FNF 6.30.11 10-Q
Table of Contents

 
 
 
 
 
 
 
 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
R
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
Commission File Number 1-32630
FIDELITY NATIONAL FINANCIAL, INC.
______________________________________________________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware
 
16-1725106
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
 
 
601 Riverside Avenue, Jacksonville, Florida
 
32204
(Address of principal executive offices)
 
(Zip Code)
(904) 854-8100
___________________________________________________________________
(Registrant’s telephone number, including area code)
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES R NO o
     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES R NO o
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer R
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company o
 
 
 
 
(Do not check if a smaller reporting company)
 
 
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO R
     As of June 30, 2011, there were 223,492,640 shares of the Registrant’s Common Stock outstanding.
 
 
 
 
 
 
 
 
 
 
FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 2011
TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


i

Table of Contents

Part I: FINANCIAL INFORMATION
Item 1.    Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
 
June 30,
2011
 
December 31,
2010
 
(Unaudited)
 
 
ASSETS
Investments:
 
 
 
Fixed maturity securities available for sale, at fair value, at June 30, 2011 and December 31, 2010 includes $262.2 and $251.9, respectively, of pledged fixed maturity securities related to secured trust deposits
$
3,521.3

 
$
3,494.3

Preferred stock available for sale, at fair value
58.0

 
—

Equity securities available for sale, at fair value
73.3

 
75.2

Investments in unconsolidated affiliates
569.7

 
527.7

Other long-term investments
128.9

 
132.7

Short-term investments
62.2

 
128.6

Total investments
4,413.4

 
4,358.5

Cash and cash equivalents, at June 30, 2011 and December 31, 2010 includes $195.4 and $146.2, respectively, of pledged cash related to secured trust deposits
567.4

 
580.8

Trade and notes receivables, net of allowance of $27.7 and $28.8, respectively, at June 30, 2011 and December 31, 2010
264.2

 
270.7

Goodwill
1,472.6

 
1,470.7

Prepaid expenses and other assets
366.5

 
389.1

Capitalized software, net
38.8

 
44.0

Other intangible assets, net
144.1

 
155.2

Title plants
390.0

 
390.8

Property and equipment, net
176.3

 
179.9

Income taxes receivable
2.0

 
15.7

Deferred tax asset
—

 
32.1

Total assets
$
7,835.3

 
$
7,887.5

LIABILITIES AND EQUITY
Liabilities:
 
 
 
Accounts payable and accrued liabilities
$
602.7

 
$
700.3

Accounts payable to related parties
5.9

 
8.3

Deferred revenue
127.4

 
121.4

Notes payable
951.8

 
952.0

Reserve for claim losses
2,154.8

 
2,272.7

Secured trust deposits
444.5

 
388.4

Deferred tax liability
16.0

 
—

Total liabilities
4,303.1

 
4,443.1

Equity:
 
 
 
Common stock, Class A, $0.0001 par value; authorized 600,000,000 shares as of June 30, 2011 and December 31, 2010; issued 252,741,657 as of June 30, 2011 and 252,184,269 as of December 31, 2010
—

 
—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none
—

 
—

Additional paid-in capital
3,761.5

 
3,745.0

Retained earnings
179.0

 
110.3

Accumulated other comprehensive earnings
22.8

 
12.6

Less: treasury stock, 29,249,017 shares and 28,435,980 shares as of June 30, 2011 and December 31, 2010, respectively, at cost
(452.0
)
 
(440.8
)
Total Fidelity National Financial, Inc. shareholders’ equity
3,511.3

 
3,427.1

Noncontrolling interests
20.9

 
17.3

Total equity
3,532.2

 
3,444.4

Total liabilities and equity
$
7,835.3

 
$
7,887.5

See Notes to Condensed Consolidated Financial Statements

1
Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)

Three months ended June 30,
 
Six months ended June 30,
 
2011
 
2010
 
2011
 
2010
 
(Unaudited)
 
(Unaudited)
Revenues:
 
 
 
 
 
 
 
Direct title insurance premiums
$
357.2

 
$
344.6

 
$
680.1

 
$
626.0

Agency title insurance premiums
484.7

 
552.8

 
908.0

 
1,036.6

Escrow, title related and other fees
334.2

 
336.5

 
647.4

 
631.0

Specialty insurance
106.8

 
101.0

 
199.6

 
187.3

Interest and investment income
39.7

 
36.4

 
75.8

 
75.2

Realized gains and losses, net
1.9

 
124.2

 
21.8

 
152.8

Total revenues
1,324.5

 
1,495.5

 
2,532.7

 
2,708.9

Expenses:
 
 
 
 
 
 
 
Personnel costs
396.8

 
397.7

 
788.1

 
768.4

Other operating expenses
300.9

 
316.9

 
586.3

 
615.9

Agent commissions
379.1

 
435.9

 
706.8

 
820.3

Depreciation and amortization
19.3

 
22.5

 
39.8

 
45.5

Provision for claim losses
104.6

 
96.9

 
191.3

 
183.2

Interest expense
13.8

 
12.5

 
28.1

 
19.6

Total expenses
1,214.5

 
1,282.4

 
2,340.4

 
2,452.9

Earnings before income taxes and equity in earnings (loss) of unconsolidated affiliates
110.0

 
213.1

 
192.3

 
256.0

Income tax expense
39.6

 
76.3

 
69.2

 
89.6

Earnings before equity in earnings (loss) of unconsolidated affiliates
70.4

 
136.8

 
123.1

 
166.4

Equity in earnings (loss) of unconsolidated affiliates
12.6

 
3.6

 
4.0

 
(7.1
)
Net earnings
83.0

 
140.4

 
127.1

 
159.3

Less: Net earnings attributable to noncontrolling interests
3.0

 
0.8

 
4.6

 
3.2

Net earnings attributable to Fidelity National Financial, Inc. common shareholders
$
80.0

 
$
139.6

 
$
122.5

 
$
156.1

Earnings per share
 
 
 
 
 
 
 
Net earnings attributable to Fidelity National Financial, Inc. common shareholders - Basic
$
0.36

 
$
0.61

 
$
0.56

 
$
0.69

Net earnings attributable to Fidelity National Financial, Inc. common shareholders - Diluted
$
0.36

 
$
0.61

 
$
0.55

 
$
0.68

Weighted average shares outstanding, basic basis
220.7

 
227.5

 
220.7

 
227.6

Weighted average shares outstanding, diluted basis
224.5

 
230.5

 
224.0

 
230.5

Cash dividends paid per share
$
0.12

 
$
0.18

 
$
0.24

 
$
0.33

See Notes to Condensed Consolidated Financial Statements

2
Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
 
 
2011
 
2010
 
2011
 
2010
 
(Unaudited)
 
(Unaudited)
Net earnings
$
83.0

 
$
140.4

 
$
127.1

 
$
159.3

Other comprehensive earnings:
 
 
 
 
 
 
 
Unrealized gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1)
16.2

 
26.8

 
13.9

 
40.1

Unrealized gain on investments in unconsolidated affiliates (2)
4.0

 
3.0

 
10.1

 
3.4

Unrealized gain (loss) on foreign currency translation (3)
0.4

 
(0.9
)
 
1.0

 
0.7

Reclassification adjustments for change in unrealized gains and losses included in net earnings (4)
(3.7
)
 
(16.5
)
 
(14.8
)
 
(36.5
)
Other comprehensive earnings
16.9

 
12.4

 
10.2

 
7.7

Comprehensive earnings
99.9

 
152.8

 
137.3

 
167.0

Less: Comprehensive earnings attributable to noncontrolling interests
3.0

 
0.8

 
4.6

 
3.2

Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders
$
96.9

 
$
152.0

 
$
132.7

 
$
163.8

_______________________________________
 
(1)
Net of income tax expense of $9.9 million and $15.7 million for the three-month periods ended June 30, 2011 and 2010, respectively, and $8.5 million and $23.4 million for the six-month periods ended June 30, 2011 and 2010, respectively.
(2)
Net of income tax expense of $2.5 million and $1.8 million for the three-month periods ended June 30, 2011 and 2010, respectively, and $6.2 million and $2.0 million for the six-month periods ended June 30, 2011 and 2010, respectively.
(3)
Net of income tax expense (benefit) of $0.2 million and $(0.5) million for the three-month periods ended June 30, 2011 and 2010, respectively, and $0.6 million and $0.4 million for the six-month periods ended June 30, 2011 and 2010, respectively.
(4)
Net of income tax expense of $2.3 million and $9.7 million for the three-month periods ended June 30, 2011 and 2010, respectively, and $9.1 million and $21.3 million for the six-month periods ended June 30, 2011 and 2010, respectively.
See Notes to Condensed Consolidated Financial Statements



3
Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(In millions)
(Unaudited)
 
Fidelity National Financial, Inc. Common Shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
 
 
 
 
Common Stock
 
Paid-in
 
Retained
 
Comprehensive
 
Treasury Stock
 
Noncontrolling
 
 
 
Shares
 
Amount
 
Capital
 
Earnings
 
Earnings
 
Shares
 
Amount
 
Interests
 
Total Equity
Balance, December 31, 2010
252.2

 
$
—

 
$
3,745.0

 
$
110.3

 
$
12.6

 
28.5

 
$
(440.8
)
 
$
17.3

 
$
3,444.4

Exercise of stock options
0.5

 
—

 
3.3

 
—

 
—

 
—

 
—

 
—

 
3.3

Treasury stock repurchased
—

 
—

 
—

 
—

 
—

 
0.7

 
(11.2
)
 
—

 
(11.2
)
Other comprehensive earnings — unrealized gain on investments and other financial instruments (excluding investments in unconsolidated affiliates)
—

 
—

 
—

 
—

 
(0.9
)
 
—

 
—

 
—

 
(0.9
)
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates
—

 
—

 
—

 
—

 
10.1

 
—

 
—

 
—

 
10.1

Other comprehensive earnings — unrealized gain on foreign currency translation
—

 
—

 
—

 
—

 
1.0

 
—

 
—

 
—

 
1.0

Stock based compensation
—

 
—

 
13.2

 
—

 
—

 
—

 
—

 
—

 
13.2

Dividends declared
—

 
—

 
—

 
(53.8
)
 
—

 
—

 
—

 
—

 
(53.8
)
Subsidiary dividends paid to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(1.0
)
 
(1.0
)
Net earnings
—

 
—

 
—

 
122.5

 
—

 
—

 
—

 
4.6

 
127.1

Balance, June 30, 2011
252.7

 
$
—

 
$
3,761.5

 
$
179.0

 
$
22.8

 
29.2

 
$
(452.0
)
 
$
20.9

 
$
3,532.2

See Notes to Condensed Consolidated Financial Statements



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Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 
Six months ended June 30,
 
 
2011
 
2010
 
(Unaudited)
Cash flows from operating activities:
 
 
 
Net earnings
$
127.1

 
$
159.3

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
            Depreciation and amortization
39.8

 
45.5

            Equity in (earnings) losses of unconsolidated affiliates
(4.0
)
 
7.1

Gain on sales of investments and other assets, net
(21.8
)
 
(54.4
)
 Gain on sale of investment in Sedgwick CMS
—

 
(98.4
)
Stock-based compensation cost
13.2

 
11.3

Tax benefit associated with the exercise of stock options
—

 
(1.0
)
Changes in assets and liabilities, net of effects from acquisitions:
 
 
 
Net (increase) decrease in pledged cash, pledged investments, and secured trust deposits
(3.2
)
 
5.7

Net decrease (increase) in trade receivables
11.5

 
(10.3
)
Net decrease (increase) in prepaid expenses and other assets
3.5

 
(2.1
)
Net decrease in accounts payable, accrued liabilities, deferred revenue and other
(97.7
)
 
(38.8
)
Net decrease in reserve for claim losses
(117.9
)
 
(100.7
)
Net change in income taxes
58.7

 
124.7

Net cash provided by operating activities
9.2

 
47.9

Cash flows from investing activities:
 
 
 
Proceeds from sales of investment securities available for sale
429.4

 
458.2

Proceeds from sale of Sedgwick CMS
32.0

 
193.6

Proceeds from calls and maturities of investment securities available for sale
297.4

 
221.0

Proceeds from sale of other assets
3.8

 
12.5

Cash received (expended) as collateral on loaned securities, net
0.7

 
(6.1
)
Additions to property and equipment
(17.4
)
 
(17.3
)
Additions to capitalized software
(4.1
)
 
(2.7
)
Purchases of investment securities available for sale
(787.4
)
 
(516.7
)
Net proceeds from short-term investment securities
66.4

 
91.3

Contributions to investments in unconsolidated affiliates
(26.0
)
 
(21.1
)
Distributions from unconsolidated affiliates
0.9

 
7.5

Net other investing activities
(5.0
)
 
(0.9
)
Acquisitions/disposals of businesses, net of cash acquired
(0.3
)
 
0.4

Net cash (used in) provided by investing activities
(9.6
)
 
419.7

Cash flows from financing activities:
 
 
 
Borrowings
—

 
350.3

Debt service payments
(0.3
)
 
(459.5
)
Dividends paid
(53.0
)
 
(75.4
)
Subsidiary dividends paid to noncontrolling interest shareholders
(1.0
)
 
(1.3
)
Exercise of stock options
3.3

 
3.0

Debt issuance costs
—

 
(2.3
)
Tax benefit associated with the exercise of stock options
—

 
1.0

Purchases of treasury stock
(11.2
)
 
(32.8
)
Net cash used in financing activities
(62.2
)
 
(217.0
)
Net (decrease) increase in cash and cash equivalents, excluding pledged cash related to secured trust deposits
(62.6
)
 
250.6

Cash and cash equivalents, excluding pledged cash related to secured trust deposits at beginning of period
434.6

 
105.3

Cash and cash equivalents, excluding pledged cash related to secured trust deposits at end of period
$
372.0

 
$
355.9

Supplemental cash flow information:
 
 
 
Income taxes paid
$
13.5

 
$
26.5

Interest paid
$
26.2

 
$
15.7

See Notes to Condensed Consolidated Financial Statements

5
Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A — Basis of Financial Statements
     The unaudited financial information in this report includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, “We,” “Us,” “Our,” or “FNF”) prepared in accordance with generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2010.
     Certain reclassifications have been made in the 2010 Condensed Consolidated Financial Statements to conform to classifications used in 2011.
Description of Business
      We are a holding company that through our subsidiaries provides title insurance, mortgage services, specialty insurance and diversified services. We are the nation's largest title insurance company through our title insurance underwriters — Fidelity National Title, Chicago Title, Commonwealth Land Title, and Alamo Title — which collectively issued more title insurance policies in 2010 than any other title company in the United States. We also provide flood insurance, personal lines insurance, and home warranty insurance through our specialty insurance subsidiaries. We own a minority interest in Ceridian Corporation ("Ceridian"), a leading provider of global human resources, payroll, benefits and payment solutions. We also own a minority interest in Remy International, Inc. (“Remy”), a leading designer, manufacturer, remanufacturer, marketer and distributor of aftermarket and original equipment electrical components for automobiles, light trucks, heavy-duty trucks and other vehicles.

Sale of Flood Insurance Business
Subsequent to quarter-end, on July 13, 2011, we entered into a definitive agreement under which we will sell our flood insurance business to WRM America Holdings LLC (“WRM America”). See note H on subsequent events for further discussion of the sale.
Sale of Sedgwick CMS
     On May 28, 2010, we completed the sale of our 32% interest in Sedgwick, our minority-owned affiliate that provides claims management services to large corporate and public sector entities, to a group of private equity funds. See note D on investments for further discussion of the sale.
Transactions with Related Parties
Agreements with Fidelity National Information Services ("FIS")
     A summary of the agreements that were in effect with FIS through June 30, 2011, is as follows:
•
Technology (“IT”) and data processing services from FIS. These agreements govern IT support services provided to us by FIS, primarily consisting of infrastructure support and data center management. Subject to certain early termination provisions (including the payment of minimum monthly service and termination fees), the agreement expires on or about June 30, 2013 with an option to renew for one or two additional years.
•
Administrative corporate support and cost-sharing services to FIS. We have provided certain administrative corporate support services such as corporate aviation and other administrative support services to FIS.
•
Real estate management and lease agreements. Included in our revenues are amounts received related to leases or subleases of certain office space and furnishings to FIS.






6
Table of Contents
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


A detail of net revenues and expenses between us and FIS that were included in our results of operations for the periods presented is as follows:
 
Three months ended
June 30, 2011
 
Three months ended
June 30, 2010
 
Six months ended
June 30, 2011
 
Six months ended
June 30, 2010
 
(In millions)
Rental revenue
$
—

 
$
0.3

 
$
—

 
$
0.7

Corporate services and cost-sharing revenue
1.3

 
0.7

 
2.4

 
1.4

Data processing expense
(9.1
)
 
(12.4
)
 
(18.5
)
 
(24.0
)
Net expense
$
(7.8
)
 
$
(11.4
)
 
$
(16.1
)
 
$
(21.9
)
     We believe the amounts earned by us or charged to us under each of the foregoing arrangements are fair and reasonable. The information technology infrastructure support and data center management services provided to us are priced within the range of prices that FIS offers to its unaffiliated third party customers for the same types of services. However, the amounts we earned or were charged under these arrangements were not negotiated at arm’s-length, and may not represent the terms that we might have obtained from an unrelated third party. The amounts due to FIS as a result of these agreements were $5.9 million as of June 30, 2011 and $8.3 million as of December 31, 2010.
     Included in equity securities, available for sale are 1,603,860 shares of FIS stock which were purchased during the fourth quarter of 2009 in connection with a merger between FIS and Metavante Technologies, Inc. The fair value of our investment was $49.4 million and $43.9 million as of June 30, 2011 and December 31, 2010, respectively. Changes in fair value of the FIS stock are recorded as other comprehensive earnings.
Also included in fixed maturities available for sale are FIS bonds. The FIS bonds had a fair value of $23.2 million and $27.4 million as of June 30, 2011 and December 31, 2010, respectively.
Recent Accounting Pronouncement

In May 2011, the Financial Accounting Standards Board ("FASB") updated Accounting Standards Code ("ASC") Topic 820, to clarify requirements on fair value measurements and related disclosures. This update is effective for interim and annual periods beginning after December 15, 2011. The additional requirements in this update will be included in the note on fair value measurements upon adoption. We do not expect this update to have a material impact on our financial condition or results of operations.     

Note B — Earnings Per Share
     Basic earnings per share is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period. In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted earnings per share is equal to basic earnings per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain options and shares of restricted stock which have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported.
  

7
Table of Contents
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


The following table presents the computation of basic and diluted earnings per share:
 
Three months ended June 30,
 
Six months ended June 30,
 
2011
 
2010
 
2011
 
2010
 
(In millions, except per share amounts)
Basic and diluted net earnings attributable to FNF common shareholders
$
80.0

 
$
139.6

 
$
122.5

 
$
156.1

 
 
 
 
 
 
 
 
Weighted average shares outstanding during the period, basic basis
220.7

 
227.5

 
220.7

 
227.6

Plus: Common stock equivalent shares assumed from conversion of options
3.8

 
3.0

 
3.3

 
2.9

Weighted average shares outstanding during the period, diluted basis
224.5

 
230.5

 
224.0

 
230.5

 
 
 
 
 
 
 
 
Basic earnings per share attributable to FNF common shareholders
$
0.36

 
$
0.61

 
$
0.56

 
$
0.69

Diluted earnings per share attributable to FNF common shareholders
$
0.36

 
$
0.61

 
$
0.55

 
$
0.68

     Options to purchase shares of our common stock that are antidilutive are excluded from the computation of diluted earnings per share. Antidilutive options totaled 7.5 million shares and 13.6 million shares for the three months ended June 30, 2011 and 2010, respectively, and 8.6 million shares and 13.8 million shares for the six months ended June 30, 2011 and 2010, respectively.

Note C — Fair Value Measurements
     The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010, respectively:
 
June 30, 2011
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(In millions)
Fixed maturity securities available for sale:
 
 
 
 
 
 
 
U.S. government and agencies
$
—

 
$
188.4

 
$
—

 
$
188.4

State and political subdivisions
—

 
1,427.4

 
—

 
1,427.4

Corporate debt securities
—

 
1,608.7

 
—

 
1,608.7

Mortgage-backed/asset-backed securities
—

 
218.6

 
—

 
218.6

Foreign government bonds
—

 
78.2

 
—

 
78.2

Preferred stock available for sale
11.3

 
46.7

 
—

 
58.0

Equity securities available for sale
73.3

 
—

 
—

 
73.3

Other long-term investments
—

 
—

 
92.3

 
92.3

Total
$
84.6

 
$
3,568.0

 
$
92.3

 
$
3,744.9


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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


 
December 31, 2010
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(In millions)
Fixed maturity securities available for sale:
 
 
 
 
 
 
 
U.S. government and agencies
$
—

 
$
313.5

 
$
—

 
$
313.5

State and political subdivisions
—

 
1,374.0

 
—

 
1,374.0

Corporate debt securities
—

 
1,532.7

 
—

 
1,532.7

Mortgage-backed/asset-backed securities
—

 
184.0

 
—

 
184.0

Foreign government bonds and other fixed maturity securities
—

 
80.6

 
9.5

 
90.1

Equity securities available for sale
75.2

 
—

 
—

 
75.2

Other long-term investments
—

 
—

 
90.1

 
90.1

Total
$
75.2

 
$
3,484.8

 
$
99.6

 
$
3,659.6

    Our Level 2 fair value measures are provided by third-party pricing services. We utilize one firm for our municipal bond portfolio and another for our other Level 2 investments. These pricing services are leading global providers of financial market data, analytics and related services to financial institutions. We only rely on one price for each instrument to determine the carrying amount of the assets on our balance sheet. The inputs utilized in these pricing methodologies include observable measures such as benchmark yields, reported trades, broker dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including market research publications. The pricing methodologies used by the relevant third-party pricing services are as follows:

U.S. government and agencies: These securities are valued based on data obtained for similar securities in active markets and from inter-dealer brokers.

State and political subdivisions: These securities are valued based on data obtained for similar securities in active markets and from inter-dealer brokers. Factors considered include relevant trade information, dealer quotes and other relevant market data.

Corporate debt securities: These securities are valued based on dealer quotes and related market trading activity. Factors considered include the bond's yield, its terms and conditions, or any other feature which may influence its risk and thus marketability, as well as relative credit information and relevant sector news.
 
Mortgage-backed/asset-backed securities: These securities are comprised of commercial mortgage-backed securities, agency mortgage-backed securities, collaterized mortgage obligations, and asset-backed securities. They are valued based on available trade information, dealer quotes, cash flows, relevant indices and market data for similar assets in active markets.

Foreign government bonds: These securities are valued based on a discounted cash flow model incorporating observable market inputs such as available broker quotes and yields of comparable securities.

Preferred stock: These securities are valued based on relevant market data for similar assets in active markets adjusted by risks inherent to the security such as credit, refunding, and liquidity. Dividends accrued are also considered in the valuation of certain preferred stocks.
     Our Level 3 investments consist of structured notes that were purchased in the third quarter of 2009. The structured notes had a par value of $75.0 million and fair value of $92.3 million at June 30, 2011 and a par value of $75.0 million and fair value of $90.1 million at December 31, 2010. The structured notes are held for general investment purposes and represent approximately two percent of our total investment portfolio. The structured notes are classified as other long-term investments and are measured in their entirety at fair value with changes in fair value recognized in earnings. The fair value of these instruments represents exit prices obtained from a broker-dealer. These exit prices are the product of a proprietary valuation model utilized by the trading desk of the broker-dealer and contain assumptions relating to volatility, the level of interest rates, and the value of the underlying indexes, exchange-traded funds, and foreign currencies. We reviewed the pricing methodologies for our Level 3 investments to ensure that they are reasonable and believe they represent an exit price for the securities as of June 30, 2011.
     

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


The following table presents the changes in our investments that are classified as Level 3 for the period ended June 30, 2011 (in millions):
Balance, December 31, 2010
$
99.6

Proceeds received upon call/sales
(8.7
)
Realized gains
5.9

Net change included in other comprehensive earnings
(4.5
)
Balance, June 30, 2011
$
92.3

     The carrying amounts of short-term investments, accounts receivable and notes receivable approximate fair value due to their short-term nature. Additional information regarding the fair value of our investment portfolio is included in note D.
Note D — Investments
     The carrying amounts and fair values of our available for sale securities at June 30, 2011 and December 31, 2010 are as follows:
 
June 30, 2011
 
Carrying
 
Cost
 
Unrealized
 
Unrealized
 
Fair
 
Value
 
Basis
 
Gains
 
Losses
 
Value
 
(In millions)
Fixed maturity securities available for sale:
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
188.4

 
$
179.7

 
$
9.6

 
$
(0.9
)
 
$
188.4

State and political subdivisions
1,427.4

 
1,378.9

 
49.7

 
(1.2
)
 
1,427.4

Corporate debt securities
1,608.7

 
1,558.7

 
63.3

 
(13.3
)
 
1,608.7

Mortgage-backed/asset-backed securities
218.6

 
210.4

 
8.2

 
—

 
218.6

Foreign government bonds
78.2

 
79.9

 
1.6

 
(3.3
)
 
78.2

Preferred stock available for sale
58.0

 
58.4

 
0.2

 
(0.6
)
 
58.0

Equity securities available for sale
73.3

 
44.7

 
28.6

 
—

 
73.3

Total
$
3,652.6

 
$
3,510.7

 
$
161.2

 
$
(19.3
)
 
$
3,652.6

 
December 31, 2010
 
Carrying
 
Cost
 
Unrealized
 
Unrealized
 
Fair
 
Value
 
Basis
 
Gains
 
Losses
 
Value
 
(In millions)
Fixed maturity securities available for sale:
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
313.5

 
$
303.8

 
$
11.8

 
$
(2.1
)
 
$
313.5

State and political subdivisions
1,374.0

 
1,343.3

 
37.9

 
(7.2
)
 
1,374.0

Corporate debt securities
1,532.7

 
1,469.6

 
69.4

 
(6.3
)
 
1,532.7

Mortgage-backed/asset-backed securities
184.0

 
176.8

 
7.2

 
—

 
184.0

Foreign government bonds and other fixed maturity securities
90.1

 
83.7

 
6.8

 
(0.4
)
 
90.1

Equity securities available for sale
75.2

 
51.1

 
24.4

 
(0.3
)
 
75.2

Total
$
3,569.5

 
$
3,428.3

 
$
157.5

 
$
(16.3
)
 
$
3,569.5

   The cost basis of fixed maturity securities available for sale includes an adjustment for amortized premium or discount since the date of purchase.




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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


The following table presents certain information regarding contractual maturities of our fixed maturity securities at June 30, 2011:
 
 
June 30, 2011
 
 
Amortized
 
% of
 
Fair
 
% of
Maturity
 
Cost
 
Total
 
Value
 
Total
 
 
(Dollars in millions)
One year or less
 
$
235.2

 
6.9
%
 
$
239.1

 
6.8
%
After one year through five years
 
1,496.8

 
43.9

 
1,560.8

 
44.3

After five years through ten years
 
1,340.0

 
39.3

 
1,374.0

 
39.0

After ten years
 
125.2

 
3.7

 
128.8

 
3.7

Mortgage-backed/asset-backed securities
 
210.4

 
6.2

 
218.6

 
6.2

Total
 
$
3,407.6

 
100.0
%
 
$
3,521.3

 
100.0
%
Subject to call
 
$
1,726.2

 
50.7
%
 
$
1,775.5

 
50.4
%
     Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Included above in amounts subject to call are $1,066.1 million and $1,105.3 million in amortized cost and fair value, respectively, of fixed maturity securities with make-whole call provisions as of June 30, 2011.
     The balance of equity securities is primarily composed of an investment in FIS stock. The fair value of our investment in the FIS stock was $49.4 million and $43.9 million at June 30, 2011 and December 31, 2010, respectively.
Included in our other long-term investments are various cost-method investments and fixed maturity structured notes purchased in the third quarter of 2009. The structured notes are carried at fair value (see note C) and changes in the fair value of these structured notes are recorded as realized gains and losses in the Condensed Consolidated Statements of Earnings. The carrying value of the structured notes was $92.3 million and $90.1 million as of June 30, 2011 and December 31, 2010, respectively; and we recorded a net (loss) gain of $(0.9) million and $2.2 million related to the structured notes in the three-month and six-month periods ended June 30, 2011, respectively, and recorded a net loss of $3.7 million and $4.5 million in the three-month and six-month periods ended June 30, 2010, respectively.
     Net unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2011 and December 31, 2010, were as follows (in millions):
June 30, 2011
 
 
 
 
 
 
 
 
 
 
 
 
Less than 12 Months
 
12 Months or Longer
 
Total
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Value
 
Losses
 
Value
 
Losses
 
Value
 
Losses
U.S. government and agencies
$
47.2

 
$
(0.8
)
 
$
0.4

 
$
(0.1
)
 
$
47.6

 
$
(0.9
)
State and political subdivisions
96.0

 
(1.2
)
 
—

 
—

 
96.0

 
(1.2
)
Corporate debt securities
232.4

 
(13.3
)
 
—

 
—

 
232.4

 
(13.3
)
Foreign government bonds
36.6

 
(3.3
)
 
—

 
—

 
36.6

 
(3.3
)
Preferred stock available for sale
36.8

 
(0.6
)
 
—

 
—

 
36.8

 
(0.6
)
Total temporarily impaired securities
$
449.0

 
$
(19.2
)
 
$
0.4

 
$
(0.1
)
 
$
449.4

 
$
(19.3
)

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


December 31, 2010
 
 
 
 
 
 
 
 
 
 
 
 
Less than 12 Months
 
12 Months or Longer
 
Total
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Value
 
Losses
 
Value
 
Losses
 
Value
 
Losses
U.S. government and agencies
$
54.3

 
$
(2.0
)
 
$
0.4

 
$
(0.1
)
 
$
54.7

 
$
(2.1
)
State and political subdivisions
255.2

 
(7.2
)
 
—

 
—

 
255.2

 
(7.2
)
Corporate debt securities
251.4

 
(6.3
)
 
—

 
—

 
251.4

 
(6.3
)
Equity securities
—

 
—

 
1.8

 
(0.3
)
 
1.8

 
(0.3
)
Foreign government bonds and other fixed maturity securities
10.8

 
(0.4
)
 
—

 
—

 
10.8

 
(0.4
)
Total temporarily impaired securities
$
571.7

 
$
(15.9
)
 
$
2.2

 
$
(0.4
)
 
$
573.9

 
$
(16.3
)
     During the three-month and six-month periods ended June 30, 2011, we incurred no impairment charges relating to investments that were determined to be other-than-temporarily impaired. We expect to recover the entire amortized cost basis of our temporarily impaired fixed maturity securities as we do not intend to sell these securities and we do not believe that we will be required to sell the fixed maturity securities before recovery of the cost basis. As of June 30, 2011 and December 31, 2010, we held no investments for which an other-than-temporary impairment had been previously recognized. It is possible that future events may lead us to recognize potential future impairment losses related to our investment portfolio and that unanticipated future events may lead us to dispose of certain investment holdings and recognize the effects of any market movements in our condensed consolidated financial statements.
The following table presents realized gains and losses on investments and other assets and proceeds from the sale or maturity on investments and other assets for the three-month and six-month periods ending June 30, 2011 and 2010, respectively:
 
 
Three months ended
June 30, 2011
 
Six months ended
June 30, 2011
 
 
Gross Realized Gains
 
Gross Realized Losses
 
Net Realized Gains (Losses)
 
Gross Proceeds from Sale/Maturity
 
Gross Realized Gains
 
Gross Realized Losses
 
Net Realized Gains (Losses)
 
Gross Proceeds from Sale/Maturity
 
 
(Dollars in millions)
 
(Dollars in millions)
Fixed maturity securities available for sale
 
$
6.4

 
$
(0.4
)
 
$
6.0

 
$
298.7

 
$
22.7

 
$
(0.6
)
 
$
22.1

 
$
689.5

Preferred stock available for sale
 
0.1

 
(0.1
)
 
—

 
16.0

 
0.1

 
(0.1
)
 
—

 
21.0

Equity securities available for sale
 
—

 
—

 
—

 
—

 
1.9

 
—

 
1.9

 
16.3

Other long-term investments
 
 
 
 
 
(0.9
)
 
32.0

 
 
 
 
 
2.2

 
32.0

Other assets
 
 
 
 
 
(3.2
)
 
2.1

 
 
 
 
 
(4.4
)
 
3.8

Total
 
 
 
 
 
$
1.9

 
$
348.8

 
 
 
 
 
$
21.8

 
$
762.6

 
 
Three months ended
June 30, 2010
 
Six months ended
June 30, 2010
 
 
Gross Realized Gains
 
Gross Realized Losses
 
Net Realized Gains (Losses)
 
Gross Proceeds from Sale/Maturity
 
Gross Realized Gains
 
Gross Realized Losses
 
Net Realized Gains (Losses)
 
Gross Proceeds from Sale/Maturity
 
 
(Dollars in millions)
 
(Dollars in millions)
Fixed maturity securities available for sale
 
$
27.7

 
$
(0.3
)
 
$
27.4

 
$
326.1

 
$
58.9

 
$
(0.4
)
 
$
58.5

 
$
675.8

Equity securities available for sale
 
—

 
—

 
—

 
—

 
0.5

 
—

 
0.5

 
3.4

Other long-term investments
 
 
 
 
 
(3.7
)
 
—

 
 
 
 
 
(4.5
)
 
—

Other assets
 
 
 
 
 
100.5

 
196.2

 
 
 
 
 
98.3

 
206.1

Total
 
 
 
 
 
$
124.2

 
$
522.3

 
 
 
 
 
$
152.8

 
$
885.3


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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


Investments in unconsolidated affiliates are recorded using the equity method of accounting. As of June 30, 2011 and December 31, 2010, investments in unconsolidated affiliates consisted of (in millions):
 
Current Ownership
 
June 30, 2011
 
December 31, 2010
Ceridian
33
%
 
$
375.2

 
$
367.2

Remy
47
%
 
143.3

 
108.7

Other
Various

 
51.2

 
51.8

     Total
 
 
$
569.7

 
$
527.7

On January 21, 2011, as part of a Common Stock Rights Offering ("the Offering") to all Remy common shareholders, we purchased an additional 9.9 million shares of Remy common stock in exchange for tendering our 42,359 shares of Remy preferred stock held and cash of $26.0 million. Following the Offering and preferred stock conversion, we own 14.8 million shares of Remy common stock, representing an increase of our ownership interest from 46% to 47%.
In addition to our equity method investment in Remy, we held $29.9 million in par value of a Remy term loan as of June 30, 2011 and December 31, 2010. The fair value of the term loan was $30.1 million and $29.7 million as of June 30, 2011 and December 31, 2010, respectively, and is included in our fixed maturity securities available for sale. Also, included in our fixed maturity securities available for sale at December 31, 2010 were $54.8 million of Remy’s bonds. On December 17, 2010, as part of a credit refinancing, Remy called these bonds at 109 percent of par, payable January 14, 2011. We received the proceeds and recognized a gain of $8.5 million during the first quarter of 2011.
On May 28, 2010, we completed the sale of our 32% interest in Sedgwick, our former minority-owned affiliate that provides claims management services to large corporate and public sector entities, to a group of private equity funds, resulting in a pre-tax gain of approximately $98.4 million during the second quarter of 2010. We received approximately $225.6 million in proceeds for our ownership interest, of which $32.0 million was held in an indemnity escrow. We fully recovered the remaining $32.0 million balance in the second quarter of 2011.
We account for our equity in Ceridian and Remy on a three-month and one-month lag, respectively. Accordingly, our net earnings for the three-month and six-month periods ended June 30, 2011, include our equity in Ceridian’s earnings for the three-month and six-month periods ended March 31, 2011, and our net earnings for the three-month and six-month periods ended June 30, 2010, include our equity in Ceridian’s earnings for the three-month and six-month periods ended March 31, 2010. Our net earnings for the three-month and six-month periods ended June 30, 2011, include our equity in Remy's earnings for the three-month and six-month periods ended May 31, 2011, and our net earnings for the three-month and six-month periods ended June 30, 2010, include our equity in Remy's earnings for the three-month and six-month periods ended May 31, 2010. During the three-month periods ended June 30, 2011 and 2010, we recorded an aggregate of $11.3 million and $(2.4) million, respectively, in equity in earnings (losses) and $1.4 million and $(10.8) million, respectively, for the six-month periods ended June 30, 2011 and 2010 of Ceridian and Remy in the 2011 periods and Ceridian, Remy and Sedgwick in the 2010 periods. Equity in earnings of other unconsolidated affiliates was $1.3 million and $6.0 million for the three-month periods ended June 30, 2011 and 2010, respectively, and $2.6 million and $3.7 million for the six-month periods ended June 30, 2011 and 2010, respectively.












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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


Summarized financial information for Ceridian for the relevant dates and time periods included in our condensed consolidated financial statements, is presented below.
 
March 31, 2011
 
September 30, 2010
 
(In millions)
 
(In millions)
Total current assets
$
1,144.5

 
$
1,080.3

Goodwill and other intangible assets, net
4,692.6

 
4,700.6

Other assets
6,814.4

 
4,859.2

Total assets
$
12,651.5

 
$
10,640.1

Current liabilities
$
867.7

 
$
799.5

Long-term obligations, less current portion
3,471.9

 
3,492.5

Other long-term liabilities
7,161.7

 
5,222.2

Total liabilities
11,501.3

 
9,514.2

Equity
1,150.2

 
1,125.9

Total liabilities and equity
$
12,651.5

 
$
10,640.1


 
Three Months Ended March 31, 2011
 
Three Months Ended March 31, 2010
 
Six Months Ended March 31, 2011
 
Six Months Ended March 31, 2010
 
(In millions)
Total revenues
$
377.7

 
$
355.0

 
$
771.5

 
$
734.3

Loss before income taxes
(14.0
)
 
(38.5
)
 
(18.8
)
 
(70.7
)
Net loss
(10.5
)
 
(39.8
)
 
(10.4
)
 
(62.3
)

Note E — Commitments and Contingencies

Legal and Regulatory Contingencies

In the ordinary course of business, we are involved in various pending and threatened litigation matters related to our operations, some of which include claims for punitive or exemplary damages. This customary litigation includes but is not limited to a wide variety of cases arising out of or related to title and escrow claims, for which we make provisions through our loss reserves. Additionally, like other insurance companies, our ordinary course litigation includes a number of class action and purported class action lawsuits, which make allegations related to aspects of our insurance operations. We believe that no actions, other than the matter discussed below, depart from customary litigation incidental to our business.
        
We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings where it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and which represents our best estimate has been recorded. None of the amounts we have currently recorded is considered to be individually or in the aggregate material to our financial condition. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending cases is generally not yet determinable. While some of these matters could be material to our operating results for any particular period if an unfavorable outcome results, at present we do not believe that the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on the Company's financial condition, results of operations or cash flows.

On November 24, 2010, plaintiffs filed a class action in the United States District court, Northern District of California, Oakland Division titled Vivian Hays, et al. vs. Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation. Plaintiffs seek to represent a class of all persons who deposited their exchange funds with LandAmerica 1031 Exchange Service (“LES”) and were not able to use them in their contemplated exchanges due to the alleged illiquidity of LES caused by the collapse of the auction rate security market in early 2008. Plaintiffs allege Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation (which was merged into Fidelity National Title Insurance Company) knew of

14
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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


the problems at LES and had an obligation of disclosure to exchangers, but did not disclose and instead recommended exchangers use LES in order to fund prior exchangers' transactions with money from new exchangers. Plaintiffs have sued our subsidiaries Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation for negligence, breach of fiduciary duty, constructive fraud and aiding and abetting LES. Plaintiffs ask for compensatory and punitive damages, prejudgment interest and reasonable attorney's fees. We have employed counsel and intend to vigorously defend the action. The case did not include a statement as to the amount of damages demanded, but instead included a demand for damages in an amount to be proved at trial. Due to the early stage of this case, it is not possible to make meaningful estimates, if any, of the amount or range of loss that could result from this case at this time. The case was transferred on our motion to a Multi District Litigation proceeding in South Carolina and a status conference was held on April 22, 2011.  This case was stayed until a decision was made on motions pending in a similar class action against an unrelated party. The Court in that case ruled on June 15, 2011 on the motion to dismiss the complaint filed by the unrelated party and dismissed the complaint. The plaintiffs in the case against Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation intend to file an amended complaint on August 15, 2011. We are prepared to file a motion to dismiss the action against our subsidiaries on September 12, 2011.

Various governmental entities are studying the title insurance product, market, pricing, and business practices, and potential regulatory and legislative changes, which may materially affect our business and operations. We receive inquiries and requests for information from state insurance departments, attorneys general and other regulatory agencies from time to time about various matters relating to our business. Sometimes these take the form of civil investigative subpoenas or market conduct examinations. We attempt to cooperate with all such inquiries. From time to time, we are assessed fines for violations of regulations or other matters or enter into settlements with such authorities which require us to pay money or take other actions.

Operating Leases

On June 29, 2004 we entered into an off-balance sheet financing arrangement (commonly referred to as a “synthetic lease”). The owner/lessor in this arrangement acquired land and various real property improvements associated with new construction of an office building in Jacksonville, Florida, at our corporate campus and headquarters. The lessor financed the acquisition of the facilities through funding provided by third-party financial institutions. On June 27, 2011, we renewed and amended the synthetic lease for the facilities. The amended lease provides for a five year term ending June 27, 2016 and had an outstanding balance as of June 27, 2011 of $71.3 million. The amended lease includes guarantees by us of up to 83.0% of the outstanding lease balance, and options to purchase the facilities at the outstanding lease balance. The guarantee becomes effective if we decline to purchase the facilities at the end of the lease and also decline to renew the lease. The lessor is a third-party company and we have no affiliation or relationship with the lessor or any of its employees, directors or affiliates, and transactions with the lessor are limited to the operating lease agreements and the associated rent expense that have been included in other operating expenses in the Condensed Consolidated Statements of Earnings. We do not believe the lessor is a variable interest entity, as defined in the FASB standard on consolidation of variable interest entities.
Note F — Dividends
     On July 18, 2011, our Board of Directors declared cash dividends of $0.12 per share, payable on September 30, 2011, to shareholders of record as of September 16, 2011.

















15
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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


Note G — Segment Information
     Summarized financial information concerning our reportable segments is shown in the following tables.
     As of and for the three months ended June 30, 2011:
 
Fidelity National
 
Specialty
 
Corporate
 
 
 
Title Group
 
Insurance
 
and Other
 
Total
 
(In millions)
Title premiums
$
841.9

 
$
—

 
$
—

 
$
841.9

Other revenues
320.9

 
106.8

 
13.3

 
441.0

Revenues from external customers
1,162.8

 
106.8

 
13.3

 
1,282.9

Interest and investment income, including net realized gains and losses
38.9

 
4.1

 
(1.4
)
 
41.6

Total revenues
1,201.7

 
110.9

 
11.9

 
1,324.5

Depreciation and amortization
17.5

 
1.0

 
0.8

 
19.3

Interest expense
—

 
—

 
13.8

 
13.8

Earnings (loss), before income taxes and equity in earnings of unconsolidated affiliates
140.6

 
4.1

 
(34.7
)
 
110.0

Income tax expense (benefit)
50.5

 
0.1

 
(11.0
)
 
39.6

Earnings (loss), before equity in earnings of unconsolidated affiliates
90.1

 
4.0

 
(23.7
)
 
70.4

Equity in earnings of unconsolidated affiliates
1.6

 
—

 
11.0

 
12.6

Net earnings (loss)
$
91.7

 
$
4.0

 
$
(12.7
)
 
$
83.0

Assets
$
6,604.5

 
$
463.8

 
$
767.0

 
$
7,835.3

Goodwill
1,424.0

 
28.7

 
19.9

 
1,472.6

As of and for the three months ended June 30, 2010:
 
Fidelity National
 
Specialty
 
Corporate
 
 
 
Title Group
 
Insurance
 
and Other
 
Total
 
(In millions)
Title premiums
$
897.4

 
$
—

 
$
—

 
$
897.4

Other revenues
325.7

 
101.0

 
10.8

 
437.5

Revenues from external customers
1,223.1

 
101.0

 
10.8

 
1,334.9

Interest and investment income, including realized gains and losses
58.2

 
3.3

 
99.1

 
160.6

Total revenues
1,281.3

 
104.3

 
109.9

 
1,495.5

Depreciation and amortization
20.9

 
0.9

 
0.7

 
22.5

Interest expense
0.1

 
—

 
12.4

 
12.5

Earnings, before income taxes and equity in earnings of unconsolidated affiliates
124.0

 
11.1

 
78.0

 
213.1

Income tax expense
44.3

 
2.5

 
29.5

 
76.3

Earnings, before equity in earnings of unconsolidated affiliates
79.7

 
8.6

 
48.5

 
136.8

Equity in earnings of unconsolidated affiliates
0.5

 
—

 
3.1

 
3.6

Net earnings
$
80.2

 
$
8.6

 
$
51.6

 
$
140.4

Assets
$
6,377.5

 
$
452.6

 
$
1,085.2

 
$
7,915.3

Goodwill
1,392.9

 
28.7

 
20.5

 
1,442.1

    

16
Table of Contents
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — continued


As of and for the six months ended June 30, 2011:
 
Fidelity National
 
Specialty
 
Corporate
 
 
 
Title Group
 
Insurance
 
and Other
 
Total
 
(In millions)
Title premiums
$
1,588.1

 
$
—

 
$
—

 
$
1,588.1

Other revenues
625.6

 
199.6

 
21.8

 
847.0

Revenues from external customers
2,213.7

 
199.6

 
21.8

 
2,435.1

Interest and investment income, including realized gains and losses
90.5

 
7.4

 
(0.3
)
 
97.6

Total revenues
2,304.2

 
207.0

 
21.5

 
2,532.7

Depreciation and amortization
36.2

 
2.1

 
1.5

 
39.8

Interest expense
0.8

 
—

 
27.3

 
28.1

Earnings, before income taxes and equity in earnings (loss) of unconsolidated affiliates
243.3

 
13.0

 
(64.0
)
 
192.3

Income tax expense (benefit)
87.6

 
2.7

 
(21.1
)
 
69.2

Earnings, before equity in earnings (loss) of unconsolidated affiliates
155.7

 
10.3

 
(42.9
)
 
123.1

Equity in earnings of unconsolidated affiliates
2.6

 
—

 
1.4

 
4.0

Net earnings (loss)
$
158.3

 
$
10.3

 
$
(41.5
)
 
$
127.1

Assets
$
6,604.5

 
$
463.8

 
$
767.0

 
$
7,835.3

Goodwill
1,424.0

 
28.7

 
19.9

 
1,472.6

As of and for the six months ended June 30, 2010:
 
Fidelity National
 
Specialty
 
Corporate
 
 
 
Title Group
 
Insurance
 
and Other
 
Total
 
(In millions)
Title premiums
$
1,662.6

 
$
—

 
$
—

 
$
1,662.6

Other revenues
599.1

 
187.3

 
31.9

 
818.3

Revenues from external customers
2,261.7

 
187.3

 
31.9

 
2,480.9

Interest and investment income, including realized gains and losses
95.3

 
6.3

 
126.4

 
228.0

Total revenues
2,357.0

 
193.6

 
158.3

 
2,708.9

Depreciation and amortization
42.5

 
2.0

 
1.0

 
45.5

Interest expense
0.2

 
—

 
19.4

 
19.6

Earnings, before income taxes and equity in loss of unconsolidated affiliates
148.0

 
17.3

 
90.7

 
256.0

Income tax expense
51.7

 
4.6

 
33.3

 
89.6

Earnings, before equity in loss of unconsolidated affiliates
96.3

 
12.7

 
57.4

 
166.4

Equity in loss of unconsolidated affiliates
(0.9
)
 
—