UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended June 30, 2006

FIDELITY NATIONAL FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		86-0498599
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		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 þ NO o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer þ Accelerated Filer o Non-Accelerated Filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

     As of June 30, 2006, 176,257,445 shares of the Registrant’s Common Stock were outstanding.

 

 

FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 2006

INDEX

		Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
A. Condensed Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005			3
B. Condensed Consolidated Statements of Earnings for the three and six month periods ended June 30, 2006 and 2005			4
C. Condensed Consolidated Statements of Comprehensive Earnings for the three and six month periods ended June 30, 2006 and 2005			5
D. Condensed Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2006			6
E. Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005			7
F. Notes to Condensed Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3. Quantitative and Qualitative Disclosure About Market Risk			44
Item 4. Controls and Procedures			44
Part II: OTHER INFORMATION
Item 1. Legal Proceedings			45
Item 1A. Risk Factors			48
Item 6. Exhibits and Reports on Form 8-K			50
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

Part I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

		June 30,				December 31,
		2006				2005
		(Unaudited)
ASSETS
Investments:
Fixed maturities available for sale, at fair value, at June 30, 2006 includes $297,850 and $206,281 of pledged fixed maturities related to secured trust deposits and the securities lending program, respectively and at December 31, 2005 includes $305,717 and $135,249 of pledged fixed maturity securities related to secured trust deposits and the securities lending program, respectively		$	2,975,580			$	3,074,617
Equity securities, at fair value at June 30, 2006 includes $30,885 and at December 31, 2005 includes $3,401 of pledged equities related to the securities lending program			195,866				210,168
Other long-term investments			332,881				162,910
Short-term investments at June 30, 2006 includes $398,740 and at December 31, 2005 includes $350,256 of pledged short-term investments related to secured trust deposits			806,846				1,116,494
Total investments			4,311,173				4,564,189
Cash and cash equivalents, at June 30, 2006 includes $322,107 and $243,949 of pledged cash related to secured trust deposits and the securities lending program, respectively, and at December 31, 2005 includes $234,709 and $143,412 of pledged cash related to secured trust deposits and the securities lending program, respectively			806,306				513,394
Trade and notes receivables, net of allowance of $33,297 at June 30, 2006 and $34,037 at December 31, 2005			755,565				637,808
Goodwill			4,732,792				2,873,861
Prepaid expenses and other assets			1,012,903				655,651
Capitalized software			711,272				530,341
Other intangible assets			1,223,257				641,420
Title plants			320,048				312,801
Property and equipment, net			531,063				375,152
		$	14,404,379			$	11,104,617
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities, at June 30, 2006 and December 31, 2005 includes $243,949 and $143,412, respectively, of security loans related to the securities lending program		$	1,568,319			$	1,241,860
Deferred revenue			523,795				494,888
Notes payable			3,519,942				3,217,019
Reserve for claim losses			1,186,360				1,113,506
Secured trust deposits			1,001,727				882,602
Deferred tax liabilities			355,806				130,846
Income taxes payable			—				107,817
			8,155,949				7,188,538
Minority interests and preferred stock of subsidiary			1,891,509				636,304
Stockholders’ equity:
Preferred stock, $.0001 par value; authorized, 3,000,000 shares; issued and outstanding, none			—				—
Common stock, $.0001 par value; authorized, 250,000,000 shares; issued, 184,273,952 as of June 30, 2006 and 182,024,039 as of December 31, 2005			18				18
Additional paid-in capital			4,460,042				3,530,969
Retained earnings			256,966				103,665
			4,717,026				3,634,652
Accumulated other comprehensive loss			(95,618	)			(78,867	)
Unearned compensation			—				(11,523	)
Treasury stock, 8,016,507 shares as of June 30, 2006 and December 31, 2005, at cost			(264,487	)			(264,487	)
			4,356,921				3,279,775
		$	14,404,379			$	11,104,617

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

		Three months ended								Six months ended
		June 30,								June 30,
		2006				2005				2006				2005
		(Unaudited)								(Unaudited)
REVENUE:
Direct title insurance premiums		$	525,450			$	583,035			$	994,372			$	1,060,855
Agency title insurance premiums			690,530				750,166				1,296,584				1,260,946
Escrow and other title related fees			287,197				298,812				540,724				540,966
Transaction processing			976,067				659,156				1,819,266				1,265,721
Specialty insurance			97,708				77,320				204,451				152,828
Interest and investment income			45,096				28,915				91,754				54,439
Realized gains and losses, net			8,681				21,699				25,316				25,582
Gain on sale of minority interest in FIS			—				—				—				318,209
Other income			14,040				13,413				26,801				23,708
Total revenue			2,644,769				2,432,516				4,999,268				4,703,254
EXPENSES:
Personnel costs			891,841				808,115				1,769,772				1,555,192
Other operating expenses			602,061				447,332				1,095,405				840,249
Agent commissions			529,082				576,205				998,789				967,671
Depreciation and amortization			137,969				105,232				262,600				202,559
Provision for claim losses			124,075				110,802				238,567				197,966
Interest expense			62,960				47,028				117,605				71,535
Total expenses			2,347,988				2,094,714				4,482,738				3,835,172
Earnings before income taxes and minority interest			296,781				337,802				516,530				868,082
Income tax expense			110,402				130,053				192,149				210,388
Earnings before minority interest			186,379				207,749				324,381				657,694
Minority interest			53,758				17,707				85,389				23,155
Net earnings		$	132,621			$	190,042			$	238,992			$	634,539
Basic earnings per share		$	0.76			$	1.10			$	1.37			$	3.67
Weighted average shares outstanding, basic			175,438				172,404				174,647				172,773
Diluted earnings per share		$	0.73			$	1.07			$	1.32			$	3.58
Weighted average shares outstanding, diluted			180,318				176,873				179,788				177,109
Cash dividends paid per share		$	0.25			$	0.25			$	0.50			$	10.50

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

		Three months ended								Six months ended
		June 30,								June 30,
		2006				2005				2006				2005
		(Unaudited)								(Unaudited)
Net earnings		$	132,621			$	190,042			$	238,992			$	634,539
Other comprehensive earnings (loss):
Unrealized gain (loss) on investments and other financial instruments, net (1)			(23,401	)			8,525				(11,947	)			(9,294	)
Unrealized loss on foreign currency translation(2)			5,241				(4,603	)			6,529				(13,251	)
Reclassification adjustments for gains included in net earnings (3)			(4,613	)			(8,805	)			(12,808	)			(9,498	)
Reclassification adjustments relating to minority interests			1,911				—				1,475				—
Other comprehensive loss			(20,862	)			(4,883	)			(16,751	)			(32,043	)
Comprehensive earnings		$	111,759			$	185,159			$	222,241			$	602,496

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)
(Unaudited)

																		Accumulated
										Additional								Other
		Common Stock								Paid - in				Retained				Comprehensive				Unearned				Treasury Stock
		Shares				Amount				Capital				Earnings				Income (Loss)				Compensation				Shares				Amount
Balance, December 31, 2005			182,024			$	18			$	3,530,969			$	103,665			$	(78,867	)		$	(11,523	)			8,016			$	(264,487	)
Adoption of SFAS 123R			—				—				(11,523	)			—				—				11,523				—				—
Exercise of stock options			2,250				—				27,245				—				—				—				—				—
Tax benefit associated with the exercise of stock options			—				—				22,495				—				—				—				—				—
Merger with Certegy Inc.			—				—				862,296				—				—				—				—				—
Other comprehensive income (loss)— unrealized gain on investments and other financial instruments			—				—				—				—				(24,755	)			—				—				—
Other comprehensive income (loss)— unrealized gain on foreign currency			—				—				—				—				6,529				—				—				—
Other comprehensive income (loss)— reclassification to minority interest																			1,475
Stock based compensation			—				—				11,130				—				—				—				—				—
Cash dividends ($.25 per share)			—				—				—				(85,691	)			—				—				—				—
Issuance of subsidiary stock, net of minority interests			—				—				22,648								—				—				—				—
Capital Contribution to FIS			—				—				(5,218	)							—				—				—				—
Net earnings			—				—				—				238,992				—				—				—				—
Balance, June 30, 2006			184,274			$	18			$	460,042			$	256,966			$	(95,618	)		$	—				8,016			$	(264,487	)

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		Six months ended
		June 30,
		2006				2005
		(Unaudited)
Cash flows from operating activities:
Net earnings		$	238,992			$	634,539
Reconciliation of net earnings to net cash provided by operating activities:
Depreciation and amortization			262,600				202,559
Net increase in reserve for claim losses			72,854				13,695
Gain on sale of minority interest in FIS stock			—				(318,209	)
Gain on sales of assets			(25,316	)			(25,582	)
Stock-based compensation cost			45,647				17,145
Minority interest			85,389				23,155
Change in assets and liabilities, net of effects from acquisitions:
Net (increase) decrease in secured trust deposits			(8,890	)			2,190
Net decrease (increase) in trade receivables			16,348				(57,738	)
Net increase in prepaid expenses and other assets			(101,082	)			(45,950	)
Net decrease in accounts payable, accrued liabilities			(97,506	)			(27,918	)
Net (decrease) increase in income taxes			(156,230	)			128,778
Net cash provided by operating activities			332,806				546,664
Cash flows from investing activities:
Proceeds from sales of investment securities available for sale			1,286,814				1,588,011
Proceeds from maturities of investment securities available for sale			162,013				157,621
Proceeds from sale of assets			2,789				11,186
Net proceeds from sale of equity interest in subsidiary			—				454,337
Cash received as collateral on loaned securities, net			2,019				5,170
Collections of notes receivable			3,845				3,378
Additions to title plants			(7,474	)			(5,975	)
Additions to property and equipment			(88,596	)			(52,245	)
Additions to capitalized software			(97,691	)			(72,108	)
Purchases of investment securities available for sale			(1,340,478	)			(2,184,532	)
Net proceeds (purchases) of short-term investment securities			309,640				(155,108	)
Issuance of notes receivable			(4,263	)			(5,414	)
Acquisitions of businesses, net of cash acquired			(113,320	)			(9,724	)
Net cash provided by (used in) investing activities			115,298				(265,403	)

(Continued)

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

		Six months ended
		June 30,
		2006				2005
		(Unaudited)
Cash flows from financing activities:
Borrowings		$	317,264			$	2,820,011
Debt issuance costs			—				(34,155	)
Debt service payments			(476,593	)			(994,080	)
Dividends paid			(85,691	)			(1,853,780	)
Subsidiary dividends paid to minority interest shareholders			(27,454	)			—
Stock options exercised			27,245				34,128
Tax benefit associated with the exercise of stock options			22,495				26,339
Exercise of subsidiary stock options			45,245				—
Purchases of treasury stock			—				(70,874	)
Subsidiary purchases of treasury stock			(65,101	)			—
Net cash used by financing activities			(242,590	)			(72,411	)
Net increase in cash and cash equivalents, excluding pledged cash related to secured trust deposits			205,514				208,850
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at beginning of period			278,685				136,022
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at end of period		$	484,199			$	344,872
Supplemental cash flow information:
Income taxes paid		$	220,600			$	64,499
Interest paid		$	118,902			$	59,400
Noncash investing and financing activities:
Fair value of shares issued in connection with acquisitions		$	—			$	1,625
Capital transactions of FIS		$	862,296			$	—

See Notes to Condensed Consolidated Financial Statements

Fidelity National Financial, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Note A — Basis of Financial Statements

     The unaudited financial information included in this report includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, the “Company” of “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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

     The Company made a reclassification adjustment to the Consolidated Statements of Income, included within this Quarterly Report on Form10-Q, with regard to the presentation of interest and investment income and other operating expenses. This adjustment was necessary to properly reflect certain credits earned as a reduction of other operating expenses as opposed to an increase in investment income. The adjustment resulted in a reduction of interest and investment income of $9.0 million and $2.4 million for the quarters ended June 30, 2006 and 2005, respectively, and $10.3 million and $3.3 million for the six month periods ended June 30, 2006 and 2005, respectively, and a corresponding reduction of other operating expenses. This adjustment had no effect on net income.

     Certain other reclassifications have been made in the 2006 Condensed Consolidated Financial Statements to conform to current period classification.

Recent Accounting Pronouncements

     In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 requires an evaluation to determine the likelihood that an uncertain tax position will be sustained upon examination, including resolution of any related appeals or litigation processes. If it is determined that it is more likely than not that an uncertain tax position will be sustained upon examination, the next step is to determine the amount to be recognized. FIN 48 prescribes recognition of the largest amount of tax benefit that is greater than 50 percent likely of being recognized upon ultimate settlement of an uncertain tax position. Such amounts are to be recognized as of the first financial reporting period during which the more-likely-than-not recognition threshold is met. Similarly, an amount that has previously been recognized will be derecognized as of the first financial reporting period during which the more-likely-than-not recognition threshold is not met. FIN 48 is effective for fiscal years beginning after December 15, 2006. Management does not believe that FIN 48 will have a material impact on the Company’s statements of financial position or operations.

Recent Developments

     As previously announced, the Company’s Board of Directors approved pursuing a plan that eliminates the Company’s holding company structure, results in the sale of certain of FNF’s assets and liabilities to Fidelity National Title Group, Inc. (“FNT”) in exchange for shares of FNT stock, distributes FNF’s ownership stake in FNT to FNF shareholders (collectively, the “Proposed Transactions”) and subsequently merges FNF with and into Fidelity National Information Services, Inc. (“FIS”). On June 25, 2006, FNF entered into a Securities Exchange and Distribution Agreement (the “SEDA”) with FNT, providing for the completion of the Proposed Transactions. Also on June 25, 2006, FNF entered into an Agreement and Plan of Merger with FIS, providing for the merger of FNF with and into FIS and the distribution to FNF stockholders of FIS stock in exchange for their FNF shares. Pursuant to the SEDA and after the Proposed Transactions are complete, FNT, which will consist primarily of FNF’s current specialty insurance and Sedgwick CMS business lines in addition to FNT’s current title insurance business, will be renamed Fidelity National Financial, Inc. (“New FNF”) and will trade under the symbol FNF. FNF’s current chairman of the board and chief executive officer, William P. Foley, II, will assume the same positions in New FNF and the position of executive chairman of the board of FIS. Other key members of FNF’s senior management will also continue their involvement in both New FNF and FIS in executive capacities. On July 18, 2006, FNT filed a Schedule 14C Preliminary Information Statement and FIS filed a Form S-4 proxy and registration statement with the Securities and Exchange Commission (“SEC”) and, on July 26, 2006, FNT filed a Form S-1 registration statement with the SEC. Completion of the transaction is subject to a number of conditions, including but not limited to:

approval of the shareholders of each of FNF, FNT and FIS; the receipt of a private letter ruling from the Internal Revenue Service and an opinion of FNF’s special tax advisors that the Proposed Transactions and the merger between FNF and FIS will be tax-free to FNF and its stockholders; the receipt of all necessary regulatory approvals for the transfer of FNF’s specialty insurance operations to FNT and for the spin-off of FNT to the shareholders of FNF; the receipt of necessary approvals under credit agreements of FNF, FNT and FIS and any other material agreements; and other conditions set forth in the definitive agreements for the transactions. The Company expects the Proposed Transactions to close late in the third quarter or early in the fourth quarter of 2006.

Note B — Acquisitions

     The results of operations and financial position of the entities acquired during any year are included in the Consolidated Financial Statements from and after the date of acquisition. The Company employs an outside third party valuation firm to value the identifiable intangible and tangible assets and liabilities of each of its acquisitions. Based on this valuation any differences between the fair value of the identifiable assets and liabilities and the purchase price paid is recorded as goodwill.

Certegy Inc.

     On September 14, 2005, the Company through Fidelity National Information Services, Inc. (“Former FIS”) entered into a definitive merger agreement with Certegy, Inc. (“Certegy”) under which FIS and Certegy combined operations to form a single publicly traded company called Fidelity National Information Services, Inc. (NYSE:FIS). Certegy was a payment processing company headquartered in St. Petersburg, Florida. On January 26, 2006, Certegy’s shareholders approved the merger which was subsequently consummated on February 1, 2006.

     As a result of the merger, FIS is one of the largest providers of processing services to U.S. financial institutions, with market-leading positions in core processing, card issuing services, check risk management, mortgage processing, and lending services.

     Under the terms of the merger agreement, FIS was merged into a wholly owned subsidiary of Certegy in a tax-free merger, and all of FIS’s outstanding stock was converted into Certegy common stock. As a result of the merger:

	•		FIS’s pre-merger shareholders owned approximately 67.4% of the combined company’s outstanding common stock immediately after the merger, while Certegy’s pre-merger shareholders owned approximately 32.6%,
	•		FNF and its subsidiaries now own approximately 51% of the combined company’s outstanding common stock, and
	•		the combined company’s board of directors was reconstituted so that a majority of the board now consists of directors designated by FIS’s stockholders.

     In connection with the merger, Certegy amended its articles of incorporation to increase the number of authorized shares of capital stock from 400 million shares to 800 million shares, with 600 million shares being designated as common stock and 200 million shares being designated as preferred stock. Additionally, Certegy amended its Stock Incentive Plan to increase the total number of shares of common stock available for issuance by an additional 6 million shares, and to increase the limits on the number of options, restricted shares, and other awards that may be granted to any individual in any calendar year. These changes were approved by Certegy’s shareholders on January 26, 2006.

     As part of the merger transaction, Certegy declared a $3.75 per share special cash dividend that was paid to Certegy’s pre-merger shareholders. This dividend, totaling $236.6 million, was paid by Certegy at the consummation of the merger.

     Generally accepted accounting principles in the U.S. require that one of the two companies in the transaction be designated as the acquirer for accounting purposes. FIS was designated as the accounting acquirer because immediately after the merger its shareholders held more than 50% of the common stock of the combined company. As a result, the merger was accounted for as a reverse acquisition under the purchase method of accounting. Under

this accounting treatment, FIS was considered the acquiring entity and Certegy was considered the acquired entity for financial reporting purposes.

     The purchase price was based on the number of outstanding shares of common stock of Certegy on February 1, 2006, the date of consummation of the merger, valued at $33.38 per share (which was the average of the trading price of Certegy common stock two days before and two days after the announcement of the merger on September 15, 2005 of $37.13, less the $3.75 per share special dividend declared prior to closing). The purchase price also included an estimated fair value of Certegy’s stock options and restricted stock units outstanding at the transaction date.

     The total purchase price was as follows (in millions):

Value of Certegy’s common stock		$	2,121.0
Value of Certegy’s stock options			54.2
FIS’s estimated transaction costs			5.9
		$	2,181.1

     The transaction was accounted for by FIS under the purchase method of accounting, and as a result, the purchase price was allocated to Certegy’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of February 1, 2006. Goodwill was recorded based on the amount that the purchase price exceeds the fair value of the net assets acquired. The purchase price allocation was as follows (in millions):

Tangible assets		$	829.7
Computer software			143.6
Intangible assets			657.5
Goodwill			1,888.9
Liabilities assumed			(1,338.6	)
Total purchase price		$	2,181.1

     The allocation of the purchase price to intangible assets, including computer software, was based on studies and valuations that are currently being finalized. Such purchase accounting adjustments may be refined as additional information becomes available. In connection with the merger of FIS and Certegy, FNF’s basis in FIS was $73.6 million lower than it would have been if FNF had applied purchase accounting to all shareholders’ interests. This basis difference was recorded as a reduction of goodwill and minority interests in FNF’s consolidation.

     The following table summarizes the liabilities assumed that impact the purchase price allocation (in millions):

Notes payable and capital lease obligations		$	222.8
Deferred income taxes			260.4
Dividends payable			236.6
Dividend bridge loan			239.0
Liabilities associated with pension, SERP, and Postretirement benefit plans			32.6
Estimated severance payments to certain Certegy employees			10.0
Estimated employee relocation and facility closure costs			9.5
Other merger related			28.5
Other operating liabilities			299.2
		$	1,338.6

     In connection with the merger, FIS announced that it will terminate and settle the Certegy U.S Retirement Income Plan (pension plan). The estimated impact of this settlement has been reflected in the purchase price allocation as an increase in the pension liability, less the fair value of the pension plan assets, based on estimates of the total cost to settle the liability through the purchase of annuity contracts or lump sum settlements to the beneficiaries. The final settlement will not occur until after an IRS determination has been obtained. In addition to the pension plan obligation, FIS assumed liabilities for Certegy’s Supplemental Executive Retirement Plan (“SERP”) and Postretirement Benefit Plan. The total liability recorded as part of the purchase price allocation related to all three plans, net of the fair value of plan related assets, was $32.6 million.

     FIS has been and is still in the process of evaluating certain lease agreements and vendor arrangements of Certegy. This evaluation has resulted in the recognition of certain liabilities associated with exiting activities of the acquired company. Modification to the amounts recorded related to the closure of duplicate facilities, employee relocation, or vendor contract terminations could result in changes in the assumed liabilities and goodwill in subsequent periods, though any changes are not expected to be significant.

     Also, the merger triggered the performance criteria relating to FIS’s stock option grant made in March 2005 and these awards vested when the trading value of the Company’s stock remained above $31.27 for 45 days following the Merger. As a result, the Company recorded a charge of $24.5 million in the first six months of 2006.

     Selected unaudited pro forma combined results of operations for the six months ended June 30, 2006 and 2005, assuming the Certegy merger had occurred as of January 1, 2005, and using actual general and administrative expenses prior to the acquisition are set forth below (in thousands):

		Six months ended June 30,
		2006				2005(a)
Total revenue		$	5,092,183			$	5,241,735
Net earnings		$	192,369			$	614,061
Pro forma earnings per share — basic		$	1.10			$	3.55
Pro forma earnings per share — diluted		$	1.07			$	3.47

Other Transactions:

     Cascade Timberlands LLC

     The Company began purchasing equity interests in Cascade Timberlands LLC (“Cascade Timberlands”) in March 2006. As of June 30, 2006, the Company had acquired approximately 71% of Cascade Timberlands for $89.2 million. The primary assets of Cascade Timberlands are approximately 293,000 acres of productive timberlands located on the eastern side of the Cascade mountain range extending from Bend, Oregon south on State Highway 20 toward the California border. Cascade Timberlands was created by the secured creditors of Crown Pacific LP upon the conclusion of the bankruptcy case of Crown Pacific LP in December 2004.

Acquisition of Equity Interest in Sedgwick

     On January 31, 2006, the Company, along with our equity partners, Thomas H. Lee Partners (“THL”) and Evercore Capital Partners, completed an acquisition of a 40% interest in Sedgwick CMS Holdings, Inc. (“Sedgwick”), for approximately $126 million. Sedgwick, headquartered in Memphis, Tennessee, is a leading provider of outsourced insurance claims management services to large corporate and public sector entities.

     Service Link L.P.

     On August 1, 2005, the Company acquired Service Link, L.P. (“Service Link”), a national provider of centralized mortgage and residential real estate title and closing services to major financial institutions and institutional lenders. The initial acquisition price was approximately $110 million in cash. It is probable that the Company will owe additional contingent consideration related to this purchase in the third quarter of 2006, the amount of which will be based on Service Link’s earnings before interest, taxes, depreciation and amortization over a 12-month period ending in July 2006. The Company is not currently able to determine the amount of contingent consideration that will be owed, but, based on current information, the amount is estimated to be approximately $60 million as of June 30, 2006.

Note C — Recapitalization Transactions

Distribution of Fidelity National Title Group, Inc.

     On October 17, 2005, the Company completed a pro rata distribution of shares, representing 17.5% of the outstanding common stock of FNT, to the Company’s shareholders. This distribution completed a restructuring that resulted in FNT becoming the parent company of the Company’s title insurance businesses. Following the distribution, FNT became a majority-owned subsidiary of FNF and a separate registrant reporting its results on a stand-alone basis. The Company continues to consolidate FNT in our results, and subsequent to the distribution, the Company began recording minority interest liabilities and expense relating to the 17.5% minority interest. This restructuring was a taxable transaction to the Company and the Company’s shareholders. The Company recognized income tax expense of approximately $108 million in the fourth quarter of 2005 relating to this restructuring which was paid in the first quarter of 2006.

Recapitalization of Former FIS in 2005

     The recapitalization of Former FIS was completed on March 9, 2005 through $2.8 billion in borrowings under new senior credit facilities consisting of an $800 million Term Loan A facility, a $2.0 billion Term Loan B facility (collectively, the “Term Loan Facilities”) and an undrawn $400 million revolving credit facility (the “Revolver”). Former FIS fully drew upon the entire $2.8 billion in Term Loan Facilities, while the Revolver remained undrawn at the closing. The current interest rate on both the Term Loan Facilities and the Revolver is LIBOR plus 1.25% to 1.75%. Bank of America, JP Morgan Chase, Wachovia Bank, Deutsche Bank and Bear Stearns led a consortium of lenders which provided the new senior credit facilities.

     The minority equity interest sale was accomplished through Former FIS selling an approximately 25% minority equity interest in the common stock of Former FIS to an investment group led by THL and Texas Pacific Group (“TPG”). Former FIS issued a total of 50 million shares of the common stock of Former FIS to the investment group for a total purchase price of $500 million, before certain expenses paid by Former FIS. The minority equity interest sale resulted in a non-operating gain of $318.2 million. This gain was calculated under the provisions of Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin Topic 5H (“SAB Topic 5H”) and relates to the issuance of securities of a non-wholly owned subsidiary. The gain represented the difference between the Company’s book value investment in Former FIS immediately prior to the transaction and its book value investment in Former FIS immediately following the transaction. No deferred income taxes were recorded in connection with this transaction as the tax basis of the investment was greater than the book basis on the date of the sale.

Note D — Earnings Per Share

     The Company presents “basic” earnings per share, representing net earnings divided by the weighted average shares outstanding (excluding all common stock equivalents), and “diluted” earnings per share, representing basic earnings per shared adjusted for the dilutive effect of all common stock equivalents. The following table illustrates the computation of basic and diluted earnings per share:

		Three months ended								Six months ended
		June 30,								June 30,
		2006				2005				2006				2005
		(In thousands, except								(In thousands, except
		per share amounts)								per share amounts)
Net earnings, basic		$	132,621			$	190,042			$	238,992			$	634,539
Dilution relating to common stock equivalents of subsidiary(1)			(1,184	)		$	—			$	(1,558	)		$	—
Net earnings, diluted		$	131,437			$	190,042			$	237,434			$	634,539
Weighted average shares outstanding during the period, basic			175,438				172,404				174,647				172,773
Plus: Common stock equivalent shares assumed from conversion of options			4,880				4,469				5,141				4,336
Weighted average shares outstanding during the period, diluted			180,318				176,873				179,788				177,109
Basic earnings per share		$	0.76			$	1.10			$	1.37			$	3.67
Diluted earnings per share		$	0.73			$	1.07			$	1.32			$	3.58

     Options to purchase 1,365,254 shares and 1,333,410 shares of the Company’s common stock for the three and six months ended June 30, 2006 and 2,002,885 shares and 3,331,485 shares for the three and six months ended June 30, 2005, respectively, were not included in the computation of diluted earnings per share because they were antidilutive.

Note E — Investments

     During the second quarter of 2005, the Company began lending fixed maturity and equity securities to financial institutions in short-term security lending transactions. The Company’s security lending policy requires that the cash received as collateral be 102% or more of the fair value of the loaned securities. These short-term security lending arrangements increase investment income with minimal risk. At June 30, 2006 and December 31, 2005, the Company had security loans outstanding with values of $243.9 million and $143.4 million, respectively, included in accounts payable and accrued liabilities and the Company held cash in the same amounts as collateral for the loaned securities.

     Gross 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, 2006 were as follows:

		Less than 12 Months								12 Months or Longer								Total
						Unrealized								Unrealized								Unrealized
		Fair Value				Losses				Fair Value				Losses				Fair Value				Losses
U.S. government and agencies		$	242,200			$	(11,218	)		$	642,116			$	(16,852	)		$	884,316			$	(28,070	)
States and political subdivisions			566,387				(12,692	)			337,284				(10,514	)			903,671				(23,206	)
Foreign government and agencies			31,354				(876	)			—				—				31,354				(876	)
Corporate securities			396,290				(16,420	)			295,911				(9,554	)			692,201				(25,974	)
Equity securities			149,898				(19,370	)			10,299				(7,393	)			160,197				(26,763	)
Total temporarily impaired securities		$	1,386,129			$	(60,576	)		$	1,285,610			$	(44,313	)		$	2,671,739			$	(104,889	)

     A substantial portion of the Company’s unrealized losses relate to its holdings of debt securities. Unrealized losses relating to U.S. government, state and political subdivision and fixed maturity corporate holdings were primarily caused by interest rate increases. Since the decline in fair value of these investments is attributable to changes in interest rates and not credit quality, and the Company has the intent and ability to hold these securities, the Company does not consider these investments other-than-temporarily impaired. The unrealized losses related to equity securities were caused by market changes that the Company considers to be temporary and thus the Company does not consider these investments other-than-temporarily impaired.

Note F — Stock-Based Compensation Plans

     The Company’s 1993 Stock Plan (“1993 Plan”) expired in June 2003. Options generally had a term of 10 years from the date of grant and were exercisable subject to the terms and conditions set by the Board of Directors. The per share option price was determined at the date of grant, provided that the price for incentive stock options shall not be less than 100% of their market value or award stock shares. A total of 599,802 stock options were outstanding under the 1993 Plan as of June 30, 2006. No further awards may be granted under this plan.

     In connection with the 1998 acquisition of FNF Capital, Inc. (formerly known as “Granite”), which was accounted for as a pooling-of-interests, the Company assumed 1,140,855 options outstanding under Granite’s existing stock option plan (the “Granite Plan”), of which 24,524 stock options were outstanding as of June 30, 2006. The Granite Plan provides that qualified stock options be granted at an exercise price equal to fair market value on the date of the grant with a term not to exceed 10 years. The Granite Plan alsoprovides that non-qualified stock options be granted at an exercise price not less than 85% of the fair market value on the date of grant with a term not to exceed 10 years.

     During 1998, stockholders approved the adoption of the 1998 Stock Incentive Plan (“1998 Plan”). The 1998 Plan authorizes up to 9,985,828 shares of common stock for issuance under the terms of the 1998 Plan. As of June 30, 2006, there were 6,773,219 options outstanding under this plan. The 1998 Plan provides for grants of “incentive stock options” as defined in Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options and rights to purchase shares of common stock (“Purchase Rights”). The term of options may not exceed 10 years from the date of grant (five years in the case of a person who owns or is deemed to own more than 10% of the total combined voting power of all classes of stock of the Company), and the right to exercise such options shall vest equally over three years. The option exercise price for each share granted pursuant to an incentive stock option may not be less than 100% of the fair market value of a share of common stock at the time such option is granted (110% of fair market value in the case of an incentive stock option granted to a person who owns more than 10% of the combined voting power of all classes of stock of the Company). There is no minimum purchase price for shares of common stock purchased pursuant to a Purchase Right, and any such purchase price shall be determined by the Board of Directors.

     In connection with the merger of Chicago Title, the Company assumed the options outstanding under Chicago Title’s existing stock option plans: the 1998 Long-Term Incentive Plan and the Director’s Stock Option Plan. Pursuant to the terms of the merger, options under these plans, totaling 5,304,456, became fully vested on March 20, 2000. The options granted in accordance with these two plans generally have a term of five to 10 years. As of June 30, 2006, there were 319,010 options outstanding under these plans.

     In 2001, stockholders approved the adoption of the 2001 Stock Incentive Plan (“2001 Plan”). The 2001 Plan authorized up to 4,026,275 shares of common stock for issuance under the terms of the 2001 Plan. As of June 30, 2006, there were 588,105 options outstanding under this plan. The 2001 Plan provides for grants of “incentive stock options” as defined in Section 422 of the Internal Revenue Code of 1986, as amended, nonqualified stock options, rights to purchase shares of common stock and deferred shares. The term of options may not exceed 10 years from the date of grant (five years in the case of an incentive stock option granted to a person who owns or is deemed to own more than 10% of the total combined voting power of all classes of stock of the Company), and are exercisable subject to the terms and conditions set by the Board of Directors. The option exercise price for each share granted pursuant to an incentive stock option may not be less than 100% of the fair market value of a share of common stock at the time such option is granted (110% of fair value in the case of an incentive stock option granted to a person who owns more than 10% of the combined voting power of all classes of stock of the Company). The option exercise price for each share granted pursuant to a nonqualified stock option may be less than the fair value of the

common stock at the date of grant to reflect the application of the optionee’s deferred bonus, if applicable. The 2001 Plan allows for exercise prices with a fixed discount from the quoted market price. Options were granted in 2003 at an exercise price of $15.36 to key employees of the Company who applied deferred bonuses expensed in 2002 amounting to $4.6 million to the exercise price. Pursuant to the terms of the 2001 Plan, there are no future exercise price decreases to options granted under this Plan in 2003 and beyond. In 2002, options were granted at an exercise price of $11.41 to key employees of the Company who applied deferred bonuses expensed in 2001 amounting to $5.7 million to the exercise price. The exercise price of these options decreases approximately $0.35 per year through 2007 and $.22 per year from 2008 through 2013, at which time the exercise price will be $8.33.

     In 2003, the Company issued to its non-employee Directors and to certain of its employees, rights to purchase 879,450 shares of restricted common stock (“Restricted Shares”) of the Company, pursuant to the 2001 Plan. A portion of the Restricted Shares vest over a five-year period and a portion of the Restricted Shares vest over a four-year period, of which one-fifth vested immediately on the date of grant. The Company recorded compensation expense of $3.3 million and unearned compensation expense of $23.0 million in connection with the issuance of Restricted Stock in 2003. The Company recorded compensation expense of $1.2 million and $1.2 million in the three-month periods ended June 30, 2006 and 2005, respectively, and $2.5 million and $2.5 million in the six-month periods ended June 30, 2006 and 2005, respectively, in connection with these shares. The Company used 769,450 shares of its common stock held as treasury shares and 110,000 newly issued common shares for the sale of Restricted Shares to its employees and directors. As of June 30, 2006 and December 31, 2005, 387,310 shares of non-vested restricted common stock were outstanding. Shares issued relating to this plan vest on the anniversary of the grant date which was November 18, 2003.

     In connection with the acquisition of ANFI, the Company assumed 988,389 options outstanding under ANFI’s existing option plans: the American National Financial, Inc. 1999 Stock Option Plan and the American National Financial, Inc. 1998 Stock Incentive Plan. The options granted under these plans generally had a term of 10 years. As of June 30, 2006, there were 413,173 options outstanding under these plans.

     In connection with the acquisition of FNIS, the Company assumed 2,585,387 options outstanding under FNIS’ existing option plans: the Fidelity National Information Solutions 2001 Stock Incentive Plan, the Vista Information Solutions, Inc. 1999 Stock Option Plan, the Micro General Corporation 1999 Stock Incentive Plan and the Micro General Corporation 1998 Stock Incentive Plan. The options granted under these plans generally had a term of 10 years. As of June 30, 2006, there were 782,946 options outstanding under these plans.

     In connection with the acquisition of Sanchez, the Company assumed 1,024,588 options outstanding under Sanchez’ 1995 Stock Incentive Plan. The option granted under this plan generally had a term of 8 years. As of June 30, 2006, there were 297,967 options outstanding under this plan.

     In connection with the acquisition of InterCept, the Company assumed 1,708,155 options outstanding under InterCept’s existing option plans: the 2002 InterCept Stock Option Plan, 1996 InterCept Stock Option Plan, 1994 InterCept Option Plan and the Boggs InterCept Stock Option Plan. The options granted under these plans were fully vested prior to the acquisition and the majority of them had a remaining term of 90 days which expired on February 7, 2005. As of June 30, 2006, there were 315,978 options outstanding under this plan.

     In 2004, stockholders approved the Fidelity National Financial 2004 Omnibus Incentive Plan (the “2004 Plan”). The 2004 Plan authorized up to 12,500,000 shares, plus the number of shares subject to prior plan awards that are outstanding as of the effective date of the 2004 Plan and that are deemed not delivered under the prior plans because of certain conditions. As of June 30, 2006, there were 2,908,382 options outstanding under this plan. The options granted under this plan have a life of 8 years and vest over a three year period. The 2004 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance shares, performance units, other stock-based awards and dividend equivalents.

     Beginning in 2005, FNT and FIS also both issued stock options and restricted stock through their own plans. The awards outstanding under these plans impact the Company’s diluted earnings per share based on the impact they would have on earnings available to the Company if the options and awards were exercised and diluted the Company’s ownership percentage in the respective subsidiaries. For purposes of computing earnings per diluted share, FNF has to analyze the dilutive impact of outstanding options at its public subsidiaries, Fidelity National Title

Group, Inc. and Fidelity National Information Services, Inc., and, if necessary, adjust the net earnings available to FNF shareholders before calculating earnings per diluted share. For the three-month and six month periods ended June 30, 2006, net earnings were reduced by $1.2 million and $1.6 million, respectively, resulting in a reduction of $0.01 in earnings per diluted share for each period.

     Transactions under all stock option plans, including stock options granted by the Company’s Board of Directors which are outside of the Company’s stock option plans, are as follows:

						Weighted Average
		Options				Exercise Price				Exercisable
Balance, December 31, 2005			15,890,293			$	18.47				11,480,299
Granted			183,500				39.20
Exercised			(2,254,113	)			12.10
Cancelled/Expired			(156,250	)			40.37
Balance, June 30, 2006			13,663,430			$	18.94				9,243,045

The aggregate intrinsic value of options exercised in the six month periods ended June 20, 2006 and 2005 was $61.1 million and $86.1 million, respectively.

     The following table summarizes information related to stock options outstanding and exercisable as of June 30, 2006:

Options Outstanding																		Options Exercisable
						Weighted								Intrinsic								Weighted
						Average				Weighted				Value at								Average				Weighted				Intrinsic
						Remaining				Average				June 30,								Remaining				Average				Value at
Range of Exercise		Number of				Contractual				Exercise				2006 (in				Number of				Contractual				Exercise				June 30,
Prices		Options				Life				Price				thousands)				Options				Life				Price				2006
$      .02 — 5.97			2,067,136				2.73			$	4.79			$	70,614				2,067,136				2.73			$	4.79			$	70,614
5.98 — 9.35			1,188,191				4.46				7.54				37,317				1,188,191				4.46				7.72				37,317
9.36 — 9.52			1,236,372				4.79				9.52				36,383				1,236,372				4.79				9.52				36,383
9.53 — 11.10			1,358,627				3.56				10.48				38,684				1,358,627				3.56				10.48				38,684
11.11— 24.83			1,872,685				5.69				16.33				42,363				1,695,826				5.68				15.45				39,856
24.84 — 25.32			2,534,430				6.20				25.32				34,545				640,426				6.20				25.32				8,729
25.33 — 32.61			221,358				3.70				29.09				2,182				193,394				3.20				29.22				1,881
32.62 — 33.03			1,748,574				6.25				33.02				10,364				591,308				6.18				33.02				3,507
33.04 — 42.02			1,183,626				7.49				35.67				3,878				19,334				3.26				34.47				87
42.03 — 171.86			252,431				4.68				50.66				(2,957	)			252,431				4.68				50.66				(2,957	)
$      .02 — 171.86			13,663,430				5.11			$	18.94			$	273,373				9,243,045				4.67			$	13.65			$	234,101

     During the first quarter of 2006, the Company began accounting for stock based compensation under the provisions of SFAS 123R “Share Based Payment” (“SFAS No. 123R”) issued in December 2004 under the modified prospective method. Previous to this adoption, the Company had adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), for stock-based employee compensation in 2003. Under the fair value method of accounting, compensation cost is measured based on the fair value of the award at the grant date and recognized over the service period. In 2003, the Company elected to use the prospective method of transition, as permitted by Statement of Financial Accounting Standards No. 148, “Accounting for Stock- Based Compensation — Transition and Disclosure” (“SFAS No. 148”). Under the fair value method, stock-based employee compensation cost is recognized from the beginning of 2003 as if the fair value method of accounting had been used to account for all employee awards granted, modified, or settled in years beginning after December 31, 2002. Prior year financial statements were not restated. The adoption of SFAS 123R using the modified prospective method did not have a material impact on the Company’s fianancial position or results of operations for the first six months of 2006 as all options that were previously accounted for under prior methods were fully vested as of December 31, 2005. Net income reflects

expenses of $11.3 million and $9.9 million for the quarters ended June 30, 2006 and 2005, respectively, and $45.6 million and $17.1 million for the six-month periods ended June 30, 2006 and 2005, respectively, which is included in personnel costs in the reported financial results. The expense for the first six months of 2006 included $24.5 million in expense relating to performance based options at FIS for which the performance and market based criteria were met during the first quarter.

     The fair value for these options was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted average assumptions. The risk free interest rates used in the calculation are the rate that corresponds to the weighted average expected life of an option. The risk free interest rate used for options granted during the first six months of 2006 was 4.88%. A volatility factor for the expected market price of the common stock of 28.5% was used for options granted in the first six months of 2006. The expected dividend yield used for the first six months of 2006 was 2.6%. A weighted average expected life of 4.1 years was used for the first six months of 2006. The weighted average fair value of each option granted during the first six months of 2006 was $9.25. There were no options granted in the first six months of 2005.

     Pro forma information regarding net earnings and earnings per share is required by SFAS 123R, and has been determined as if the Company had accounted for all of its employee stock options under the fair value method of that statement. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to all outstanding and unvested awards for the three-month and six-month periods ended June 30, 2005:

		Three months ended				Six months ended
		June 30, 2005				June 30, 2005
		(In thousands, except
		per share amounts)
Net earnings, as reported		$	190,042			$	634,539
Add: Stock-based compensation expense included in reported net earnings, net of related tax effects			6,162				10,569
Deduct: Total stock-based compensation expense determined under fair value based methods for all awards, net of related tax effects			(6,457	)			(11,233	)
Pro forma net earnings		$	189,747			$	633,875
Earnings per share:
Basic — as reported		$	1.10			$	3.67
Basic — pro forma		$	1.10			$	3.67
Diluted — as reported		$	1.07			$	3.58
Diluted — pro forma		$	1.07			$	3.57

     At June 30, 2006, the total unrecognized compensation cost related to nonvested stock option grants was $24.6 million, which is expected to be recognized in pre-tax income over a weighted average period of 1.25 years and the total unrecognized compensation cost related to nonvested restricted stock grants is $8.7 million, which is expected to be recognized in pre-tax income over a weighted average period of 1.4 years. Also included in our consolidated stock-based compensation costs are stock based compensation at FNT and FIS. At June 30, 2006, the total unrecognized compensation costs related to FNT non-vested stock option grants was $7.4 million, which is expected to be recognized in pre-tax income over a weighted average period of 3.3 years and the total unrecognized compensation costs related to FNT non-vested restricted stock grants was $13.0 million, which is expected to be recognized in pre-tax income over a weighted average period of 3.3 years. At June 30, 2006, the total unrecognized compensation costs related to FIS non-vested stock option grants is $46.3 million, which is expected to be recognized in pre-tax income over a weighted average period of 2.0 years. There are no outstanding restricted stock grants at FIS.

Note G — Notes Payable

     Notes payable consist of the following:

		June 30,				December 31,
		2006				2005
FIS Term Loan A Facility, secured, interest payable at LIBOR plus 1.25% (6.42% at June 30, 2006), 0.25% quarterly principal amortization, due March, 2011		$	790,000			$	794,000
FIS Term Loan B Facility, secured, interest payable at LIBOR plus 1.75% (6.92% at June 30, 2006), 0.25% quarterly principal amortization, due March, 2013			1,730,000				1,760,000
FIS Syndicated credit agreement, secured, interest due quarterly at LIBOR plus 1.25% (Eurodollar borrowings) and Prime plus 0.25% (Base Rate borrowings) (6.57% and 8.50% at June 30, 2006), unused portion of $270 million at June 30, 2006 maturing March 2011			130,000				—
FNT Syndicated credit agreement, unsecured, at LIBOR plus 0.4%,(5.9% at June 30, 2006, unused portion of $325 million at June 30, 2006)			75,000				100,000
Syndicated credit agreement, unsecured, interest due quarterly at LIBOR plus 0.625%, undrawn, unused portion of $250 million at June 30, 2006			—				—
Unsecured notes, net of discount, interest payable semi-annually at 4.75%, due September 2008			194,779				—
Unsecured notes, net of discount, interest payable semi-annually at 7.30%, due August 2011			247,461				249,437
Unsecured notes net of discount, interest payable semi-annually at 5.25%, due March 2013			248,758				248,651
Other promissory notes with various interest rates and maturities			103,944				64,931
		$	3,519,942			$	3,217,019

     Through the merger with Certegy, the Company through FIS has an obligation to service $200 million (aggregate principal amount) of unsecured 4.75% fixed-rate notes due in 2008. The notes were recorded in purchase accounting at a discount of $5.7 million, which is being amortized over the term of the notes. The notes accrue interest at a rate of 4.75% per year, payable semi-annually in arrears on each March 15 and September 15. Through this merger, the Company also assumed approximately $22.2 million in other notes payable and as result of the merger FIS borrowed $180.0 million on its line of credit of which $50.0 million was repaid prior to June 30, 2006.

     Principal maturities of notes payable at June 30, 2006, are as follows (dollars in thousands):

2006		$	36,971
2007			44,751
2008			241,177
2009			49,898
2010			105,995
Thereafter			3,041,150
		$	3,519,942

Note H — Segment Information

     During 2005, the Company restructured its business segments to more accurately reflect a change in the Company’s current operating structure. Accordingly previously reported segment information has been restated to be consistent with the current presentation.

     Summarized financial information concerning the Company’s reportable segments is shown in the following table.

     As of and for the three months ended June 30, 2006 (dollars in thousands):

						Fidelity National
		Fidelity National				Information				Specialty				Corporate
		Title Group, Inc.				Services, Inc.				Insurance				and Other				Eliminations				Total
Title premiums		$	1,213,246			$	18,488			$	—			$	2,499			$	(18,253	)		$	1,215,980
Other revenues			299,529				1,003,459				97,708				1,491				(27,175	)			1,375,012
Intersegment revenue			—				(45,428	)			—				—				45,428				—
Revenues from external customers		$	1,512,775			$	976,519			$	97,708			$	3,990			$	—			$	2,590,992
Interest and investment income, including realized gains and (losses)			43,786				2,446				3,741				3,804				—				53,777
Total revenues		$	1,556,561			$	978,965			$	101,449			$	7,794			$	—			$	2,644,769
Depreciation and amortization			27,194				110,374				1,502				(1,101	)			—				137,969
Interest expense			12,374				49,033				325				1,228				—				62,960
Earnings (loss) before income tax and minority interest			181,979				106,333				15,473				(7,004	)			—				296,781
Income tax expense			64,603				40,621				6,049				(871	)			—				110,402
Minority interest			863				(317	)			—				53,212				—				53,758
Net earnings (loss)		$	116,513			$	66,029			$	9,424			$	(58,453	)			—			$	132,621
Assets			6,199,666				7,342,785				462,134				399,794				—				14,404,379
Goodwill			1,051,523				3,697,900				44,856				(61,487	)			—				4,732,792

     As of and for the three months ended June 30, 2005 (dollars in thousands):

						Fidelity National
		Fidelity National				Information				Specialty				Corporate
		Title Group, Inc.				Services, Inc.				Insurance				and Other				Eliminations				Total
Title premiums		$	1,332,878			$	18,352			$	—			$	1,082			$	(19,111	)		$	1,333,201
Other revenues			311,273				690,361				77,320				5,423				(35,676	)			1,048,701
Intersegment revenue			—				(54,787	)			—				—				54,787				—
Revenues from external customers		$	1,644,151			$	653,926			$	77,320			$	6,505			$	—			$	2,381,902
Interest and investment income, including realized gains and (losses)			40,687				2,054				1,770				6,103				—				50,614
Total revenues		$	1,684,838			$	655,980			$	79,090			$	12,608			$	—			$	2,432,516
Depreciation and amortization			24,523				75,362				948				4,399				—				105,232
Interest expense			421				36,388				23				10,196				—				47,028
Earnings (loss) before income tax and minority interest			259,297				83,254				11,500				(16,249	)			—				337,802
Income tax expense			97,774				32,069				4,393				(4,183	)			—				130,053
Minority interest			945				2,609				—				14,153				—				17,707
Net earnings (loss)		$	160,578			$	48,576			$	7,107			$	(26,219	)			—			$	190,042
Assets			5,973,378				4,068,759				273,180				371,714				—				10,687,031
Goodwill			962,587				1,746,656				23,842				11,883				—				2,744,968

     As of and for the six months ended June 30, 2006 (dollars in thousands):

						Fidelity National
		Fidelity National				Information				Specialty				Corporate
		Title Group, Inc.				Services, Inc.				Insurance				and Other				Eliminations				Total
Title premiums		$	2,289,435			$	37,103			$	—			$	1,286			$	(36,868	)		$	2,290,956
Other revenues			564,086				1,885,779				204,451				3,222				(66,296	)			2,591,242
Intersegment revenue			—				(103,164	)			—				—				103,164				—
Revenues from external customers		$	2,853,521			$	1,819,718			$	204,451			$	4,508			$	—			$	4,882,198
Interest and investment income, including realized gains and (losses)			95,032				5,178				7,393				9,467				—				117,070
Total revenues		$	2,948,553			$	1,824,896			$	211,844			$	13,975			$	—			$	4,999,268
Depreciation and amortization			53,431				207,169				2,972				(972	)			—				262,600
Interest expense			23,700				92,301				581				1,023				—				117,605
Earnings (loss) before income tax and minority interest			305,263				170,588				47,931				(7,252	)			—				516,530
Income tax expense			108,369				65,207				18,615				(42	)			—				192,149
Minority interest			1,279				(6	)			—				84,116				—				85,389
Net earnings (loss)		$	195,615			$	105,387			$	29,316			$	(91,326	)			—			$	238,992
Assets			6,199,666				7,342,785				462,134				399,794				—				14,404,379
Goodwill			1,051,523				3,697,900				44,856				(61,487	)			—				4,732,792

     As of and for the six months ended June 30, 2005 (dollars in thousands):

						Fidelity National
		Fidelity National				Information				Specialty				Corporate
		Title Group, Inc.				Services, Inc.				Insurance				and Other				Eliminations				Total
Title premiums		$	2,321,596			$	37,292			$	—			$	964			$	(38,051	)		$	2,321,801
Other revenues			563,485				1,323,001				152,828				1,189				(57,280	)			1,983,223
Intersegment revenue			—				(95,331	)			—				—				95,331				—
Revenues from external customers		$	2,885,081			$	1,264,962			$	152,828			$	2,153			$	—			$	4,305,024
Gain on issuance of subsidiary stock			—				—				—				318,209				—				318,209
Interest and investment income, including realized gains and (losses)			64,077				3,528				3,145				9,271				—				80,021
Total revenues		$	2,949,158			$	1,268,490			$	155,973			$	329,633			$	—			$	4,703,254
Depreciation and amortization			49,389				151,103				1,967				100				—				202,559
Interest expense			724				49,809				23				20,979				—				71,535
Earnings (loss) before income tax and minority interest			390,826				158,320				25,009				293,927				—				868,082
Income tax expense			146,637				60,894				9,553				(6,696	)			—				210,388
Minority interest			1,292				4,254				—				17,609				—				23,155
Net earnings (loss)		$	242,897			$	93,172			$	15,456			$	283,014				—			$	634,539
Assets			5,973,378				4,068,759				273,180				371,714				—				10,687,031
Goodwill			962,587				1,746,656				23,842				11,883				—				2,744,968

     The activities of the reportable segments include the following:

  Fidelity National Title Group, Inc.

     This segment consists of the operation of FNF’s majority owned subsidiary, FNT. FNT’s title insurance underwriters — Fidelity National Title, Chicago Title, Ticor Title, Security Union Title and Alamo Title — together issued approximately 29.0% of all title insurance policies issued nationally during 2005. FNT provides core title insurance and escrow and other title related services including collection and trust activities, trustee’s sales guarantees, recordings and reconveyances.

  Fidelity National Information Services, Inc.

     This segment consists of the operation of FNF’s majority owned subsidiary, FIS, which provides transaction processing services, consisting principally of technology solutions for banks and other financial institutions, credit and debit card services and check risk management and related services for retailers and others. FIS also provides lender processing services, consisting principally of technology solutions for mortgage lenders, selected mortgage origination services such as title agency and closing services, default management and mortgage information services.

  Specialty Insurance

     This segment, consisting of various non-title insurance subsidiaries, issues flood, home warranty and homeowners insurance policies.

  Corporate and Other

     The corporate and other segment consists of the operations of the FNF parent holding company (including certain smaller businesses and investments) and certain other unallocated corporate overhead expenses.