FIS

Business Context and Reporting Period

Company: Fidelity National Information Services, Inc. (FIS)
Filing Type: Form 8-K (Current Report)
Date of Report: June 25, 2006
Event: Entry into a Material Definitive Agreement involving a corporate restructuring.

On June 25, 2006, Fidelity National Financial, Inc. (FNF) entered into an Agreement and Plan of Merger with its majority-owned subsidiary, FIS, and a Securities Exchange and Distribution Agreement (SEDA) with its other majority-owned subsidiary, Fidelity National Title Group, Inc. (FNT). The transaction involves a spin-off of FNT to FNF shareholders followed by the merger of FNF into FIS, with FIS continuing as the surviving corporation.

Key Financial Metrics

This filing is a current report regarding a material definitive agreement and does not contain audited financial statements, revenue, profit, cash flow, or liquidity metrics for the reporting period.

• Revenue/Profit/Cash Flow: Not provided in this filing.
• Debt/Liquidity: Not provided in this filing.
• Transaction Consideration: FNF shareholders will receive FIS common stock based on a "Conversion Number" calculated as 96,214,500 shares of FIS (currently owned by FNF) divided by the aggregate number of FNF shares outstanding immediately prior to the merger. No premium or discount is associated with this conversion.

Material Changes Versus Prior Period

The filing details a significant corporate restructuring rather than operational performance changes:

• Corporate Structure: FNF will cease to exist as a separate entity, merging into FIS. FNT will be spun off to FNF shareholders prior to the merger.
• Ownership: FNF currently owns approximately 51% of FIS. Post-merger, FIS will be the surviving public entity.
• Stock Plan Adjustments: FIS agreed to amend its stock incentive plan to increase the number of shares available for issuance by 4,000,000 shares.

Guidance, Outlook, and Management Commentary

Management Changes:

• William P. Foley, II: Will become Executive Chairman of FIS. Compensation includes a $500,000 annual base salary, a cash bonus opportunity of 300% of base, and a grant of 830,000 FIS stock options.
• Lee A. Kennedy: Will remain President and CEO.
• Brent B. Bickett: Will become Executive Vice President – Strategic Planning. Compensation includes a $300,000 annual base salary, a 150% bonus opportunity, and 230,000 FIS stock options.
• Alan L. Stinson: Will become Executive Vice President – Finance. Compensation includes a $300,000 annual base salary, a 150% bonus opportunity, and 230,000 FIS stock options.

Conditions to Closing:

• Receipt of shareholder approvals from both FNF and FIS.
• SEC clearance of proxy statements and effectiveness of Form S-4 registration.
• IRS private letter ruling confirming the Merger qualifies as a tax-free reorganization (Section 368(a)) and the Spin-off qualifies as a tax-free spin-off (Section 355).
• Termination date: The agreement may be terminated if not consummated by December 31, 2006.

Risks and Contingencies:

• Tax Treatment: The transaction is contingent on maintaining tax-free status. FNT will indemnify FIS for taxes and adverse consequences if the Merger or Spin-off is determined to be taxable (unless caused by FIS breach).
• Stock Buy-Backs: FIS may be required to repurchase shares if the Merger Consideration does not constitute more than 50% of FIS shares outstanding immediately after the Merger.
• Restrictions: Stock acquisitions involving FIS or FNT are restricted for two years post-spin-off to preserve tax-free status.

Important Facts for Investor Verification

• Verify the final "Conversion Number" of FIS shares to be issued per FNF share once the exact share counts are finalized prior to the effective time.
• Confirm the receipt of the IRS private letter ruling and the SEC's declaration of effectiveness for the Form S-4 registration statement.
• Monitor the outcome of the required shareholder votes for both FNF and FIS.
• Review the Tax Disaffiliation Agreement (Exhibit 10.2) for specific indemnification liabilities regarding pre-spin-off tax periods.
• Check for any updates on the waiver of accelerated vesting for FIS options granted in February 2006.