FNF

Business Context and Reporting Period

Company: Fidelity National Title Group, Inc. (FNT), a majority-owned subsidiary of Fidelity National Financial, Inc. (FNF).
Reporting Date: June 25, 2006.
Event: Entry into a Material Definitive Agreement (Securities Exchange and Distribution Agreement or "SEDA") and an Agreement and Plan of Merger. The filing details a corporate restructuring where FNF will spin off FNT to its shareholders and subsequently merge into its other subsidiary, Fidelity National Information Services, Inc. (FIS).

Key Financial Metrics and Transaction Terms

Note: This filing describes a corporate restructuring and does not contain standard periodic financial statements (e.g., revenue, net income, or cash flow for a fiscal period).

• Asset Contribution: FNF will contribute substantially all assets (excluding its interest in FIS) to FNT. This includes up to $275 million in cash.
• Consideration: FNT will issue Class A common stock to FNF equal to 34,042,553 shares plus an amount calculated based on cash contributed (cash divided by $23.50).
• Liability Cap: A closing condition requires that total liabilities of FNF to be assumed by FNT do not exceed $100 million on an unconsolidated GAAP basis.
• Executive Compensation (2006):
  • William P. Foley, II: $500,000 base salary; 300% bonus opportunity; 475,000 restricted shares.
  • Brent B. Bickett: $300,000 base salary; 150% bonus opportunity; 130,000 restricted shares.
  • Alan S. Stinson: $300,000 base salary; 150% bonus opportunity; 130,000 restricted shares.
• Stock Plan Amendment: FNT will increase shares available for issuance under its stock incentive plan by 6,500,000 shares.

Material Changes and Transaction Structure

The filing outlines a three-step transaction sequence:

1. Asset Contribution: FNF transfers assets to FNT in exchange for FNT Class A stock.
2. Spin-off: FNF distributes all FNT Class A shares (including converted Class B shares) to FNF stockholders as a dividend.
3. Merger: FNF merges into FIS, ceasing its separate existence, with FIS as the surviving entity.

Following the transaction, FNT will change its name to "Fidelity National Financial, Inc." William P. Foley, II will serve as Chairman and CEO of FNT, while Alan L. Stinson will serve as COO. Three executives will serve as "Dual Executives" for both FNT and FIS.

Guidance, Risks, and Contingencies

Closing Conditions: The transaction is contingent upon several factors, including:

• Receipt of a private letter ruling from the IRS and a tax opinion confirming the transaction is tax-free to FNF and its stockholders.
• Stockholder approval by FNT.
• SEC clearance of information statements and registration statements.
• Governmental and regulatory consents, specifically for specialty insurance operations.
• Third-party consents under credit agreements.

Tax and Legal Risks:

• Tax Disaffiliation: A Tax Disaffiliation Agreement (TDA) will allocate tax responsibilities for periods prior to the Spin-off. FNT will indemnify FNF/FIS for federal consolidated taxes prior to the Spin-off.
• Restrictions on Stock Acquisitions: For two years post-Spin-off, acquisitions or issuances of FIS or FNT stock are restricted unless an opinion confirms the transaction will not cause the Spin-off to become taxable.
• Indemnification: A Cross-Indemnity Agreement covers losses arising from operations, breaches of law, and third-party claims related to the transaction.

Investor Verification Checklist

• Verify the receipt of the IRS private letter ruling confirming tax-free treatment of the Spin-off.
• Confirm FNT stockholder approval of the SEDA, stock plan amendment, and name change.
• Monitor the status of regulatory consents for the transfer of specialty insurance operations.
• Review the final unconsolidated balance sheet of FNF to ensure liabilities assumed by FNT remain under the $100 million cap.
• Check for the filing of the Form S-1 registration statement for the FNT shares to be distributed in the Spin-off.