Business Context and Reporting Period
This Form 8-K was filed by Fidelity National Financial, Inc. (FNF) on May 30, 2018. The report primarily addresses two significant events: the execution of a Merger Agreement with Stewart Information Services Corporation dated March 18, 2018, and the adoption of a new accounting standard (ASU No. 2016-18) regarding the presentation of restricted cash in statements of cash flows.
Key Financial Metrics and Adjustments
The filing does not report current period revenue, profit, or operating cash flow. Instead, it details retrospective adjustments to historical Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015, resulting from the adoption of ASU No. 2016-18.
| Year Ended Dec 31 | Net Change in Cash & Equivalents | Cash from Investing Activities | Cash from Financing Activities |
|---|---|---|---|
| 2017 | +$144 million | +$174 million | -$30 million |
| 2016 | +$223 million | +$63 million | +$160 million |
| 2015 | -$29 million | -$110 million | +$79 million |
Additionally, the adoption resulted in a $2 million increase in cash provided by operating activities for 2015. These changes reflect the reclassification of cash pledged against secured trust deposits from operating to investing and financing activities.
Material Changes and Events
- Merger Agreement: On March 18, 2018, FNF, through its subsidiaries Merger Sub I and Merger Sub II, entered into an Agreement and Plan of Merger with Stewart Information Services Corporation.
- Form S-4 Filing: On May 30, 2018, FNF filed a registration statement on Form S-4, including a proxy statement/prospectus, regarding the issuance of FNF Group common stock to Stewart stockholders.
- Accounting Standard Adoption: FNF adopted ASU No. 2016-18 effective January 1, 2018, requiring retrospective application to prior periods presented in the Form S-4.
Guidance, Outlook, and Risks
The filing contains forward-looking statements regarding the proposed merger and future financial results, noting that actual results may differ materially from projections. Key risks identified include:
- Failure of Stewart stockholders to adopt the merger agreement.
- Failure to obtain necessary regulatory approvals or obtaining them with unanticipated conditions.
- Failure to satisfy closing conditions in a timely manner.
- Integration risks, including potential difficulties, delays, or costs exceeding expectations.
- General economic risks, including changes in real estate activity, interest rates, and mortgage funding supply.
- Dependence on distributions from title insurance underwriters as a primary cash flow source.
Investor Verification Checklist
- Verify the status of the proposed merger with Stewart Information Services Corporation and the outcome of the proxy vote.
- Review the Form S-4 filed on May 30, 2018, for detailed terms of the merger and the proxy statement/prospectus.
- Confirm the receipt of necessary regulatory approvals for the transaction.
- Assess the impact of the ASU No. 2016-18 adoption on historical cash flow analysis when comparing periods.
- Monitor integration progress and potential costs post-closing.