LPS earnings hit by subsidiary exchange

Some of Lender Processing Services Inc.???s decline in earnings in the first quarter related to an exchange of two subsidiary companies that LPS shared an interest in with Fidelity National Financial Inc.

The Jacksonville-based mortgage processing service provider (NYSE: LPS) previously reported a 19 percent decline to $50 million in net earnings in the first quarter compared with the same time last year. The U.S. Securities and Exchange Commission released the full quarterly report Thursday.

Earnings attributable to LPS were impacted by a $2 million equity loss for acquiring the remaining 61 percent interest in Fidelity National Real Estate Solutions Holdings Inc., or FNRES, from Fidelity National Financial Inc. (NYSE: FNF). In exchange, FNF took all of LPS???s interest in a division called Property Exchange Services Inc.

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Because of the exchange, Lender Processing Services no longer receives revenue or expense reimbursements from FNF for FNRES.

LPS had a gross profit of $175.1 million in the first quarter, down 13 percent from the same time last year. The gross profit included revenue and expenses from both FNRES and Property Exchange.

Earnings were also impacted by a $21.9 million interest expense in the first quarter related to lines of credit and senior subordinated notes the company entered into after it spun off from Fidelity National Information Services Inc. (NYSE: FIS) in June.

Diluted earnings per share were 53 cents in the first quarter, down from 63 cents in the first three months of 2008.

At the end of April, when LPS released its initial first quarter report, the company said it expects second quarter earnings to range between 66 cents and 68 cents per share and 2009 earnings to be between $2.64 and $2.74 per share.