-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Hv4wFMFKvJeCIGKahDZORRzK7IGv6wLgq9XsGwhxaBEhBnPWZqIdeI6vjR6j1dSb GAWsbV0smvb/X4YRaN/r9w== 0000898430-95-001492.txt : 19950814 0000898430-95-001492.hdr.sgml : 19950814 ACCESSION NUMBER: 0000898430-95-001492 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST AMERICAN FINANCIAL CORP CENTRAL INDEX KEY: 0000036047 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 951068610 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03658 FILM NUMBER: 95560950 BUSINESS ADDRESS: STREET 1: 114 E FIFTH ST CITY: SANTA ANA STATE: CA ZIP: 92701-4699 BUSINESS PHONE: 7145583211 MAIL ADDRESS: STREET 1: 114 E FIFTH STREET CITY: SANTA ANA STATE: CA ZIP: 92701 FORMER COMPANY: FORMER CONFORMED NAME: FIRST AMERICAN TITLE INSURANCE & TRUST C DATE OF NAME CHANGE: 19690515 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________________ to ______________________ Commission file number 0-3658 ------------------------------------------------------- THE FIRST AMERICAN FINANCIAL CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Incorporated in California 95-1068610 --------------------------------------------- ------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 114 East Fifth Street, Santa Ana, California 92701-4699 ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (714)558-3211 ------------------------------------------------------------------- (Registrant's telephone number, including area code) ------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 X No __________ ----------- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ___________ No ___________ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. $1 par value - 11,395,950 as of August 7, 1995 INFORMATION INCLUDED IN REPORT ------------------------------ Part I: Financial Information Item 1. Financial Statements A. Condensed Consolidated Statements of Income B. Condensed Consolidated Balance Sheets C. Condensed Consolidated Statements of Cash Flows D. Notes to Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II: Other Information Item 6. Exhibits and Reports on Form 8-K Items 1-5 have been omitted because they are not applicable with respect to the current reporting period. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE FIRST AMERICAN FINANCIAL CORPORATION ---------------------------------------- (Registrant) /s/ Thomas Klemens ---------------------------------------- Thomas A. Klemens Vice President, Chief Financial Officer (Principal Financial Officer and Duly Authorized to Sign on Behalf of Registrant) Date: August 10, 1995 1 Part I: Financial Information --------------------- Item 1. Financial Statements -------------------- THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Statements of Income ------------------------------------------- (Unaudited)
For the Three Months Ended For the Six Months Ended June 30 June 30 -------------------------- --------------------------- 1995 1994 1995 1994 ------------ ----------- ------------ ------------ Revenues Operating revenues $286,748,000 $364,131,000 $543,036,000 $732,735,000 Investment and other income 6,492,000 4,880,000 11,358,000 8,712,000 ------------ ------------ ------------ ------------ 293,240,000 369,011,000 554,394,000 741,447,000 ------------ ------------ ------------ ------------ Expenses Salaries and other personnel costs 103,687,000 109,678,000 203,737,000 219,998,000 Premiums retained by agents 91,252,000 143,780,000 184,647,000 289,692,000 Other operating expenses 63,979,000 59,055,000 123,266,000 117,646,000 Provision for title losses and other claims 22,419,000 31,935,000 43,725,000 61,598,000 Depreciation and amortization 4,584,000 4,998,000 8,795,000 9,608,000 Interest 1,639,000 1,407,000 3,252,000 2,975,000 Minority interests 563,000 853,000 543,000 1,802,000 ------------ ------------ ------------ ------------ 288,123,000 351,706,000 567,965,000 703,319,000 ------------ ------------ ------------ ------------ Income (loss) before premium and income taxes 5,117,000 17,305,000 (13,571,000) 38,128,000 Premium taxes 3,280,000 3,871,000 6,101,000 8,196,000 ------------ ------------ ------------ ------------ Income (loss) before income taxes 1,837,000 13,434,000 (19,672,000) 29,932,000 Income taxes 700,000 5,800,000 (8,100,000) 12,900,000 ------------ ------------ ------------ ------------ Net income (loss) $ 1,137,000 $ 7,634,000 $(11,572,000) $ 17,032,000 ============ ============ ============ ============ Net income (loss) per share $ .10 $ .67 $ (1.01) $ 1.49 ============ ============ ============ ============ Cash dividends per share $ .15 $ .15 $ .30 $ .30 ============ ============ ============ ============ Weighted average number of shares 11,421,000 11,476,000 11,411,000 11,447,000 ============ ============ ============ ============
2 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Balance Sheets ------------------------------------- (Unaudited)
June 30, 1995 December 31, 1994 ---------------- ----------------- ASSETS Cash and cash equivalents $115,921,000 $154,234,000 ---------------- ----------------- Accounts and accrued income receivable, net 64,401,000 47,103,000 ---------------- ----------------- Income tax receivable 14,143,000 7,324,000 ---------------- ----------------- Investments: Deposits with savings and loan associations and banks 19,831,000 18,538,000 Debt securities 130,551,000 149,190,000 Equity securities 18,214,000 21,813,000 Other long-term investments 25,720,000 25,224,000 ---------------- ----------------- 194,316,000 214,765,000 ---------------- ----------------- Loans receivable, net 43,018,000 40,546,000 ---------------- ----------------- Property and equipment, at cost 186,108,000 175,214,000 Less - accumulated depreciation (69,703,000) (64,659,000) ---------------- ----------------- 116,405,000 110,555,000 ---------------- ----------------- Title plants and other indexes 76,015,000 54,781,000 ---------------- ----------------- Assets acquired in connection with claim settlements (net of valuation reserves of $12,830,000 and $12,354,000) 25,273,000 27,223,000 ---------------- ----------------- Deferred income taxes 37,088,000 43,726,000 ---------------- ----------------- Goodwill and other intangibles, net 67,868,000 61,322,000 ---------------- ----------------- Deferred policy acquisition costs 25,468,000 26,060,000 ---------------- ----------------- Other assets 42,594,000 41,010,000 ---------------- ----------------- $822,510,000 $828,649,000 ================ ================= LIABILITIES AND STOCKHOLDERS' EQUITY Demand deposits $ 39,864,000 $ 38,695,000 ---------------- ----------------- Accounts payable and accrued liabilities 61,229,000 60,806,000 ---------------- ----------------- Deferred revenue 110,108,000 117,828,000 ---------------- ----------------- Reserve for known and incurred but not reported claims 218,925,000 206,743,000 ---------------- ----------------- Notes and contracts payable 87,381,000 89,600,000 ---------------- ----------------- Minority interests in consolidated subsidiaries 21,811,000 22,867,000 ---------------- ----------------- Stockholders' equity: Preferred stock, $1 par value Authorized - 500,000 shares; Outstanding - None Common stock, $1 par value Authorized - 24,000,000 shares Outstanding - 11,403,000 and 11,395,000 shares 11,403,000 11,395,000 Additional paid-in capital 43,740,000 44,013,000 Retained earnings 227,359,000 242,356,000 Net unrealized gain (loss) on securities 690,000 (5,654,000) ---------------- ----------------- 283,192,000 292,110,000 ---------------- ----------------- $822,510,000 $828,649,000 ================ =================
3 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Statements of Cash Flows ----------------------------------------------- (Unaudited)
For the Six Months Ended June 30 -------------------------------- 1995 1994 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (11,572,000) $ 17,032,000 Adjustments to reconcile net income (loss) to cash (used for) provided by operating activities- Provision for title losses and other claims 43,725,000 61,598,000 Depreciation and amortization 8,795,000 9,608,000 Minority interests in net income 543,000 1,802,000 Other, net 1,128,000 1,565,000 Changes in assets and liabilities excluding effects of company acquisitions and noncash transactions- Claims paid, including assets acquired, net of recoveries (30,643,000) (44,994,000) Net change in income tax accounts (3,133,000) (16,718,000) (Increase) decrease in accounts and accrued income receivable (13,463,000) 9,260,000 Decrease in accounts payable and accrued liabilities (3,862,000) (6,344,000) (Decrease) increase in deferred revenue (7,796,000) 10,503,000 Other, net 1,097,000 (9,083,000) ------------ ------------ Cash (used for) provided by operating activities (15,181,000) 34,229,000 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Net cash effect of company acquisitions (31,039,000) (1,031,000) Net (increase) decrease in deposits with banks (293,000) 4,204,000 Net increase in loans receivable (2,472,000) (7,019,000) Purchases of debt and equity securities (7,983,000) (57,684,000) Proceeds from sales of debt and equity securities 32,345,000 20,785,000 Proceeds from maturities of debt securities 7,920,000 26,321,000 Net decrease (increase) in other investments 1,257,000 (497,000) Capital expenditures (10,256,000) (21,429,000) Proceeds from sale of property and equipment 117,000 223,000 ------------ ------------ Cash used for investing activities (10,404,000) (36,127,000) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net change in demand deposits 1,169,000 3,255,000 Repayment of debt (9,079,000) (6,769,000) Purchase of Company shares (1,393,000) (1,026,000) Cash dividends (3,425,000) (3,442,000) ------------ ------------ Cash used for financing activities (12,728,000) (7,982,000) ------------ ------------ Net decrease in cash and cash equivalents (38,313,000) (9,880,000) Cash and cash equivalents - Beginning of year 154,234,000 130,298,000 ------------ ------------ - End of second quarter $115,921,000 $120,418,000 ============ ============ SUPPLEMENTAL INFORMATION: Cash paid during the first half for: Interest $ 3,268,000 $ 2,893,000 Premium taxes $ 7,682,000 $ 10,947,000 Income taxes $ 2,362,000 $ 33,441,000 Noncash investing and financing activities: Shares issued for stock bonus plan $ 1,128,000 $ 1,910,000 Liabilities incurred in connection with company acquisitions $ 11,812,000 $ 3,166,000 Net unrealized gain (loss) on securities $ 6,344,000 $ (4,044,000) Company acquisitions in exchange for common stock $ 2,284,000 Debt incurred in connection with purchase of real property $ 3,750,000 Increase in equity due to reduction of long-term debt of ESOT $ 1,300,000
4 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Notes to Condensed Consolidated Financial Statements ---------------------------------------------------- (Unaudited) Note 1 - Basis of Condensed Consolidated Financial Statements ------------------------------------------------------------- The condensed consolidated financial information included in this report has been prepared in conformity with the accounting principles and practices reflected on the consolidated financial statements included in the annual report filed with the Commission for the preceding calendar year. All adjustments are of a normal recurring nature and are, in the opinion of management, necessary to a fair statement of the consolidated results for the interim periods. Certain 1994 interim amounts have been reclassified to conform with the 1995 interim presentation. This report should be read in conjunction with the Company's 1994 Annual Report to Stockholders and the Company's Annual Report on Form 10-K for the year ended December 31, 1994. Note 2 - Acquisitions --------------------- On January 3, 1995, the Company completed the acquisitions of Credco, Inc., a national mortgage credit reporting company and Flood Data Services, Inc. ("FDSI"), a nationwide flood certification firm, for a combined purchase price of $32 million in cash and notes. These acquisitions have been accounted for by the purchase method of accounting and, accordingly, the purchase price of each has been allocated to their respective assets acquired and liabilities assumed based on estimated fair values at the date of acquisition. The excess purchase price of $5.5 million over the estimated fair value of the net assets of Credco, Inc. has been recorded as goodwill and is being amortized over a 40-year period. The primary asset of FDSI is an index of maps and other records with a fair value of $21.0 million which provides information as to whether or not a property is in a governmentally delineated Special Flood Hazard Area. Since this properly maintained index has an indefinite life and will not diminish in value with the passage of time, no provision will be made for depreciation. Accordingly, this index has been included with title plants in the Company's Condensed Consolidated Balance Sheet at June 30, 1995. 5 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- RESULTS OF OPERATIONS Three and six months ended June 30: OVERVIEW Beginning in the second quarter 1994, increased mortgage interest rates caused a downward trend in new order counts and closings as refinance transactions came to a virtual halt. Due to seasonal considerations, this condition intensified at yearend 1994 resulting in a low inventory of new orders going into the first quarter 1995. As a result, the Company reported a first quarter 1995 net loss. During the second quarter 1995, marked improvements in the national real estate market resulted in a return to profitability for the Company. Order counts rebounded to 236,400 orders opened and 165,800 orders closed, increases of 24.0% and 22.5%, respectively, when compared to the first quarter 1995. Particularly encouraging was the volume of orders opened during the latter part of the current quarter, which together with the recent signs of economic strength, are strong indicators of increased operating revenues and pretax profits for the third quarter of the year. OPERATING REVENUES Set forth below is a summary of operating revenues for each of the Company's segments.
Three Months Ended Six Months Ended June 30 June 30 ------------------------------------- ------------------------------------ ($000) ($000) 1995 % 1994 % 1995 % 1994 % ----------- ---- ----------- ---- ----------- ---- ---------- ---- Title Insurance: Direct operations $ 128,714 45 $ 151,799 42 $ 230,659 42 $ 305,057 42 Agency operations 114,050 40 177,029 48 231,422 43 355,840 48 ----------- ---- ----------- ---- ----------- ---- ---------- ---- 242,764 85 328,828 90 462,081 85 660,897 90 Real Estate Information 32,875 11 25,639 7 58,980 11 53,102 7 Home Warranty 7,830 3 6,889 2 15,219 3 13,024 2 Trust and Banking 3,279 1 2,775 1 6,756 1 5,712 1 ----------- ---- ----------- ---- ----------- ---- ---------- ---- Total $ 286,748 100 $ 364,131 100 $ 543,036 100 $ 732,735 100 =========== ==== =========== ==== =========== ==== ========== ====
TITLE INSURANCE. Operating revenues from direct operations decreased 15.2% and 24.4% for the three and six months ended June 30, 1995, respectively, when compared with the same periods of the prior year. These decreases were primarily attributable to a reduction in the number of title orders closed by the Company's direct operations, as well as changes in the average revenues per order closed. The Company's direct title operations closed 165,800 and 301,100 title orders during the three and six month periods ended June 30, 1995, respectively, representing decreases of 14.5% and 26.0% when compared with the same periods of the prior year. The average revenues per order closed were $776 for the current quarter, as compared with $782 for the same period of the prior year. This decrease was primarily due to a reduction (primarily in California) in the average value of an insured transaction. The average revenues per order closed were $766 for the six months ended June 30, 1995, as compared with $750 for the same period of the prior year. This increase was primarily due to a relatively low average revenues per order closed in the prior year due to the numerous refinance transactions closed during the first quarter 1994. Operating revenues from agency operations decreased 35.6% and 35.0% for the three and six months ended June 30, 1995, respectively, when compared with the same periods of the prior year. These decreases were primarily attributable to the same factors affecting direct operations mentioned above, compounded by the inherent delay in the reporting of orders closed by agents during the latter part of the current quarter. 6 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) --------------------------------- REAL ESTATE INFORMATION. Real estate information operating revenues increased 28.2% and 11.1% for the three and six months ended June 30, 1995, respectively, when compared with the same periods of the prior year. These increases were primarily due to $13.6 million and $23.2 million of operating revenues contributed by new acquisitions for the respective periods, offset in part by the same economic factors affecting title insurance mentioned above. HOME WARRANTY. Home warranty operating revenues increased 13.7% and 16.9% for the three and six months ended June 30, 1995, respectively, when compared with the same periods of the prior year. These increases were primarily due to improvements in certain of the residential resale markets in which this business segment operates, an increase in warranty renewals and successful geographic expansion. INVESTMENT AND OTHER INCOME Investment and other income increased $1.6 million and $2.6 million for the three and six months ended June 30, 1995, respectively, when compared with the same periods of the prior year. These increases were primarily attributable to capital gains realized on the sale of certain investments as well as a $0.7 million fire insurance recovery. The increase for the six month period was also due to $0.4 million of capital losses incurred in the first quarter 1994. The average investment portfolio balance and interest yields remained relatively constant for the three and six months ended June 30, 1995, when compared with the same periods of the prior year. TOTAL OPERATING EXPENSES TITLE INSURANCE. Salaries and other personnel costs were $84.8 million and $166.6 million for the three and six months ended June 30, 1995, respectively, decreases of 11.6% and 13.6% when compared with the same periods of the prior year. These decreases were primarily due to personnel reductions that commenced during the beginning of the second quarter 1994 and continued into the current year in response to the decrease in order volume. Agents retained $91.3 million and $184.6 million of title premiums generated by agency operations for the three and six months ended June 30, 1995, respectively, which compares with $143.8 million and $289.7 million for the same periods of the prior year. The percentage of title premiums retained by agents ranged from 79.8% to 81.4% due to regional variances (i.e., the agency share varies from region to region and thus the geographical mix of agency revenues accounts for this variation). Other operating expenses were $45.4 million and $88.4 million for the three and six months ended June 30, 1995, respectively, decreases of 4.3% and 6.6% when compared with the same periods of the prior year. These decreases were primarily attributable to a decline in incremental costs associated with processing orders due to the reduction in business activity, partially offset by general price level increases. The provision for title losses as a percentage of title insurance operating revenues was 7.2% for the six months ended June 30, 1995, and 8.1% for the comparable period of the prior year. This decrease was primarily attributable to a reduction in the Company's loss experience rate as well as a decrease in major claims activity. REAL ESTATE INFORMATION. Personnel and other operating expenses were $29.3 million and $55.3 million for the three and six months ended June 30, 1995, respectively, increases of 52.6% and 53.2% when compared with the same periods of the prior year. These increases were primarily due to $8.1 million and $17.1 million of personnel and other operating expenses for the three and six months ended June 30, 1995, respectively, attributable to company acquisitions, increased costs associated with enhancing the Company's software to better service customers and general price level increases. 7 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) --------------------------------- HOME WARRANTY. Personnel and other operating expenses were $2.3 and $4.8 million for the three and six months ended June 30, 1995, increases of 16.4% and 15.7% when compared with the same periods of the prior year. These increases were primarily attributable to costs incurred servicing the increase in business volume. The provision for home warranty losses expressed as a percentage of home warranty operating revenues was 56.0% and 52.6% for the six months ended June 30, 1995 and 1994, respectively. The increase in loss ratio was primarily due to an increase in the average number of claims per contract. PRETAX PROFITS Set forth below is a summary of pretax profits for each of the Company's segments.
($000) ($000) 1995 % 1994 % 1995 % 1994 % -------- --- -------- --- -------- --- -------- --- Title Insurance $ 6,524 64 $ 13,376 63 $ (8,037) 247 $ 27,768 59 Real Estate Information 1,524 15 5,412 25 144 (4) 14,980 32 Home Warranty 1,644 16 1,830 9 3,172 (98) 3,229 7 Trust and Banking 539 5 541 3 1,471 (45) 1,218 2 -------- --- -------- --- -------- --- -------- --- Total before corporate 10,231 100 21,159 100 (3,250) 100 47,195 100 === === === === Corporate 5,114 3,854 10,321 9,067 -------- -------- -------- -------- Total $ 5,117 $ 17,305 $(13,571) $ 38,128 ======== ======== ======== ========
In general, the title insurance business is a lower profit margin business when compared to the Company's other segments. The lower profit margins reflect the high fixed cost of producing title evidence whereas the corresponding revenues are subject to regulatory and competitive pricing restraints. Due to this relatively high proportion of fixed costs, title insurance profit margins generally improve as closed order volumes increase. In addition, title insurance profit margins are affected by the composition (residential or commercial) and type (resale, refinancing or new construction) of real estate activity. Profit margins from resale and new construction transactions are generally higher than from refinancing transactions, and profit margins from commercial transactions are generally higher than from residential transactions. Title insurance profit margins are also affected by the percentage of operating revenues generated by agency operations. Profit margins from direct operations are generally higher than from agency operations due primarily to the large portion of the premium that is retained by the agent. PREMIUM TAXES Premium taxes were $6.1 million for the six months ended June 30, 1995, a decrease of 25.6% when compared with the same period of the prior year. This decrease corresponded to the relative decrease in title insurance premium revenues. Premium taxes as a percentage of title insurance operating revenues remained relatively constant. INCOME TAXES The effective income tax rate for the six months ended June 30, 1995, and for the comparable period of the prior year was 41.2% and 43.1%, respectively. The decrease in effective rate was primarily attributable to a decrease in state income taxes resulting from the Company's non-insurance subsidiaries' decrease in contribution to pretax profits. 8 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) --------------------------------- NET INCOME Net income (loss) for the three and six months ended June 30, 1995, was $1.1 million, or $0.10 per share, and $(11.6) million, or $(1.01) per share, respectively. Net income for the three and six months ended June 30, 1994, was $7.6 million, or $0.67 per share, and $17.0 million, or $1.49 per share. LIQUIDITY AND CAPITAL RESOURCES Total cash and cash equivalents decreased $38.3 million and $9.9 million for the six months ended June 30, 1995 and 1994, respectively. The decrease for the current year period was primarily due to cash used for operating activities, the net cash effect of company acquisitions, capital expenditures and the repayment of debt, offset in part by the proceeds from the sales of certain debt and equity securities. The decrease for the prior year period was primarily attributable to purchases of debt and equity securities, as well as capital expenditures, offset in part by cash provided by operating activities, proceeds from sales of debt and equity securities and maturities of debt securities. Notes and contracts payable as a percentage of total capitalization increased marginally to 22.3% at June 30, 1995, from 22.1% at December 31, 1994. Management believes that all of its anticipated cash requirements for the immediate future will be met from internally generated funds. 9 Part II: Other Information ----------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits (4) Amendment No. 4 dated as of June 1, 1995, to Amendment and Restatement dated as of April 28, 1993, of Credit Agreement dated as of April 21, 1992. (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarterly period covered by this report. 10 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- (4) Amendment No. 4 dated as of June 1, 1995, to Amendment and Restatement dated as of April 28, 1993, of Credit Agreement dated as of April 21, 1992 (27) Financial Data Schedule 11 EX-4 2 AMENDMENT NO. 4 OF CREDIT AGREEMENT Exhibit (4) [COMPOSITE CONFORMED COPY] AMENDMENT NO. 4 AMENDMENT NO. 4 dated as of June 1, 1995 to the AMENDMENT AND RESTATEMENT dated as of April 28, 1993 of CREDIT AGREEMENT dated as of April 21, 1992 between THE FIRST AMERICAN FINANCIAL CORPORATION (the "Company"), the ------- lenders party thereto (the "Lenders") and THE CHASE MANHATTAN BANK (NATIONAL ------- ASSOCIATION), as agent (the "Agent") for the Lenders (such Amendment and ----- Restatement, as amended by Amendment No. 1 thereto dated as of June 1, 1994, Amendment No. 2 thereto dated as of November 22, 1994 and Amendment No. 3 thereto dated as of March 31, 1995, being herein called the "Credit ------ Agreement"). ----------- The Company has requested that the Lenders agree to certain amendments of the Credit Agreement and the Pledge Agreement referred to therein. The Lenders are willing to do so on the terms and conditions contained herein. Accordingly, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement ----------- shall have the same meanings when used herein. SECTION 2. AMENDMENTS OF CREDIT AGREEMENT AND PLEDGE AGREEMENT. --------------------------------------------------- Effective as of June 1, 1995 but subject to Section 3 hereof, the Credit Agreement and the Pledge Agreement are hereby amended as follows: A. Section 8.08(a) of the Credit Agreement is amended by changing clause (v) thereof to read as follows: (v) Interest Rate Protection Agreements (including those required by Section 8.15 hereof) so long as the aggregate outstanding notional principal amount of all transactions under such Agreements does not exceed an amount equal to the sum of the aggregate outstanding principal amount of the Bank Loans plus the aggregate outstanding unused amount of the New Revolving Credit Commitments at any time; B. The definition of "Secured Obligations" in Section 1 of the Pledge Agreement is amended by substituting the words "to which the Company and such Lender are parties" for the words "entered into pursuant to the requirements set forth in Section 8.15 of the Credit Agreement" appearing therein. C. Each reference in the Credit Agreement to the Credit Agreement (including references such as "herein", "hereunder" and the like) or the Pledge Agreement is amended to refer to the Credit Agreement or the Pledge Agreement (as the case may be) as heretofore amended and as amended hereby and each reference in the Pledge Agreement to the Pledge Agreement (including references such as "herein", "hereunder" and the like) or the Credit Agreement is amended to refer to the Pledge Agreement or the Credit Agreement (as the case may be) as heretofore amended and as hereby amended. D. Except as hereby expressly amended, the Credit Agreement shall remain in full force and effect. SECTION 3. EFFECTIVENESS OF AMENDMENTS. The amendments provided --------------------------- for by Section 2 hereof shall become effective upon the satisfaction of the following conditions precedent (except, other than in the case of the condition precedent specified in clause (a) below, to the extent waived by or with the consent of the Majority Lenders): (a) the execution and delivery by the Agent of a counterpart of this Amendment and the receipt by the Agent of counterparts of this Amendment executed and delivered by the Company and the Lenders; (b) the receipt by the Agent of evidence satisfactory to Milbank, Tweed, Hadley & McCloy of the due authorization, execution and delivery by the Company of this Amendment; and (c) the receipt by the Agent of a certificate of a senior officer of the Company to the effect that no Default under the Credit Agreement (as amended hereby) has occurred and is continuing. The Agent will advise the Company and the Lenders when such conditions have been so satisfied (or waived as aforesaid). 12 SECTION 4. EXPENSES. The Company hereby confirms its obligations -------- under Section 11.03(a)(ii) of the Credit Agreement with respect to the reasonable out-of-pocket costs and expenses of the Agent (including, without limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy) in connection with the negotiation, preparation, execution and delivery of this Amendment). SECTION 5. COUNTERPARTS. This Amendment may be executed in any ------------ number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Amendment by executing any such counterpart. SECTION 6. NEW YORK LAW. This Amendment shall be governed by and ------------ construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written. THE FIRST AMERICAN FINANCIAL CORPORATION By /s/ Parker S. Kennedy ---------------------------------- Title: By /s/ Thomas A. Klemens ---------------------------------- Title: V.P./C.F.O. THE CHASE MANHATTAN BANK, N.A. By /s/ Robert A. Foster ---------------------------------- Title: Vice President FIRST INTERSTATE BANK OF CALIFORNIA By /s/ Marla W. Johnson ---------------------------------- Title: Vice President IMPERIAL BANK By /s/ Paul A. Krupela ---------------------------------- Title: Vice President SANWA BANK CALIFORNIA By /s/ Art Dunbar ---------------------------------- Title: V.P. 13 UNION BANK By /s/ D. S. Lambell ---------------------------------- Title: VP/SCE NBD BANK By /s/ Richard J. Johnsen -------------------------------- Title: Richard J. Johnsen Vice President THE CANADA LIFE ASSURANCE COMPANY INCE & CO., as Nominee for The Canada Life Assurance Company By /s/ Eugene Bohan -------------------------------- Title: Eugene Bohan A Partner THE CHASE MANHATTAN BANK, N.A., as Agent By /s/ Robert A. Foster -------------------------------- Title: 14 EX-27 3 ARTICLE 7 FDS
7 3-MOS 6-MOS DEC-31-1994 DEC-31-1994 APR-01-1995 JAN-01-1995 JUN-30-1995 JUN-30-1995 0 130,551,000 0 0 0 0 0 18,214,000 0 0 0 0 0 194,316,000 115,921,000 0 0 0 25,468,000 0 822,510,000 0 218,925,000 0 0 0 0 0 0 0 87,381,000 0 11,403,000 0 0 0 0 0 271,789,000 0 822,510,000 0 286,748,000 543,036,000 6,492,000 11,358,000 0 0 0 0 22,419,000 43,725,000 1,215,000 2,439,000 0 0 1,837,000 (19,672,000) 700,000 (8,100,000) 1,137,000 (11,572,000) 0 0 0 0 0 0 1,137,000 (11,572,000) .10 (1.01) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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