-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B2bcbvIQ5B0t3rgOf+SRtd53pFjMaxhGNk9nDCTo+QKi3wy+oaTpYn1Zra7F+ElT gOZ6W88X/mqFawuHf3/IZQ== 0000898430-95-002280.txt : 19951119 0000898430-95-002280.hdr.sgml : 19951119 ACCESSION NUMBER: 0000898430-95-002280 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95590048 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 9/30/95 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 September 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 (I.R.S. Employer incorporation 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 - 11,412,069 as of November 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 A. Klemens ---------------------------------------- Thomas A. Klemens Vice President, Chief Financial Officer (Principal Financial Officer and Duly Authorized to Sign on Behalf of Registrant) Date: November 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 Nine Months Ended September 30 September 30 ----------------------------------- ----------------------------------- 1995 1994 1995 1994 ------------- ------------- -------------- -------------- Revenues Operating revenues $ 326,355,000 $ 329,802,000 $ 869,391,000 $1,062,537,000 Investment and other income 4,973,000 5,068,000 16,331,000 13,780,000 ------------- ------------- -------------- -------------- 331,328,000 334,870,000 885,722,000 1,076,317,000 ------------- ------------- -------------- -------------- Expenses Salaries and other personnel costs 110,860,000 102,311,000 314,597,000 322,309,000 Premiums retained by agents 104,502,000 131,292,000 289,149,000 420,984,000 Other operating expenses 66,031,000 55,945,000 189,297,000 173,591,000 Provision for title losses and other claims 23,405,000 27,232,000 67,130,000 88,830,000 Depreciation and amortization 4,736,000 5,238,000 13,531,000 14,846,000 Interest 1,570,000 1,430,000 4,822,000 4,405,000 Minority interests 863,000 719,000 1,406,000 2,521,000 ------------- ------------- -------------- -------------- 311,967,000 324,167,000 879,932,000 1,027,486,000 ------------- ------------- -------------- -------------- Income before premium and income taxes 19,361,000 10,703,000 5,790,000 48,831,000 Premium taxes 3,841,000 3,613,000 9,942,000 11,809,000 ------------- ------------- -------------- -------------- Income (loss) before income taxes 15,520,000 7,090,000 (4,152,000) 37,022,000 Income taxes 6,200,000 2,300,000 (1,900,000) 15,200,000 ------------- ------------- -------------- -------------- Net income (loss) $ 9,320,000 $ 4,790,000 $ (2,252,000) $ 21,822,000 ============= ============= ============== ============== Net income (loss) per share $ .81 $ .42 $ (.20) $ 1.91 ============= ============= ============== ============== Cash dividends per share $ .15 $ .15 $ .45 $ .45 ============= ============= ============== ============== Weighted average number of shares 11,394,000 11,464,000 11,405,000 11,453,000 ============= ============= ============== ==============
2 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Balance Sheets ------------------------------------- (Unaudited)
September 30, 1995 December 31, 1994 ------------------ ----------------- Assets Cash and cash equivalents $127,334,000 $154,234,000 ------------------ ----------------- Accounts and accrued income receivable, net 70,604,000 47,103,000 ------------------ ----------------- Income tax receivable 4,869,000 7,324,000 ------------------ ----------------- Investments: Deposits with savings and loan associations and banks 18,796,000 18,538,000 Debt securities 133,170,000 149,190,000 Equity securities 20,390,000 21,813,000 Other long-term investments 26,211,000 25,224,000 ------------------ ----------------- 198,567,000 214,765,000 ------------------ ----------------- Loans receivable, net 44,805,000 40,546,000 ------------------ ----------------- Property and equipment, at cost 188,999,000 175,214,000 Less - accumulated depreciation (71,703,000) (64,659,000) ------------------ ----------------- 117,296,000 110,555,000 ------------------ ----------------- Title plants and other indexes 79,281,000 54,781,000 ------------------ ----------------- Assets acquired in connection with claim settlements (net of valuation reserves of $11,369,000 and $12,354,000) 26,347,000 27,223,000 ------------------ ----------------- Deferred income taxes 42,174,000 43,726,000 ------------------ ----------------- Goodwill and other intangibles, net 70,935,000 61,322,000 ------------------ ----------------- Deferred policy acquisition costs 24,881,000 26,060,000 ------------------ ----------------- Other assets 45,466,000 41,010,000 ------------------ ----------------- $852,559,000 $828,649,000 ================== ================= Liabilities and Stockholders' Equity Demand deposits $ 40,830,000 $ 38,695,000 ------------------ ----------------- Accounts payable and accrued liabilities 72,694,000 60,806,000 ------------------ ----------------- Deferred revenue 105,651,000 117,828,000 ------------------ ----------------- Reserve for known and incurred but not reported claims 233,225,000 206,743,000 ------------------ ----------------- Notes and contracts payable 83,366,000 89,600,000 ------------------ ----------------- Minority interests in consolidated subsidiaries 23,850,000 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 - 11,428,000 and 11,395,000 shares 11,428,000 11,395,000 Additional paid-in capital 44,358,000 44,013,000 Retained earnings 234,966,000 242,356,000 Net unrealized gain (loss) on securities 2,191,000 (5,654,000) ------------------ ----------------- 292,943,000 292,110,000 ------------------ ----------------- $852,559,000 $828,649,000 ================== =================
3 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Statements of Cash Flows ----------------------------------------------- (Unaudited)
For the Nine Months Ended September 30 -------------------------------- 1995 1994 ------------ ---------- Cash flows from operating activities: Net income (loss) $ (2,252,000) $ 21,822,000 Adjustments to reconcile net income (loss) to cash provided by operating activities- Provision for title losses and other claims 67,130,000 88,830,000 Depreciation and amortization 13,531,000 14,846,000 Minority interests in net income 1,406,000 2,521,000 Other, net 1,444,000 1,413,000 Changes in assets and liabilities excluding effects of company acquisitions and noncash transactions- Claims paid, including assets acquired, net of recoveries (49,073,000) (68,221,000) Net change in income tax accounts 1,837,000 (16,391,000) (Increase) decrease in accounts and accrued income receivable (18,586,000) 12,669,000 Increase (decrease) in accounts payable and accrued liabilities 6,058,000 (6,280,000) (Decrease) increase in deferred revenue (12,252,000) 11,053,000 Other, net (2,297,000) (9,866,000) ------------ ------------ Cash provided by operating activities 6,946,000 52,396,000 ------------ ------------ Cash flows from investing activities: Net cash effect of company acquisitions (31,336,000) (9,145,000) Net decrease in deposits with banks 742,000 3,189,000 Net increase in loans receivable (4,259,000) (7,998,000) Purchases of debt and equity securities (13,203,000) (75,356,000) Proceeds from sales of debt and equity securities 34,972,000 31,467,000 Proceeds from maturities of debt securities 13,038,000 33,105,000 Net decrease (increase) in other investments 524,000 (2,830,000) Capital expenditures (16,748,000) (28,695,000) Proceeds from sale of property and equipment 384,000 673,000 ------------ ------------ Cash used for investing activities (15,886,000) (55,590,000) ------------ ------------ Cash flows from financing activities: Net change in demand deposits 2,135,000 5,767,000 Repayment of debt (13,099,000) (10,433,000) Purchase of Company shares (1,858,000) (2,091,000) Cash dividends (5,138,000) (5,159,000) ------------ ------------ Cash used for financing activities (17,960,000) (11,916,000) ------------ ------------ Net decrease in cash and cash equivalents (26,900,000) (15,110,000) Cash and cash equivalents - Beginning of year 154,234,000 130,298,000 ------------ ------------ - End of third quarter $127,334,000 $115,188,000 ============ ============ Supplemental information: Cash paid during the first nine months for: Interest $ 4,552,000 $ 4,253,000 Premium taxes $ 11,241,000 $ 15,122,000 Income taxes $ 3,597,000 $ 35,381,000 Noncash investing and financing activities: Shares issued for stock bonus plan $ 1,128,000 $ 1,910,000 Liabilities incurred in connection with company acquisitions $ 20,021,000 $ 12,649,000 Net unrealized gain (loss) on securities $ 7,845,000 $ (5,098,000) Company acquisitions in exchange for common stock $ 1,108,000 $ 2,284,000 Debt incurred in connection with the purchase of real property $ 3,750,000 Debt incurred in connection with the purchase of other investments $ 2,900,000 Increase in equity due to reduction of long-term debt of ESOT $ 1,949,000
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 in 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 September 30, 1995. 5 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- RESULTS OF OPERATIONS Three and nine months ended September 30: OVERVIEW Beginning in the second quarter 1994, increased mortgage interest rates caused a downward trend in new title orders 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 title orders going into the first quarter 1995. As a result, the Company reported a first quarter 1995 net loss. During the second quarter 1995, lower interest rates and an improved real estate economy resulted in a return to profitability for the Company. These conditions continued into the third quarter 1995 and remained the primary factors contributing to increased profits in the current quarter as compared with the same quarter of the prior year. Net income for the current quarter increased to $9.3 million, or $0.81 per share, compared with net income of $4.8 million, or $0.42 per share, for the same period of the prior year. Title orders increased to 244,200 orders opened and 185,000 orders closed, increases of 20% and 12%, respectively, when compared with the same periods of the prior year. The Company is currently experiencing a seasonal reduction in new title orders. Despite this downturn, the Company is anticipating a profitable fourth quarter 1995 leading into traditionally slower first quarter 1996 business. OPERATING REVENUES Set forth below is a summary of operating revenues for each of the Company's segments.
Three Months Ended Nine Months Ended September 30 September 30 --------------------------------------- ------------------------------------------ ($000) ($000) 1995 % 1994 % 1995 % 1994 % -------- --- -------- --- -------- --- ---------- --- Title Insurance: Direct operations $143,718 44 $133,825 41 $374,377 43 $ 438,882 41 Agency operations 130,707 40 163,108 49 362,129 42 518,948 49 -------- --- -------- --- -------- --- ---------- --- 274,425 84 296,933 90 736,506 85 957,830 90 Real Estate Information 39,826 12 22,444 7 98,806 11 75,546 7 Home Warranty 8,575 3 7,548 2 23,794 3 20,572 2 Trust and Banking 3,529 1 2,877 1 10,285 1 8,589 1 -------- --- -------- --- -------- --- ---------- --- Total $326,355 100 $329,802 100 $869,391 100 $1,062,537 100 ======== === ======== === ======== === ========== ===
TITLE INSURANCE. Operating revenues from direct title operations increased 7.4% and decreased 14.7% for the three and nine months ended September 30, 1995, respectively, when compared with the same periods of the prior year. The increase for the current three month period was primarily attributable to the increase in the number of title orders closed by the Company's direct operations, partially offset by a decline in the average revenues per order closed. Average revenues per closing were $777 for the current quarter, as compared with $810 for the same period of the prior year. This decrease was primarily due to a higher than usual average revenue per closing for the prior year period attributable to the significant decline in lower margin refinance business. In addition, the average revenues for the current quarter were negatively impacted by a reduction (primarily in California) in the average value of an insured transaction. The decrease in operating revenues for the nine month period was primarily due to the lower year-to-date number of title orders closed by the Company's direct operations. The Company's direct operations closed 486,100 title orders during the nine month period ended September 30, 1995, a decrease of 15.0% when compared with same period of the prior year. Operating revenues from agency operations decreased 19.9% and 30.2% for the three and nine months ended September 30, 1995, respectively, when compared with the same periods of the prior year. These decreases were primarily due to the same factors affecting direct operations, compounded by the inherent delay in reporting by agents. 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 77.4% and 30.8% for the three and nine months ended September 30, 1995, respectively, when compared with same periods of the prior year. These increases were primarily attributable to $18.3 million and $41.5 million of operating revenues contributed by new acquisitions for the respective periods, partially offset by the same economic factors affecting title insurance mentioned above. HOME WARRANTY. Home warranty operating revenues increased 13.6% and 15.7% for the three and nine months ended September 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 operates, an increase in renewals and successful geographic expansion. INVESTMENT AND OTHER INCOME Investment and other income decreased 1.9% and increased 18.5% for the three and nine months ended September 30, 1995, respectively, when compared with the same periods of the prior year. The decrease for the current three month period was primarily attributable to a 17.7% reduction in the average investment portfolio balance, offset in part by a 0.4% increase in investment income yields, as well as an increase in equity in earnings of affiliates and gains on the sale of certain investments. The increase for the current nine month period was due primarily to $0.7 million fire insurance recovery, gains on the sale of certain investments and first quarter 1994 capital losses of $0.4 million. TOTAL OPERATING EXPENSES TITLE INSURANCE. Title insurance salaries and other personnel costs were $90.1 million and $256.6 million for the three and nine months ended September 30, 1995, respectively, representing an increase of 1.0% and a decrease of 9.0% when compared with the same periods of the prior year. The slight increase for the current quarter was primarily attributable to personnel expenses incurred processing the increase in title order volume, offset in part by personnel efficiencies. The decrease for the current nine month period reflected personnel reductions that commenced during the beginning of the second quarter 1994, resulting in a 12.3% reduction in the average number of title employees for the current nine month period when compared with the same period of the prior year, offset in part by modest salary increases. Agents retained $104.5 million and $289.1 million of title premiums generated by agency operations for the three and nine months ended September 30, 1995, respectively, which compared with $131.3 million and $421.0 million for the same periods of the prior year. The percentage of title premiums retained by agents ranged from 79.8% to 81.1% 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 $47.7 million and $136.1 million for the three and nine months ended September 30, 1995, respectively, an increase of 8.8% and a decrease of 1.7% when compared with the same periods of the prior year. The increase for the current year quarter was primarily due to the incremental costs associated with processing the increase in order volume, as well as general price level increases, offset in part by successful cost containment programs. The decrease for the nine month period reflected the 3.5% reduction in the year-to-date number of open orders, offset in part by general price level increases. The provision for title losses as a percentage of title insurance operating revenues was 6.9% for the nine months ended September 30, 1995, and 7.9% 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. 7 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) --------------------------------- REAL ESTATE INFORMATION. Real estate information personnel and other operating expenses were $31.1 million and $86.4 million for the three and nine months ended September 30, 1995, respectively, increases of 64.6% and 57.2% when compared with same periods of the prior year. These increases were primarily due to $12.3 million and $29.4 million of personnel and other operating expenses for the three and nine months ended September 30, 1995, respectively, attributable to company acquisitions, as well as increased costs associated with developing the Company's electronic communications delivery system to better service customers, partially offset by successful cost containment programs. HOME WARRANTY. Home warranty personnel and other operating expenses were $2.3 million and $7.1 million for the three and nine months ended September 30, 1995, respectively. The current three month period remained relatively constant and the current nine month period increased 9.6% when compared with the same periods of the prior year, primarily as the result of costs incurred servicing the increase in business volume, as well as geographic expansion, offset in part by successful cost containment programs. The provision for home warranty losses expressed as a percentage of home warranty operating revenues was 58.9% and 55.4% for the nine months ended September 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.
Three Months Ended Nine Months Ended September 30 September 30 --------------------------------------------- ------------------------------------------- ($000) ($000) 1995 % 1994 % 1995 % 1994 % ---------- --- ----------- --- --------- --- ---------- --- Title Insurance $ 14,786 60 $ 9,441 67 $ 6,749 32 $ 37,209 61 Real Estate Information 7,398 30 2,755 19 7,542 35 17,735 29 Home Warranty 1,528 6 1,413 10 4,700 22 4,642 7 Trust and Banking 861 4 571 4 2,332 11 1,789 3 ---------- --- ----------- --- --------- --- ---------- --- Total before corporate 24,573 100 14,180 100 21,323 100 61,375 100 === === === === Corporate 5,212 3,477 15,533 12,544 ---------- ----------- --------- ---------- Total $ 19,361 $ 10,703 $ 5,790 $ 48,831 ========== =========== ========= ==========
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 for the nine months ended September 30, 1995, were $9.9 million, as compared with $11.8 million for the same period of the prior year. Premium taxes as a percentage of title insurance operating revenues remained relatively constant. 8 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) --------------------------------- INCOME TAX The effective income tax rate for the nine months ended September 30, 1995, and for the comparable period of the prior year was 45.8% and 41.1%, respectively. The increase in effective rate was primarily attributable to changes in the ratio of permanent differences to income before taxes. NET INCOME Net income (loss) for the three and nine months ended September 30, 1995, was $9.3 million, or $0.81 per share, and $(2.3) million, or $(0.20) per share, respectively. Net income for the three and nine months ended September 30, 1994, was $4.8 million, or $0.42 per share, and $21.8 million, or $1.91 per share. LIQUIDITY AND CAPITAL RESOURCES Total cash and cash equivalents decreased $26.9 million and $15.1 million for the nine months ended September 30, 1995 and 1994, respectively. The decrease for the current year period was primarily due to acquisition activity, purchases of debt and equity securities, capital expenditures and the repayment of debt, partially offset by proceeds from the sale and maturity of certain debt and equity securities. The decrease for the prior year period was primarily attributable to purchases of debt and equity securities, capital expenditures and the repayment of debt, offset in part by proceeds from the sale and maturity of certain debt and equity securities and cash provided by operating activities. Notes and contracts payable as a percentage of total capitalization decreased to 20.8% at September 30, 1995, from 22.1% at December 31, 1994. This decrease was primarily due to a $6.2 million net reduction in notes and contracts payable. 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 (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 ----------- ----------- (27) Financial Data Schedule 11 EX-27 2 FINANCIAL DATA SCHEDULE
7 3-MOS 9-MOS DEC-31-1994 DEC-31-1994 JUL-01-1995 JAN-01-1995 SEP-30-1995 SEP-30-1995 133,170,000 0 0 0 0 0 20,390,000 0 0 0 0 0 198,567,000 0 127,334,000 0 0 0 24,881,000 0 852,559,000 0 233,225,000 0 0 0 0 0 0 0 83,366,000 0 11,428,000 0 0 0 0 0 281,515,000 0 852,559,000 0 326,355,000 869,391,000 4,973,000 16,331,000 0 0 0 0 23,405,000 67,130,000 0 0 0 0 15,520,000 (4,152,000) 6,200,000 (1,900,000) 9,320,000 (2,252,000) 0 0 0 0 0 0 9,320,000 (2,252,000) 0.81 (0.20) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-----END PRIVACY-ENHANCED MESSAGE-----