-----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, Kg+VY7+ct+20EcO0nUah+fl+/xSghaKib9IWWBvIH9L4zmGAAXlk5obW37ibI+Ic WahVBVyDY9flG4DBai2VWw== 0000898430-96-003716.txt : 19960814 0000898430-96-003716.hdr.sgml : 19960814 ACCESSION NUMBER: 0000898430-96-003716 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96609355 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 10-Q DATED 6-30-96 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, 1996 ------------- 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 - 11,434,282 as of August 7, 1996 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 1. Legal Proceedings Item 6. Exhibits and Reports on Form 8-K Items 2-5 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 Executive Vice President, Chief Financial Officer (Principal Financial Officer and Duly Authorized to Sign on Behalf of Registrant) Date: August 9, 1996 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 ---------------------------- ---------------------------- 1996 1995 1996 1995 ------------- ------------ ------------- ------------ REVENUES Operating revenues $404,878,000 $286,748,000 $745,757,000 $543,036,000 Investment and other income 8,496,000 6,492,000 14,993,000 11,358,000 ------------- ------------ ------------- ------------ 413,374,000 293,240,000 760,750,000 554,394,000 ------------- ------------ ------------- ------------ EXPENSES Salaries and other personnel costs 132,742,000 103,687,000 252,982,000 203,737,000 Premiums retained by agents 128,218,000 91,252,000 238,090,000 184,647,000 Other operating expenses 84,011,000 63,979,000 157,475,000 123,266,000 Provision for title losses and other claims 23,488,000 22,419,000 42,463,000 43,725,000 Depreciation and amortization 5,558,000 4,584,000 10,007,000 8,795,000 Interest 1,281,000 1,639,000 2,510,000 3,252,000 Minority interests 864,000 563,000 1,484,000 543,000 ------------- ------------ ------------- ------------ 376,162,000 288,123,000 705,011,000 567,965,000 ------------- ------------ ------------- ------------ Income (loss) before premium and income taxes 37,212,000 5,117,000 55,739,000 (13,571,000) Premium taxes 4,385,000 3,280,000 7,930,000 6,101,000 ------------- ------------ ------------- ------------ Income (loss) before income taxes 32,827,000 1,837,000 47,809,000 (19,672,000) Income taxes 13,400,000 700,000 19,800,000 (8,100,000) ------------- ------------ ------------- ------------ Net income (loss) $19,427,000 $1,137,000 $28,009,000 ($11,572,000) ============= ============ ============= ============ Net income (loss) per share $ 1.70 $ .10 $ 2.45 $ (1.01) ============= ============ ============= ============ Cash dividends per share $ .18 $ .15 $ .33 $ .30 ============= ============ ============= ============ WEIGHTED AVERAGE NUMBER OF SHARES 11,447,000 11,421,000 11,439,000 11,411,000 ============= ============ ============= ============
2 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Balance Sheets (Unaudited)
June 30, 1996 December 31, 1995 ------------- ----------------- ASSETS Cash and cash equivalents $152,484,000 $145,902,000 ------------ ------------ Accounts and accrued income receivable, net 95,042,000 75,069,000 ------------ ------------ Investments: Deposits with savings and loan associations and banks 24,095,000 18,637,000 Debt securities 137,565,000 128,875,000 Equity securities 8,407,000 21,445,000 Other long-term investments 27,276,000 25,230,000 ------------ ------------ 197,343,000 194,187,000 ------------ ------------ Loans receivable 51,490,000 46,134,000 ------------ ------------ Property and equipment, at cost 201,029,000 192,496,000 Less- accumulated depreciation (77,094,000) (73,672,000) ------------ ------------ 123,935,000 118,824,000 ------------ ------------ Title plants and other indexes 86,729,000 82,454,000 ------------ ------------ Assets acquired in connection with claim settlements (net of valuation reserves of $11,094,000 and $11,246,000) 26,130,000 25,592,000 ------------ ------------ Deferred income taxes 39,748,000 39,994,000 ------------ ------------ Goodwill and other intangibles, net 73,273,000 71,825,000 ------------ ------------ Deferred policy acquisition costs 23,923,000 24,342,000 ------------ ------------ Other assets 60,499,000 49,455,000 ------------ ------------ $930,596,000 $873,778,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Demand deposits $ 47,251,000 $ 43,418,000 ------------ ------------ Accounts payable and accrued liabilities 106,362,000 80,938,000 ------------ ------------ Deferred revenue 103,505,000 104,315,000 ------------ ------------ Reserve for known and incurred but not reported claims 242,037,000 238,161,000 ------------ ------------ Income taxes payable 10,922,000 2,812,000 ------------ ------------ Notes and contracts payable 72,402,000 77,206,000 ------------ ------------ Minority interests in consolidated subsidiaries 22,848,000 24,161,000 ------------ ------------ Commitments and contingencies Stockholders' equity: Preferred stock, $1 par value Authorized - 500,000 shares; outstanding - none Common stock, $1 par value Authorized - 24,000,000 shares Outstanding - 11,448,000 and 11,411,000 shares 11,448,000 11,411,000 Additional paid-in capital 45,172,000 44,270,000 Retained earnings 267,318,000 243,093,000 Net unrealized gain on securities 1,331,000 3,993,000 ------------ ------------ 325,269,000 302,767,000 ------------ ------------ $930,596,000 $873,778,000 ============ ============
3 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Statements of Cash Flows ----------------------------------------------- (Unaudited)
For the Six Months Ended June 30 -------------------------------------------- 1996 1995 -------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 28,009,000 $ (11,572,000) Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities- Provision for title losses and other claims 42,463,000 43,725,000 Depreciation and amortization 10,007,000 8,795,000 Minority interests in net income 1,484,000 543,000 Other, net (640,000) 1,128,000 Changes in assets and liabilities excluding effects of company acquisitions and noncash transactions- Claims paid, including assets acquired, net of recoveries (39,077,000) (30,643,000) Net change in income tax accounts 11,223,000 (3,133,000) Increase in accounts and accrued income receivable (19,878,000) (13,463,000) Increase (decrease) in accounts payable and accrued liabilities 15,466,000 (3,862,000) Decrease in deferred revenue (1,054,000) (7,796,000) Other, net (7,554,000) 1,097,000 -------------- --------------- Cash provided by (used for) operating activities 40,449,000 (15,181,000) -------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES: Net cash effect of company acquisitions (3,306,000) (31,039,000) Net increase in deposits with banks (5,458,000) (293,000) Net increase in loans receivable (5,356,000) (2,472,000) Purchases of debt and equity securities (40,365,000) (7,983,000) Proceeds from sales of debt and equity securities 33,451,000 32,345,000 Proceeds from maturities of debt securities 8,031,000 7,920,000 Net decrease in other investments 147,000 1,257,000 Capital expenditures (12,474,000) (10,256,000) Proceeds from sale of property and equipment 1,092,000 117,000 -------------- --------------- Cash used for investing activities (24,238,000) (10,404,000) -------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in demand deposits 3,833,000 1,169,000 Repayment of debt (9,330,000) (9,079,000) Purchase of Company shares (348,000) (1,393,000) Cash dividends (3,784,000) (3,425,000) -------------- --------------- Cash used for financing activities (9,629,000) (12,728,000) -------------- --------------- Net increase (decrease) in cash and cash equivalents 6,582,000 (38,313,000) Cash and cash equivalents - Beginning of year 145,902,000 154,234,000 -------------- --------------- - End of first half $ 152,484,000 $115,921,000 ============== =============== SUPPLEMENTAL INFORMATION: Cash paid during the first half for: Interest $ 2,729,000 $ 3,268,000 Premium taxes $ 7,149,000 $ 7,682,000 Income taxes $ 8,760,000 $ 2,362,000 Noncash investing and financing activities: Shares issued for stock bonus plan $ 1,287,000 $ 1,128,000 Liabilities incurred in connection with company acquisitions $ 11,311,000 $ 11,812,000 Net unrealized (loss) gain on securities $ (2,662,000) $ 6,344,000
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. This report should be read in conjunction with the Company's 1995 Annual Report to Stockholders and the Company's Annual Report on Form 10- K for the year ended December 31, 1995. Note 2 - Stock Option Plan - -------------------------- At the Annual Meeting of Stockholders held on April 24, 1996, The First American Financial Corporation 1996 Stock Option Plan was approved. Concurrently, The Compensation Committee of the Board of Directors granted 635,000 options at an exercise price of $25.625. These options had no affect on the Company's earnings per share computations for the current reporting period. Under the plan, the maximum number of common shares that may be subject to options is 1,250,000. 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 virtual halt. Due to seasonal considerations, this condition intensified at yearend 1994 resulting in a low inventory of new orders going into 1995. As a result, the Company reported a first quarter 1995 loss. During the second quarter 1995, marked improvements in the national real estate market resulted in significant order count increases and enabled the Company to return to profitability. Mortgage interest rates peaked in January 1995 and decreased throughout the remainder of the year and into 1996, helped by an easing of monetary policy by the Federal Reserve Board. This, together with an improved real estate economy (including the beginnings of a modest recovery in California), contributed to high order counts resulting in a strong first quarter 1996. During the second quarter 1996, continued improvements in the national real estate market and the Company's successful integration of its diverse businesses resulted in record revenues and significantly increased pretax profits. 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) 1996 % 1995 % 1996 % 1995 % ---- --- ---- --- ---- --- ---- ---- Title Insurance: Direct operations $166,748 41 $128,714 45 $304,238 41 $230,659 42 Agency operations 158,104 39 114,050 40 294,468 39 231,422 43 -------- --- -------- --- -------- --- -------- --- 324,852 80 242,764 85 598,706 80 462,081 85 Real Estate Information 66,265 16 32,875 11 120,659 16 58,980 11 Home Warranty 9,761 3 7,830 3 18,500 3 15,219 3 Trust and Banking 4,000 1 3,279 1 7,892 1 6,756 1 -------- --- -------- --- -------- --- -------- --- Total $404,878 100 $286,748 100 $745,757 100 $543,036 100 ======== === ======== === ======== === ======== ===
TITLE INSURANCE. Operating revenues from direct operations increased 29.5% and 31.9% for the three and six months ended June 30, 1996, respectively, when compared with the same periods of the prior year. These increases were attributable to an increase in the number of title orders closed by the Company's direct operations, as well as an increase in the average revenues per order closed. The Company's direct operations closed 209,200 and 386,800 title orders during the three and six months ended June 30, 1996, respectively, representing increases of 26.2% and 28.5% when compared with the same periods of the prior year. The average revenues per order closed were $797 and $787 for the three and six months ended June 30, 1996, respectively, as compared with $776 and $766 for the same periods of the prior year. These increases were primarily due to the significant decline in refinance activity, coupled with the improved mix of higher-margin commercial and residential resale and new home transactions during the current quarter. Operating revenues from agency operations increased 38.6% and 27.2% for the three and six months ended June 30, 1996, respectively, when compared with the same periods of the prior year. These increases were primarily due to the same factors affecting direct operations, as well as the effects of 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 101.6% and 104.6% for the three and six months ended June 30, 1996, respectively, when compared with the same periods of the prior year. These increases were primarily due to the same factors affecting title insurance, as well as market penetration, primarily by the Company's flood determination and credit reporting divisions. The second quarter 1996 also included $4.4 million of operating revenues attributable to the Company's acquisition of Exelis, Inc. HOME WARRANTY. Home warranty operating revenues increased 24.7% and 21.6% for the three and six months ended June 30, 1996, respectively, when compared with the same periods of the prior year. These increases were primarily attributable to improvements in the residential resale markets in which this business segment operates. INVESTMENT AND OTHER INCOME Investment and other income increased $2.0 million, or 30.9%, and $3.6 million, or 32.0%, for the three and six months ended June 30, 1996, respectively, when compared with the same periods of the prior year. The increase for the current three-month period was primarily due to increases of approximately $1.5 million in realized investment gains, $0.4 million in equity in earnings of affiliates and $0.2 million in gains on the sale of fixed assets, partially offset by a 2.5% decrease in the average investment portfolio balance. The increase for the current six-month period was also primarily due to realized investment gains and increases in equity in earnings of affiliates, offset in part by a 7.3% decrease in the average investment portfolio balance. TOTAL OPERATING EXPENSES TITLE INSURANCE. Salaries and other personnel costs were $103.1 million and $198.2 million for the three and six months ended June 30, 1996, respectively, increases of 15.6% and 19.0% when compared with the same periods of the prior year. These increases were primarily due to costs incurred processing the high number of title orders opened during the respective periods. The increase for the second quarter 1996 was also impacted by costs incurred servicing orders opened during the first quarter 1996 but not closed until the second quarter 1996. The Company's direct operations opened 259,100 and 531,600 title orders during the three and six months ended June 30, 1996, respectively, increases of 9.6% and 24.5% when compared with the 236,400 and 427,000 opened during the same periods of the prior year. Agents retained $128.2 million and $238.1 million of title premiums generated by agency operations for the three and six months ended June 30, 1996, respectively, which compares with $91.3 million and $184.6 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 causes this variation). Other operating expenses were $55.2 million and $105.0 million for the three and six months ended June 30, 1996, respectively, increases of 21.5% and 18.7% when compared with the same periods of the prior year. These increases were primarily attributable to the incremental costs associated with processing the increase in order volumes. The provision for title losses as a percentage of title insurance operating revenues was 5.1% for the six months ended June 30, 1996, and 7.2% for the same period of the prior year. This decrease was primarily due to an ongoing improvement in the Company's loss experience. REAL ESTATE INFORMATION. Real estate information personnel and other operating expenses were $47.7 million and $86.0 million for the three and six months ended June 30, 1996, respectively, increases of 62.8% and 55.6% when compared with the same periods of the prior year. These increases were primarily attributable to costs incurred servicing the increase in business volume, as well as approximately $5.2 million of costs incurred during the second quarter 1996 attributable to the Company's acquisition of Excelis, Inc. Also contributing to the increases were costs incurred expanding the flood determination and credit reporting divisions. 7 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) -------------------------------- HOME WARRANTY. Home warranty personnel and other operating expenses were $2.8 million and $5.5 million for the three and six months ended June 30, 1996, respectively, increases of 20.6% and 14.1% when compared with the same periods of the prior year. These increases were primarily attributable to costs incurred servicing the increased business volume. The provision for home warranty losses expressed as a percentage of home warranty operating revenues was 53.2% and 56.0% for the six months ended June 30, 1996 and 1995, respectively. The decrease in loss ratio was primarily attributable to a decrease in the average number of claims per contract. PRETAX PROFITS (LOSSES) Set forth below is a summary of pretax profits for each of the Company's segments.
Three Months Ended Six Months Ended June 30, June 30, -------------------------------- ------------------------------- ($000) ($000) 1996 % 1995 % 1996 % 1995 % ---- --- ---- --- ---- --- ---- --- Title Insurance $23,581 54 $ 6,524 64 $ 31,740 46 $ (8,037) 247 Real Estate Information 16,628 38 1,524 15 30,410 45 144 (4) Home Warranty 2,399 6 1,644 16 4,687 7 3,172 (98) Trust and Banking 838 2 539 5 1,617 2 1,471 (45) ------- --- ------- --- -------- --- -------- --- Total before corporate 43,446 100 10,231 100 68,454 100 (3,250) 100 === === === === Corporate (6,234) (5,114) (12,715) (10,321) ------- ------- -------- -------- Total $37,212 $ 5,117 $ 55,739 $(13,571) ======= ======= ======== ========
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 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 because in many states there are premium discounts on, and cancellation rates are higher for, refinance 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. Real estate information pretax profits are generally unaffected by the type of real estate activity but increase as the volume of residential real estate loan transactions increases. PREMIUM TAXES Premium taxes were $7.9 million and $6.1 million for the six months ended June 30, 1996 and 1995, respectively. Premium taxes as a percentage of title insurance operating revenues remained constant at 1.3%. INCOME TAXES The effective income tax rate of 41.4% for the six months ended June 30, 1996, remained relatively constant when compared with the same period of the prior year. 8 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) -------------------------------- NET INCOME Net income for the three and six months ended June 30, 1996, was $19.4 million, or $1.70 per share, and $28.0 million, or $2.45 per share, respectively. 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. LIQUIDITY AND CAPITAL RESOURCES Total cash and cash equivalents increased $6.6 million and decreased $38.3 million for the six months ended June 30, 1996 and 1995, respectively. The increase for the current year period was primarily due to cash provided by operating activities, offset in part by capital expenditures, net increases in loans receivable and deposits with banks, and the repayment of debt. The decrease for the prior 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. Notes and contracts payable as a percentage of total capitalization decreased to 17.2% at June 30, 1996, from 19.1% at December 31, 1995. The decrease was primarily due to the net income contribution to equity as well as the reduction of debt. 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 1. Legal Proceedings. ----------------- The Company reported in its Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "Form 10-K"), that its subsidiary, First American Title Insurance Company ("First American"), together with other title insurers and certain individuals, is a defendant in civil actions entitled Brown, et al. v. Ticor Title Insurance Co., et al., and Segall, et al. v. Stewart Title Guaranty Co., et al., which have been consolidated, for pretrial matters, in the U.S. District Court in Phoenix, Arizona, under the title "In Re Title Search and Examination Services Antitrust Litigation," as Case No. MDL-94-1027. In subsequent developments, First American, along with the other defendants in these actions, has entered into an agreement with the plaintiffs to settle both actions that has been approved by the District Court. The Court's order approving the settlement agreement became final on July 24, 1996. The Company's management does not believe that compliance with this agreement will materially and adversely affect its financial condition. Item 6. Exhibits and Reports on Form 8-K. -------------------------------- (a) Exhibits (27) Financial Data Schedule. (b) Reports on Form 8-K The Company filed a report on Form 8-K dated April 23, 1996 (the "Form 8-K"), during the quarterly period covered by this report. The Form 8-K contains Item 5, describing the Company's acquisition of certain assets and liabilities of Residential Information Services Limited Partnership. 10 EXHIBIT INDEX Exhibit No. Description - ---------- ----------- (27) Financial Data Schedule 11 EX-27 2 FDS ART 7 - FOR 10-Q DATED 6-30-96
7 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 137,565,000 0 0 8,407,000 0 0 197,343,000 152,484,000 0 23,923,000 930,596,000 242,037,000 0 0 0 72,402,000 0 0 11,448,000 313,821,000 930,596,000 745,757,000 12,190,000 2,803,000 0 42,463,000 0 0 47,809,000 19,800,000 28,009,000 0 0 0 28,009,000 2.45 0 0 0 0 0 0 0 0
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