-----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, Mfek23YaPWoRinArmu3UPLnhUNvHayfft4UEXBy9smdoXP0QjF0txkV9YLj7UGiZ huxhpGrJgAl2eG5gyAy8/A== 0000950127-99-000075.txt : 19990211 0000950127-99-000075.hdr.sgml : 19990211 ACCESSION NUMBER: 0000950127-99-000075 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990209 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990210 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: 8-K SEC ACT: SEC FILE NUMBER: 001-13585 FILM NUMBER: 99527790 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 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------- DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 9, 1999 THE FIRST AMERICAN FINANCIAL CORPORATION (Exact Name of the Registrant as Specified in Charter) CALIFORNIA 0-3658 95-1068610 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 114 EAST FIFTH STREET, SANTA ANA, CALIFORNIA 92701-4642 (Address of Principal Executive Offices) (Zip Code) Registrants telephone number, including area code (714) 558-3211 NOT APPLICABLE (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS. See the attached Exhibit. The full impact of the change in the Registrant's revenue recognition policy discussed in the attached press release is not reasonably estimable at this time. ITEM 7. EXHIBITS 99 Press Release of The First American Financial Corporation dated February 9, 1999. 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 hereunto duly authorized. THE FIRST AMERICAN FINANCIAL CORPORATION Date: February 10, 1999 By: /s/ Thomas A. Klemens ----------------------- Name: Thomas A. Klemens Title: Executive Vice President and Chief Financial Officer EX-99 2 PRESS RELEASE EXHIBIT 99 CONTACT: Thomas A. Klemens Executive Vice President & Chief Financial Officer (714) 558-3211 Ext. 7442 FIRST AMERICAN FINANCIAL REPORTS RECORD-SETTING RESULT - FOURTH QUARTER RESULTS EXCEED ANALYSTS' ESTIMATES - SANTA ANA, CALIF., FEB. 9, 1999 The First American Financial Corporation (NYSE: FAF), the leading provider of real estate-related information products and services, announced today record-breaking annual and fourth quarter revenues, net income and earnings per share. Net income for the fourth quarter of 1998 was $53.0 million, or 85 cents per diluted share, representing a 156 percent increase over net income of $20.7 million, or 37 cents per diluted share, for the same period in 1997. The 1998 results were the highest of any previously reported fourth quarter and were achieved despite a $6.2 million pre-tax charge ($3.8 million on an after-tax basis, or 6 cents per diluted share) associated with the write-off of certain capitalized software in the company's information services operations. Analysts' consensus estimates for the fourth quarter of 1998 were 80 cents per diluted share. Revenues for the fourth quarter of 1998 were $797.3 million, an increase of 43 percent when compared with revenues of $557.0 million reported for the same period last year. The company's record-breaking 1998 profits were $178.9 million, or $2.99 per diluted share, which represents an increase of 177 percent when compared with 1997 results of $64.5 million, or $1.16 per diluted share. Record-setting revenues in 1998 totaled $2.84 billion, an increase of 49 percent when compared with last year's revenues of $1.91 billion. These profits and revenues for the year exclude a previously announced investment gain of $32.4 million, $19.8 million on an after-tax basis, or 33 cents per diluted share, relating to its joint venture with Experian. Full-year 1998 and 1997 results have been restated to reflect the company's current year acquisitions accounted for as poolings of interests. In addition, 1997 per share amounts and shares outstanding have been adjusted for the three-for-two stock split distributed on Jan. 15, 1998, and the three-for-one stock split distributed on July 17, 1998. With mortgage interest rates reaching their lowest level in five years, 1998 marked a banner year for the real estate industry. Mortgage loan originations for the year were at record levels, sales of existing homes reached a record 4.8 million units and new home sales hit a 21-year record high, with housing values growing at a pace slightly above inflation. "First American excelled in 1998's strong real estate market, profiting from the increased volume of real estate transactions nationwide and strong market share gains," stated Parker S. Kennedy, president of The First American Financial Corporation. "We are extremely excited about our prospects for 1999, particularly in our newly established consumer risk management division and our pending merger with National Information Group. "We are committed to delivering strong operating results for our shareholders in 1999. We remain focused on our successful growth strategies which include expanding our products to serve a new client base of businesses, employers, landlords and consumers, as well as increasing market share and efficiencies; enhancing our technological capabilities; and cost-effectively bundling and delivering a full menu of information products to our mortgage customers." It was also noted that during the first quarter of 1999, the company will implement a change to its accounting policy for tax service contracts in anticipation of the issuance of a Securities and Exchange Commission Staff Accounting Bulletin regarding revenue recognition. The new accounting policy will be adopted prospectively and apply to all new loans to be serviced beginning Jan. 1, 1999. The change will provide for a more ratable recognition of revenues and gross profit from tax service contracts, reducing the amount of revenue and gross profit recognized at the inception of such agreements and spreading it over the life of the contract. Although this accounting change will likely cause a reduction in tax service revenues and earnings recognized in the early years of each tax service contract, it is anticipated by the company that starting in the second year following its adoption, this method will begin to reduce the volatility in reported financial results arising from the inherent cyclicality of the company's tax service business. This change will have no impact on cash flow from operations. The First American Financial Corporation, based in Santa Ana, Calif., is the nation's leading provider of real estate-related information products and services. The corporation's subsidiaries include First American Title Insurance Company, a national and international title insurer; First American Real Estate Information Services, Inc., which offers tax monitoring, credit reporting, property data services, flood certification, field inspection services, appraisal services, loss mitigation services, mortgage loan origination and servicing systems, and mortgage document preparation nationally; First American Home Buyers Protection Corporation, a home warranty company; and First American Capital Management, an investment advisory firm. The corporation also operates First American Trust Company and First Security Thrift Company in Southern California. First American Financial has more than 17,000 employees in over 400 branches in the United States and abroad. Information about the company's subsidiaries and an archive of its press releases can be found on the Internet at http://www.firstam.com. Any statements in this release looking forward in time involve risks and uncertainties, including but not limited to the following risks: the effect of interest rate fluctuations; changes in the performance of the real estate markets; the effect of changing economic conditions; the demand for and the acceptance of the company's products; and contingencies associated with the Year 2000 issue. Quarter ended December 31: 1998 1997 - -------------------------- ---- ---- Revenues $ 797,281,000 $ 556,966,000 Income before income taxes and minority interests $ 94,567,000 $ 36,967,000 Income taxes $ 32,700,000 $ 14,900,000 Minority interests $ 8,849,000 $ 1,389,000 Net income $ 53,018,000 $ 20,678,000 Net income per share: Basic $ .88 $ .38 Diluted $ .85 $ .37 Average shares outstanding: Basic 59,942,000 54,448,000 Diluted 62,690,000 56,041,000 Year ended December 31: - ----------------------- Revenues $ 2,877,328,000 $ 1,908,923,000 Income before income taxes and minority interests $ 361,422,000 $ 109,675,000 Income taxes $ 127,700,000 $ 41,500,000 Minority interests $ 35,012,000 $ 3,676,000 Net income $ 198,710,000 $ 64,499,000 Net income per share: Basic $ 3.46 $ 1.18 Diluted $ 3.32 $ 1.16 Average shares outstanding: Basic 57,450,000 54,448,000 Diluted 59,822,000 55,717,000 Full-year 1998 and 1997 results have been restated to reflect the company's current year acquisitions accounted for as poolings of interests. In addition, 1997 per share amounts and shares outstanding have been adjusted for the three-for-two stock split distributed on Jan. 15, 1998 and the three-for-one stock split distributed on July 17, 1998. (Additional Financial Data on Following Page)
For the Three Months Ended For the Twelve Months Ended December 31, December 31, -------------------------- --------------------------- 1998 1997 1998 1997 -------------------------- --------------------------- RESULTS OF OPERATIONS REVENUES Operating revenues $ 784,747,000 $ 549,755,000 $ 2,802,190,000 $ 1,881,666,000 Investment and other income 12,534,000 7,211,000 75,138,000 27,257,000 ---------------- ---------------- ------------------ ------------------ 797,281,000 556,966,000 2,877,328,000 1,908,923,000 ---------------- ---------------- ------------------ ------------------ EXPENSES Salaries and other personnel costs 254,616,000 184,182,000 914,058,000 659,325,000 Premiums retained by agents 220,416,000 167,023,000 773,030,000 563,137,000 Other operating expenses 170,095,000 126,052,000 611,332,000 421,056,000 Provision for title losses and other claims 29,874,000 24,734,000 118,763,000 90,323,000 Depreciation and amortization 17,251,000 10,635,000 59,804,000 38,489,000 Premium taxes 5,895,000 4,349,000 20,912,000 16,904,000 Interest 4,567,000 3,024,000 18,007,000 10,014,000 ---------------- ---------------- ------------------ ------------------ 702,714,000 519,999,000 2,515,906,000 1,799,248,000 ---------------- ---------------- ------------------ ------------------ Income before income taxes and minority interests $ 94,567,000 $ 36,967,000 $ 361,422,000 $ 109,675,000 ---------------- ---------------- ------------------ ------------------ ---------------- ---------------- ------------------ ------------------ OPERATING REVENUES Title Insurance: Direct operations $ 311,179,000 $ 221,342,000 $ 1,097,989,000 $ 761,774,000 Agency operations 275,190,000 207,487,000 965,228,000 700,193,000 ---------------- ---------------- ------------------ ------------------ 586,369,000 428,829,000 2,063,217,000 1,461,967,000 Real Estate Information 176,947,000 102,652,000 656,018,000 352,833,000 Home Warranty 15,177,000 13,007,000 58,204,000 46,859,000 Trust and Banking 6,254,000 5,267,000 24,751,000 20,007,000 ---------------- ---------------- ------------------ ------------------ Total operating revenues $ 784,747,000 $ 549,755,000 $ 2,802,190,000 $ 1,881,666,000 ---------------- ---------------- ------------------ ------------------ ---------------- ---------------- ------------------ ------------------ INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS Title Insurance $ 73,547,000 $ 29,963,000 $ 227,906,000 $ 79,602,000 Real Estate Information 24,787,000 10,601,000 116,333,000 45,107,000 Home Warranty 2,799,000 2,584,000 11,406,000 8,871,000 Trust and Banking 1,509,000 1,039,000 7,156,000 4,062,000 ---------------- ---------------- ------------------ ------------------ Total before corporate expenses and minority interests 102,642,000 44,187,000 362,801,000 137,642,000 Corporate expenses 8,075,000 7,220,000 1,379,000 27,967,000 ---------------- ---------------- ------------------ ------------------ Income before income taxes and minority interests $ 94,567,000 $ 36,967,000 $ 361,422,000 $ 109,675,000 ---------------- ---------------- ------------------ ------------------ ---------------- ---------------- ------------------ ------------------ TITLE INSURANCE ORDER COUNTS FROM DIRECT OPERATIONS Total orders opened 410,000 298,800 1,585,400 1,173,300 Title orders closed 336,700 238,900 1,210,200 885,600 Includes an investment gain of $32.4 million relating to the joint venture agreement with Experian.
# # # -----END PRIVACY-ENHANCED MESSAGE-----