EX-99 3 earningsdoc.txt PRESS RELEASE THE FIRST AMERICAN CORPORATION REPORTS OPERATING RESULTS FOR THE SECOND QUARTER 2002 -Results Exceed Consensus Estimates- SANTA ANA, Calif., July 25, 2002 - The First American Corporation (NYSE: FAF), the nation's leading, diversified provider of business information and related products and services, announced today operating results for the second quarter ended June 30, 2002. Net income for the second quarter of 2002 was $40.1 million, or 51 cents per diluted share, which includes a previously announced $13.6 million pretax investment loss relating to the write down of WorldCom bonds. This item totaled $8.1 million on an after-tax basis, or 10 cents per diluted share. Excluding this investment loss, net income for the second quarter was $48.1 million, or 61 cents per diluted share, which compares with net income of $54.5 million, or 75 cents per diluted share, for the second quarter of 2001. Revenues for the second quarter of 2002 were $1.09 billion, representing an increase of 18 percent when compared with revenues of $928.0 million for the same period last year. Net income for the first six months of 2002, excluding the investment losses noted above, was $92.3 million, or $1.17 per diluted share. This compares with net income of $75.4 million, or $1.03 per diluted share, for the first six months of 2001, which excludes a previously announced $3.6 million, or 3 cents per diluted share, pretax charge relating to the company's exit of the lender-placed homeowner's insurance business. Revenues for the first half of 2002 totaled $2.14 billion, an increase of 26 percent when compared with revenues of $1.69 billion for the first half of 2001. "We are pleased with our operating results for the second quarter, as business continues to be very good for First American, particularly in the residential resale markets," stated Parker S. Kennedy, president of The First American Corporation. "Refinance-related orders during the quarter declined from record-setting levels in the prior year, but were still above normal levels. In recent weeks, our real estate-related businesses experienced a significant increase in refi orders, prompted by a further decline in mortgage interest rates. This activity bodes well for our second-half results. -more- "We continue to be on track with our technology initiative of streamlining the title production process through our FAST Transaction System. Although expensive to implement in the short term, this automation process will significantly improve margins in the long run, which should result in a higher valuation for First American in the years to come." About The First American Corporation The First American Corporation is a Fortune 500 company that traces its history to 1889. As the nation's leading, diversified provider of business information, the company supplies businesses and consumers with the information resources that affect the major economic events of people's lives, such as getting a job; renting an apartment; buying a car, house, boat or airplane; securing a mortgage; opening or buying a business; and planning for retirement. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within seven primary business segments including: Title Insurance and Services, Specialty Insurance, Trust and Other Services, Mortgage Information, Property Information, Credit Information and Screening Information. With revenues of $3.75 billion in 2001, First American has more than 22,500 employees in approximately 1,300 offices throughout the United States and abroad. More information about the company and an archive of its press releases can be found at www.firstam.com. Certain statements made in this press release, including those relating to second-half results and the effects of technology solutions are forward-looking. Risks and uncertainties exist which may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: interest rate fluctuations; changes in the performance of the real estate markets; general volatility in the capital markets; changes in applicable government regulations; consolidation among the company's significant customers and competitors; legal proceedings commenced by the California attorney general and related litigation; the company's continued ability to identify businesses to be acquired; changes in the company's ability to integrate businesses which it acquires; and other factors described in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2001, filed with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made. The company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. - more - Summary of Earnings For the Three Months Ended For the Six Months Ended June 30 June 30 ---------------------------------------------------------------------------- 2002 2001 2002 2001 ---------------------------------------------------------------------------- Revenues $ 1,092,420,000 $ 928,042,000 $ 2,135,401,000 $ 1,694,783,000 Income before income taxes and minority interests $ 80,054,000 $ 106,332,000 $ 168,613,000 $ 145,530,000 Income taxes $ 26,300,000 $ 39,200,000 $ 57,300,000 $ 52,700,000 Minority interests $ 13,633,000 $ 12,615,000 $ 27,117,000 $ 19,537,000 Net income $ 40,121,000 $ 54,517,000 $ 84,196,000 $ 73,293,000 Net income per share: Basic $.56 $.83 $1.19 $1.13 Diluted $.51 $.75 $1.07 $1.00 Weighted average shares outstanding: Basic 71,454,000 65,621,000 70,725,000 64,983,000 Diluted 82,672,000 74,960,000 81,829,000 75,167,000
Summary Title Insurance Order Counts From Direct Operations For the Three Months Ended June 30 ------------------------------------------------ 2002 2001 ------------------------------------------------ Title orders opened: April 159,900 156,800 May 162,400 160,000 June 155,200 145,900 -------------------- ----------------- Second quarter total 477,500 462,700 ==================== ================= Title orders closed: April 136,400 113,900 May 130,000 123,900 June 115,100 122,200 ------------------- ----------------- Second quarter total 381,500 360,000 ==================== =================
Summary Balance Sheet Information June 30 December 31 -------------------------------------------------- 2002 2001 -------------------------------------------------- Total stockholders' equity $1,222,081,000 $1,104,452,000 Book value per share $17.08 $16.08
(Additional Financial Data Follows) - more - The First American Corporation Reports Operating Results for the Second Quarter 2002 Page 4-4-4 Selected Financial Data (Unaudited) For the Three Months Ended For the Six Months Ended June 30 June 30 --------------------------------------------- --------------------------------------------- 2002 2001 2002 2001 --------------------------------------------- --------------------------------------------- RESULTS OF OPERATIONS Revenues Operating revenues $ 1,085,471,000 $ 908,009,000 $ 2,109,590,000 $ 1,658,193,000 Investment and other income 6,949,000 20,033,000 25,811,000 36,590,000 ---------------------- ----------------------- ---------------------- ----------------------- 1,092,420,000 928,042,000 2,135,401,000 1,694,783,000 ---------------------- ----------------------- ---------------------- ----------------------- Expenses Salaries and other personnel costs 363,918,000 311,396,000 709,243,000 586,215,000 Premiums retained by agents 308,839,000 216,415,000 593,133,000 405,822,000 Other operating expenses 244,719,000 214,431,000 482,856,000 405,519,000 Provision for title losses and other claims 52,697,000 40,525,000 99,796,000 77,015,000 Depreciation and amortization 25,084,000 25,672,000 49,232,000 50,105,000 Premium taxes 8,393,000 5,704,000 15,592,000 10,712,000 Interest 8,716,000 7,567,000 16,936,000 13,865,000 ---------------------- ----------------------- ---------------------- ----------------------- 1,012,366,000 821,710,000 1,966,788,000 1,549,253,000 ---------------------- ----------------------- ---------------------- ----------------------- Income before income taxes and minority interests $ 80,054,000 $ 106,332,000 $ 168,613,000 $ 145,530,000 ====================== ======================= ====================== ======================= OPERATING REVENUES Financial Services Title Insurance and Services: Direct operations $ 419,603,000 $ 386,102,000 $ 806,777,000 $ 675,373,000 Agency operations 378,622,000 267,183,000 735,419,000 501,437,000 ---------------------- ----------------------- ---------------------- ----------------------- 798,225,000 653,285,000 1,542,196,000 1,176,810,000 Specialty Insurance 33,580,000 28,337,000 62,892,000 55,092,000 Trust and Other Service 11,538,000 9,892,000 22,694,000 18,886,000 ---------------------- ----------------------- ---------------------- ----------------------- 843,343,000 691,514,000 1,627,782,000 1,250,788,000 ---------------------- ----------------------- ---------------------- ----------------------- Information Technology Mortgage Information 108,530,000 105,094,000 216,660,000 190,735,000 Property Information 57,453,000 51,771,000 112,563,000 102,272,000 Credit Information 50,548,000 48,627,000 103,547,000 93,135,000 Screening Information 25,597,000 11,003,000 49,038,000 21,263,000 ---------------------- ----------------------- ---------------------- ----------------------- 242,128,000 216,495,000 481,808,000 407,405,000 ---------------------- ----------------------- ---------------------- ----------------------- Total operating revenues $ 1,085,471,000 $ 908,009,000 $ 2,109,590,000 $ 1,658,193,000 ====================== ======================= ====================== ======================= INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS Financial Services Title Insurance and Services $ 50,110,000 $ 63,295,000 $ 89,762,000 $ 82,161,000 Specialty Insurance 6,159,000 3,605,000 11,841,000 3,117,000 Trust and Other Services 4,587,000 2,855,000 8,812,000 5,002,000 ---------------------- ----------------------- ---------------------- ----------------------- 60,856,000 69,755,000 110,415,000 90,280,000 Information Technology Mortgage Information 29,551,000 34,214,000 61,057,000 51,723,000 Property Information 15,021,000 9,573,000 26,665,000 16,312,000 Credit Information 7,231,000 8,361,000 19,884,000 14,622,000 Screening Information 1,966,000 305,000 2,748,000 140,000 ---------------------- ----------------------- ---------------------- ----------------------- 53,769,000 52,453,000 110,354,000 82,797,000 ---------------------- ----------------------- ---------------------- ----------------------- Total before corporate expenses and minority interest 114,625,000 122,208,000 220,769,000 173,077,000 Corporate expense 34,571,000 15,876,000 52,156,000 27,547,000 Income before income taxes ---------------------- ----------------------- ---------------------- ----------------------- and minority interests $ 80,054,000 $ 106,332,000 $ 168,613,000 $ 145,530,000 ====================== ======================= ====================== ======================= # # #