-----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, OjyZedr92MHzLjMYSS9aN3I1izyYSnD3G5TBTvU8D941NcUbMDlW+lj0wc0FIATF 8H09Kx/73Lu9MgU0ZvuQwg== 0000950127-99-000215.txt : 19990723 0000950127-99-000215.hdr.sgml : 19990723 ACCESSION NUMBER: 0000950127-99-000215 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990722 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990722 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: 99668771 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 FORM 8-K 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) July 22, 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. Item 7. Exhibits. 99 Press Release of The First American Financial Corporation dated July 22, 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: July 22, 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 STRONG OPERATING RESULTS FOR THE SECOND QUARTER 1999 - Results Exceed Analysts' Estimates - SANTA ANA, Calif., July 21, 1999 - The First American Financial Corporation (NYSE: FAF), the leading provider of business information and related products and services, announced today earnings and revenues for the second quarter and six months ended June 30, 1999. Earnings for the second quarter, excluding the results of operations and other effects of the merger of National Information Group (NAIG), were $35.8 million, or 57 cents per diluted share, which exceeded the analysts' consensus estimate of 55 cents per diluted share. These results include the effects of a previously reported revenue recognition accounting change for the company's tax service contracts, which became effective Jan. 1, 1999, on a prospective basis. This accounting change resulted in a decrease of $7.2 million on an after-tax basis, or 11 cents per diluted share. Thus, earnings for the second quarter of 1999 would have been $43.0 million, or 68 cents per diluted share, under the former accounting rules. These results compare to the record setting second quarter 1998 net income of $45.7 million, or 79 cents per diluted share. Earnings for the quarter ended June 30, 1999, including NAIG, which was acquired in April 1999 in a transaction accounted for as a pooling of interests, were $29.2 million, or 44 cents per diluted share. These results included the issuance of 3.0 million shares and a pretax nonrecurring merger-related charge of $10.8 million, or 10 cents per diluted share. Earnings for the six-month period were $53.1 million, or 80 cents per diluted share, compared to $71.8 million, or $1.19 per diluted share, for the same period 1998. Earnings and weighted average shares outstanding for both periods have been adjusted to reflect the merger of NAIG. Revenues for the second quarter of 1999 were $770.4 million, an 11.0 percent increase when compared with the same period last year. Revenues for the first half of 1999 totaled $1.49 billion, an increase of 12.9 percent when compared with revenues of $1.32 billion for the first half of 1998. (1998 excludes an investment gain of $32.4 million relating to the joint venture agreement with Experian.) Had it not been for the previously mentioned tax service accounting change, the company would have reported additional revenues for the second quarter and first half of 1999 of $14.6 million and $29.6 million, respectively. "Rising mortgage interest rates have led to a significant decline in refinance transactions during the second quarter, although the residential resale and commercial markets remain robust," commented Parker S. Kennedy, president of First American Financial. "As a company, we continually monitor our labor efficiencies, measured as the ratio between new orders and personnel, and adjust headcount where necessary in order to maximize profitability. "Additionally, we continued our progress toward the scheduled completion of our Year 2000 program initiatives. To date, the company has expensed approximately $15 million, of which $6 million was incurred during the second quarter of 1999 in connection with the substantial completion of the implementation phase of the plan. We expect to expense an additional $2 million by September in order to complete the plan." Kennedy continued, "We recently restructured our business segments to more accurately reflect our current operating structure. This will help investors to better understand our business and to recognize that First American should be valued at a higher multiple, similar to other business information services providers. We continue to focus on enhancing our technological capabilities in order to improve our efficiencies and expand the new consumer information and services business segment to provide noncyclical, high-margin revenues and significant opportunities for steady growth for the future. We will continue to invest in technology solutions to accomplish our goal of becoming the single-source provider for all real estate-related information and services and to leverage our infrastructure and technology to deliver a broader base of products and services to a larger and more diversified customer base." The First American Financial Corporation, based in Santa Ana, Calif., is the nation's leading provider of business information and related products and services. The corporation's three primary business segments include: title insurance; real estate information and services, which includes mortgage origination, mortgage servicing and database products and services; and consumer information and services, which provides home warranties; automotive, subprime and direct-to-consumer credit reporting; insurance and automotive tracking services; resident screening; pre-employment screening; lender-placed flood and hazard insurance; investment advisory; and trust and banking services. Through its family of companies, First American Financial has nearly 20,000 employees in more than 600 branch offices in the United States and abroad. Information about the company and an archive of its press releases can be found on the Internet at www.firstam.com. Any statements in this document that look forward in time involve risks and uncertainties, including but not limited to the following: the effect of interest rate fluctuations; changes in the performance of the real estate markets; the effect of changing economic conditions; general volatility in the capital markets; the demand for and the acceptance of the company's products; changes in applicable government regulations; consolidation among the company's customers; and contingencies associated with the Year 2000 issue. The company's actual results, performance or achievement could differ materially from those expressed in, or implied by, any forward-looking statements, and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what impact they will have on the results of operations or financial condition of the company.
Quarter ended June 30: 1999 1998 - ---------------------- ---- ---- Revenues $ 770,398,000 $ 726,420,000 Income before income taxes and minority interests $ 51,553,000 $ 84,636,000 Income taxes $ 18,300,000 $ 30,100,000 Minority interest $ 4,027,000 $ 8,418,000 Net income $ 29,226,000 $ 46,118,000 Net income per share Basic $ .45 $ .78 Diluted $ .44 $ .75 Average shares outstanding: Basic 64,763,000 59,048,000 Diluted 66,325,000 61,180,000 Six months ended June 30: Revenues $ 1,492,440,000 $ 1,354,636,000 Income before income taxes and minority interests $ 95,414,000 $ 167,404,000 Income taxes $ 33,200,000 $ 59,800,000 Minority interest $ 9,115,000 $ 16,171,000 Net income $ 53,099,000 $ 91,433,000 Net income per share Basic $ .83 $ 1.57 Diluted $ .80 $ 1.51 Average shares outstanding: Basic 64,202,000 58,407,000 Diluted 66,322,000 60,432,000 All periods presented include the operating results of NAIG accounted for under the pooling-of-interests method of accounting. (Additional Financial Data on Following Page)
For the Three Months Ended For the Six Months Ended June 30 June 30 -------------------------- ------------------------ 1999 1998 1999 1998 RESULTS OF OPERATIONS Revenues Operating revenues $ 758,153,000 $ 717,141,000 $ 1,468,515,000 $ 1,301,492,000 Investment and other income 12,245,000 9,279,000 23,925,000 53,144,000* ----------------- ---------------- ----------------- ----------------- 770,398,000 726,420,000 1,492,440,000 1,354,636,000 ----------------- ---------------- ----------------- ---------------- Expenses Salaries and other personnel costs 259,603,000 229,240,000 515,015,000 439,110,000 Premiums retained by agents 228,212,000 194,982,000 438,780,000 335,027,000 Other operating expenses 174,443,000 157,810,000 332,606,000 301,957,000 Provision for title losses and other 28,420,000 33,793,000 55,441,000 63,094,000 claims Depreciation and amortization 19,148,000 14,955,000 36,067,000 28,972,000 Premium taxes 5,987,000 5,327,000 11,296,000 9,575,000 Interest 3,032,000 5,677,000 7,821,000 9,497,000 ----------------- ---------------- ----------------- ---------------- 718,845,000 641,784,000 1,397,026,000 1,187,232,000 ----------------- ---------------- ----------------- ---------------- Income before income taxes and minority $ 51,553,000 $ 84,636,000 $ 95,414,000 $ 167,404,000 interests ================= ================ ================= ================ OPERATING REVENUES Title Insurance: Direct operations $ 280,007,000 $ 274,827,000 $ 540,330,000 $ 500,546,000 Agency operations 284,852,000 243,519,000 545,513,000 420,055,000 ----------------- ---------------- ----------------- ---------------- 564,859,000 518,346,000 1,085,843,000 920,601,000 Real Estate Information 144,082,000 157,112,000 287,727,000 298,960,000 Consumer Information 49,212,000 41,683,000 94,945,000 81,931,000 ----------------- ---------------- ----------------- ---------------- Total operating revenues $ 758,153,000 $ 717,141,000 $ 1,468,515,000 $ 1,301,492,000 ================= ================ ================= ================ INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS Title Insurance $ 49,075,000 $ 56,395,000 $ 84,236,000 $ 86,656,000 Real Estate Information 11,949,000 31,184,000 21,238,000 53,730,000 Consumer Information 8,933,000 7,794,000 17,144,000 14,047,000 ----------------- ---------------- ----------------- ---------------- Total before corporate expenses and minority interests 69,957,000 95,373,000 122,618,000 154,433,000 Corporate expenses 18,404,000 10,737,000 27,204,000 (12,971,000) ----------------- ---------------- ----------------- ----------------- Income before income taxes and minority $ 51,553,000 $ 84,636,000 $ 95,414,000 $ 167,404,000 interest TITLE INSURANCE ORDER COUNTS FROM DIRECT OPERATIONS Title orders opened 379,100 386,400 746,500 784,200 Title orders closed 319,000 302,000 614,100 562,600 * Includes an investment gain of $32.4 million relating to the joint venture agreement with Experian. All periods presented include the operating results of NAIG accounted for under the pooling-of-interests method of accounting.
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