10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

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 CORPORATION

(Exact name of registrant as specified in its charter)

Incorporated in California	95-1068610
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1 First American Way, Santa Ana, California	92707-5913
(Address of principal executive offices)	(Zip Code)

(714) 800-3000

(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 ¨

Indicate by check mark if the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

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 - 78,233,349 as of November 7, 2003

INFORMATION INCLUDED IN REPORT

Part I:	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		A. Condensed Consolidated Balance Sheets
		B. Condensed Consolidated Statements of Income and Comprehensive Income
		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
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk
	Item 4.	Controls and Procedures
Part II:	OTHER INFORMATION
	Item 6.	Exhibits and Reports on Form 8-K

Part I: Financial Information

Item 1: Financial Statements

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Balance Sheets

(in thousands, except percentage and share data)

	September 30, 2003			December 31, 2002
	($000)			($000)
	(unaudited)
Assets
Cash and cash equivalents	$	1,255,870		$	900,863
Accounts and accrued income receivable, net		385,103			299,040
Investments:
Deposits with savings and loan associations and banks		55,681			38,328
Debt securities		377,172			309,864
Equity securities		44,611			36,931
Other long-term investments		211,835			142,392
		689,299			527,515
Loans receivable, net		105,726			108,162
Property and equipment, at cost:
Land		43,291			43,185
Buildings		191,954			183,045
Furniture and equipment		290,578			270,004
Capitalized software		329,267			284,537
		855,090			780,771
Less - accumulated depreciation and amortization		(396,698	)		(347,695	)
		458,392			433,076
Title plants and other indexes		394,794			375,401
Deferred income taxes		46,672			20,951
Goodwill, net		714,993			563,991
Other assets		233,285			169,046
	$	4,284,134		$	3,398,045
Liabilities and Stockholders’ Equity
Demand deposits	$	74,266		$	84,473
Accounts payable and accrued liabilities		692,232			539,069
Deferred revenue		452,522			358,747
Reserve for known and incurred but not reported claims		404,478			360,305
Income taxes payable		73,584			1,518
Notes and contracts payable		459,387			425,705
Mandatorily redeemable preferred securities of the Company’s subsidiary trust whose sole assets are the Company’s $100,000 8.5% deferrable interest subordinated notes due 2012		100,000			100,000
Minority interests in consolidated subsidiaries		251,530			163,639
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $1 par value Authorized - 500,000 shares; outstanding - none
Common stock, $1 par value Authorized - 180,000,000 shares Outstanding - 77,843,000 and 73,636,000 shares		77,843			73,636
Additional paid-in capital		439,947			359,644
Retained earnings		1,317,647			987,768
Accumulated other comprehensive loss		(59,302	)		(56,459	)
		1,776,135			1,364,589
	$	4,284,134		$	3,398,045

See notes to condensed consolidated financial statements.

3

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share amounts)

	For the Three Months Ended September 30						For the Nine Months Ended September 30
	2003			2002			2003			2002
	(unaudited)						(unaudited)
Revenues
Operating revenues	$	1,681,446		$	1,179,116		$	4,499,863		$	3,287,037
Investment and other income		29,535			22,858			81,892			61,237
Net realized investment gains (losses)		5,761			(5,888	)		19,893			(18,456	)
		1,716,742			1,196,086			4,601,648			3,329,818
Expenses
Salaries and other personnel costs		490,152			381,074			1,337,138			1,090,317
Premiums retained by agents		477,504			322,148			1,251,997			915,281
Other operating expenses		348,528			264,458			969,719			745,645
Provision for policy losses and other claims		89,464			58,215			236,106			158,011
Depreciation and amortization		27,134			23,662			79,704			72,894
Premium taxes		14,348			8,889			36,814			24,481
Interest		8,853			8,618			26,165			25,554
		1,455,983			1,067,064			3,937,643			3,032,183
Income before income taxes and minority interests		260,759			129,022			664,005			297,635
Income taxes		92,100			42,800			231,200			100,100
Income before minority interests		168,659			86,222			432,805			197,535
Minority interests		26,812			18,863			75,902			45,980
Net income	$	141,847		$	67,359		$	356,903		$	151,555
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities		992			(313	)		4,212			(5,323	)
Minimum pension liability adjustment		(2,005	)		(875	)		(7,055	)		(3,250	)
		(1,013	)		(1,188	)		(2,843	)		(8,573	)
Comprehensive income	$	140,834		$	66,171		$	354,060		$	142,982
Net income per share (Note 2):
Basic	$	1.83		$	0.94		$	4.69		$	2.13
Diluted	$	1.62		$	0.84		$	4.15		$	1.91
Cash dividends per share	$	.10		$	.08		$	.30		$	.23
Weighted average number of shares (Note 2):
Basic		77,660			71,827			76,080			71,092
Diluted		88,395			82,679			87,155			82,112

See notes to condensed consolidated financial statements.

4

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

	For the Nine Months Ended September 30
	2003			2002
	(unaudited)
Cash flows from operating activities:
Net income	$	356,903		$	151,555
Adjustments to reconcile net income to cash provided by operating activities-
Provision for policy losses and other claims		236,106			158,011
Depreciation and amortization		79,704			72,894
Minority interests in net income		75,902			45,980
Net investment (gains) losses		(19,893	)		18,456
Other, net		(47,724	)		(28,475	)
Changes in assets and liabilities excluding effects of company acquisitions and noncash transactions-
Claims paid, net of recoveries		(196,499	)		(141,968	)
Net change in income tax accounts		50,768			(2,776	)
Increase in accounts and accrued income receivable		(74,128	)		(42,862	)
Increase in accounts payable and accrued liabilities		134,558			73,074
Increase in deferred revenue		93,600			50,366
Other, net		(30,072	)		(23,737	)
Cash provided by operating activities		659,225			330,518
Cash flows from investing activities:
Net cash effect of company acquisitions/dispositions		(111,540	)		(31,767	)
Net increase in deposits with banks		(16,856	)		(13,132	)
Net decrease (increase) in loans receivable		2,436			(4,768	)
Purchases of debt and equity securities		(242,885	)		(250,568	)
Proceeds from sales of debt and equity securities		138,099			60,811
Proceeds from maturities of debt securities		41,466			111,388
Net decrease in other investments		45,468			15,913
Capital expenditures		(81,387	)		(70,997	)
Purchases of capitalized data		(14,794	)		(13,472	)
Proceeds from sale of property and equipment		3,067			2,934
Cash used for investing activities		(236,926	)		(193,658	)
Cash flows from financing activities:
Net change in demand deposits		(10,207	)		(3,149	)
Proceeds from issuance of debt		19,398			6,543
Repayment of debt		(38,342	)		(19,096	)
Proceeds from exercise of stock options		14,978			7,521
Proceeds from the issuance of stock to employee benefit plans		4,676			3,113
Distributions to minority shareholders		(35,467	)		(24,063	)
Cash dividends		(22,328	)		(17,205	)
Cash used for financing activities		(67,292	)		(46,336	)
Net increase in cash and cash equivalents		355,007			90,524
Cash and cash equivalents - Beginning of year		900,863			645,240
- End of third quarter	$	1,255,870		$	735,764
Supplemental information:
Cash paid during the first nine months for:
Interest	$	23,327		$	18,641
Premium taxes	$	37,477		$	24,563
Income taxes	$	183,909		$	101,992
Noncash investing and financing activities:
Shares issued for employee benefit plans	$	42,376		$	17,491
Liabilities incurred in connection with company acquisitions	$	109,490		$	46,927
Company acquisitions in exchange for common stock	$	22,480		$	34,880

See notes to condensed consolidated financial statements.

5

THE FIRST AMERICAN 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 Securities and Exchange 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 2002 amounts have been reclassified to conform to the 2003 presentation. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Note 2 – Earnings Per Share

	For the Three Months Ended September 30				For the Nine Months Ended September 30
(in thousands, except per share amounts)	2003		2002		2003		2002
Numerator:
Net Income-numerator for basic net income per share	$	141,847	$	67,359	$	356,903	$	151,555
Effect of dilutive securities
Add: Convertible debt – interest expense (net of tax)		1,700		1,748		5,134		5,282
Net Income–numerator for dilutive net income per share	$	143,547	$	69,107	$	362,037	$	156,837
Denominator:
Weighted average shares-denominator For basic net income per share		77,660		71,827		76,080		71,092
Effect of dilutive securities:
Employee stock options		2,365		2,333		2,650		2,464
Convertible debt		8,370		8,519		8,425		8,556
Denominator for diluted net income per share		88,395		82,679		87,155		82,112
Basic net income per share	$	1.83	$	0.94	$	4.69	$	2.13
Diluted net income per share	$	1.62	$	0.84	$	4.15	$	1.91
Antidilutive stock options		320		2,549		1,346		3,624

6

Note 3 – Stock Options

Effective December 15, 2002, the Company adopted Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, which amends Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation” (SFAS 148). In accounting for its plans, the Company, as allowable under the provisions of SFAS 148, applies Accounting Principles Board Opinions No. 25, “Accounting for Stock Issued to Employees.” As a result of this election, the Company does not recognize compensation expense for its stock option plans. Had the Company determined compensation cost based on the fair value for its stock options at grant date, net income and earnings per share would have been reduced to the pro forma amounts as follows:

	For the Three Months Ended September 30						For the Nine Months Ended September 30
(in thousands, except per share amounts)	2003			2002			2003			2002
Net Income:
As reported	$	141,847		$	67,359		$	356,903		$	151,555
Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of tax		(1,960	)		(1,418	)		(4,916	)		(3,190	)
Pro forma	$	139,887		$	65,941		$	351,987		$	148,365
Net income per share:
As reported:
Basic	$	1.83		$	0.94		$	4.69		$	2.13
Diluted	$	1.62		$	0.84		$	4.15		$	1.91
Pro forma:
Basic	$	1.80		$	0.92		$	4.63		$	2.09
Diluted	$	1.60		$	0.82		$	4.10		$	1.87

Note 4 – Business Combinations

On June 5, 2003, the Company formed First Advantage Corporation, which was created through the merger of First American Corporation’s screening information businesses with the operations of US SEARCH.com Inc. Under the terms of the agreement, the former stockholders of US SEARCH received 0.04 of a Class A common share of First Advantage for each share of US SEARCH owned prior to the merger. The former stockholders of US SEARCH hold approximately 20 percent of the total shares of First Advantage. The First American Corporation received Class B common stock, entitling 10 votes for each share, representing approximately 80 percent of the total shares of First Advantage. Approximately $3.0 million of intangible assets with definite lives and $54.4 million of goodwill was recorded by First Advantage as part of this transaction. The new public company trades Class A common stock as “FADV” on the NASDAQ National Market System.

First Advantage Corporation completed 5 acquisitions during the current year. The aggregate purchase price of these acquisition was $8.5 million in cash, $9.2 million in notes payable and .7 million shares, valued at $13.0 million of First Advantage’s Class A common stock. The purchase price of each acquisition was allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis. As a result of these acquisitions, First Advantage recorded approximately $4.1 million of intangible assets with definite lives and $25.5 million of goodwill. In accounting for the First Advantage shares issued in these acquisitions, the Company, whose ownership interest was reduced to approximately 77 percent, recorded a pretax gain of $1.6 million.

In addition to the acquisitions discussed above, the Company acquired 26 companies during the nine months ended September 30, 2003. These acquisitions were not material individually or in the aggregate. Of these acquisitions, 23 have been included in the Company’s title insurance segment and three are in the Company’s property information segment. The aggregate purchase price was $91.9 million in cash, $31.8 million in notes payable and .9 million shares, valued at $22.5 million, of the Company’s common stock. The purchase price for each was allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis. As a result of these acquisitions, the Company has preliminarily recorded approximately $11.4 million of intangible assets with definite lives and $70.5 million of goodwill. The Company is awaiting information necessary to finalize the purchase accounting adjustments for these acquisitions and the final purchase price allocations could change the recorded intangible asset and goodwill amounts.

7

Note 5 – Segment Information

In order to report financial results in a manner consistent with the reporting responsibilities of the Company’s management, the Company established seven reporting segments that fall within two primary business groups, Financial Services and Information Technology. The Financial Services Group includes Title Insurance and Services, Specialty Insurance and Trust and Other Services. The Information Technology Group includes Mortgage Information, Property Information, Credit Information and Screening Information.

For the three months ended September 30, 2003:

(in thousands)	Revenues		Income (loss) before income taxes and minority interests			Depreciation and amortization		Capital expenditures
Financial Services
Title Insurance and Services	$	1,262,666	$	167,478		$	9,357	$	12,862
Specialty Insurance		58,524		8,741			505		261
Trust and Other Services		10,529		2,960			190		121
		1,331,719		179,179			10,052		13,244
Information Technology
Mortgage Information		166,624		64,733			3,464		3,140
Property Information		105,001		26,976			6,075		10,720
Credit Information		64,354		14,987			2,787		72
Screening Information		47,644		2,525			2,395		1,890
		383,623		109,221			14,721		15,822
		1,715,342		288,400			24,773		29,066
Corporate		1,400		(27,641	)		2,361		1,421
	$	1,716,742	$	260,759		$	27,134	$	30,487

For the three months ended September 30, 2002:

(in thousands)	Revenues			Income (loss) before income taxes and minority interests			Depreciation and amortization		Capital expenditures
Financial Services
Title Insurance and Services	$	868,298		$	80,026		$	10,218	$	11,296
Specialty Insurance		40,156			6,014			496		565
Trust and Other Services		9,635			2,443			259		143
		918,089			88,483			10,973		12,004
Information Technology
Mortgage Information		120,759			39,188			2,666		2,645
Property Information		76,058			21,405			5,262		2,757
Credit Information		56,213			10,943			2,178		2,614
Screening Information		26,786			1,120			679		1,148
		279,816			72,656			10,785		9,164
		1,197,905			161,139			21,758		21,168
Corporate		(1,819	)		(32,117	)		1,904		2,845
	$	1,196,086		$	129,022		$	23,662	$	24,013

8

For the nine months ended September 30, 2003:

(in thousands)	Revenues		Income (loss) before income taxes and minority interests			Depreciation and amortization		Capital expenditures
Financial Services
Title Insurance and Services	$	3,307,986	$	394,279		$	27,940	$	35,381
Specialty Insurance		161,170		22,821			1,417		1,061
Trust and Other Services		30,637		8,403			634		145
		3,499,793		425,503			29,991		36,587
Information Technology
Mortgage Information		469,437		173,183			10,986		11,067
Property Information		297,599		82,809			17,054		15,636
Credit Information		214,181		59,565			8,797		4,572
Screening Information		116,636		6,258			5,965		4,647
		1,097,853		321,815			42,802		35,922
		4,597,646		747,318			72,793		72,509
Corporate		4,002		(83,313	)		6,911		8,878
	$	4,601,648	$	664,005		$	79,704	$	81,387

For the nine months ended September 30, 2002:

(in thousands)	Revenues			Income (loss) before income taxes and minority interests			Depreciation and amortization		Capital expenditures
Financial Services
Title Insurance and Services	$	2,427,531		$	169,788		$	33,361	$	37,297
Specialty Insurance		107,843			17,855			1,442		1,604
Trust and Other Services		32,421			11,255			821		209
		2,567,795			198,898			35,624		39,110
Information Technology
Mortgage Information		339,808			100,245			7,047		7,043
Property Information		196,814			48,070			14,274		8,527
Credit Information		164,968			30,827			8,083		7,782
Screening Information		74,240			3,868			1,963		2,823
		775,830			183,010			31,367		26,175
		3,343,625			381,908			66,991		65,285
Corporate		(13,807	)		(84,273	)		5,903		5,712
	$	3,329,818		$	297,635		$	72,894	$	70,997

9

Note 6 – Goodwill and Other Intangible Assets

A reconciliation of the changes in the carrying amount of net goodwill, by operating segment, for the nine months ended September 30, 2003, is as follows (in thousands):

	Balance as of December 31, 2002		Acquired (Disposed of) During the Period			Impairment Losses		Balance as of September 30, 2003
Financial Services
Title Insurance and Services	$	149,013	$	47,394		$	—	$	196,407
Specialty Insurances		19,794		—			—		19,794
Trust and Other Services		—		—			—		—
Information Technology
Mortgage Information		72,423		297			—		72,720
Property Information		124,678		24,583			—		149,261
Credit Information		86,900		(10,562	)		—		76,338
Screening Information		111,183		89,290			—		200,473
	$	563,991	$	151,002		$	—	$	714,993

The Company had $44.9 million of intangible assets included in “Other assets” at September 30, 2003, with definite lives ranging from three to seven years. These assets, comprised primarily of customer lists and noncompete agreements, are being amortized in a manner consistent with periods prior to the adoption of SFAS 142.

Note 7 – Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial instruments with Characteristics of both Liabilities and Equity. This statement is effective for interim periods beginning after June 15, 2003 and establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. The implementation of this statement required the Company to reclassify its “Mandatorily redeemable preferred securities of the Company’s subsidiary trust whose sole assets are the Company’s $100,000,000 8.5% deferrable interest subordinated notes due 2012” as debt. As a result of the change in classification, the Company’s debt-to-total capitalization ratio was increased. This change has not had any other impact on the Company’s financial condition or results of operations.

Note 8 – Subsequent Events

On October 1, 2003, the Company completed the previously announced acquisition of the real estate tax service and flood hazard certification businesses of Transamerica Finance Corporation for a net cash purchase price of $375 million. The Company will combine the new companies with its existing tax service and flood certification businesses, which are included in the Company’s mortgage information and services segment.

The Company is in the process of analyzing the fair value of the assets acquired and liabilities assumed utilizing a variety of valuation techniques including third party valuation advisors. This process should be substantially completed by the end of 2003 and is expected to result in the Company recording goodwill and other intangible assets of approximately $400 million.

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). The purpose of FIN 46 is to establish guidance for consolidation of variable interest entities that function to support the activities of the primary beneficiary. In October 2003, the FASB issued FIN 46-6, “Effective Date of FASB Interpretation No. 46, Consolidation of Variable Interest Entities” deferring the effective date for applying the FIN 46 provisions until periods that end after December 15, 2003. The adoption of FIN 46 will have not have a material impact on the Company’s financial condition or results of operations.

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements made in this 10-Q, including those relating to anticipated cash requirements, 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; 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 December 31, 2002, 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.

RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosure of contingencies. A summary of the significant critical accounting policies of the Company can be found in Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Additionally, pursuant to SFAS 142, the Company is required to perform an annual impairment test for goodwill and other intangible assets. This impairment test is performed utilizing a variety of valuation techniques, all which require management to make estimates and judgments, and include discounted cash flow analysis, market approach valuations and the use of third party valuation advisors. Certain of these valuation techniques are also utilized by the Company in accounting for business combinations, primarily in the determination of the fair value of acquired assets and liabilities.

OVERVIEW

Record-setting levels of mortgage applications in the second quarter of 2003 produced record-breaking order closings for the Company in the third quarter of 2003. This, coupled with operating efficiencies resulting from technology enhancements and related infrastructure cost-cutting initiatives, as well as other expense reductions in reaction to the slowdown in new refinance transactions, resulted in record-breaking quarterly results for the Company for the three months ended September 30, 2003. Mortgage application levels remained seasonally strong in the third quarter of 2003, although down from the record levels of the second quarter of 2003. The decrease from the second quarter was due to a slowdown in refinance transactions as a result of increasing mortgage interest rates. The Company began to reduce expenses in the third quarter of 2003 in reaction to the slowdown in refinance transactions and will continue to monitor expenses and personnel in relation to new incoming orders. Net income for the three months ended September 30, 2003, was $141.8 million, or $1.62 per diluted share, compared with net income of $67.4 million, or $0.84 per diluted share for the three months ended September 30, 2002. Net income for the nine months ended September 30, 2003, was $356.9 million, or $4.15 per diluted share, compared with net income of $151.6 million, or $1.91 per diluted share for the nine months ended September 30, 2002.

11

OPERATING REVENUES

Set forth below is a summary of operating revenues for each of the Company’s segments (in thousands, except percentages).

	Three Months Ended September 30						Nine Months Ended September 30
	2003		%	2002		%	2003		%	2002		%
Financial Services:
Title Insurance:
Direct operations	$	654,861	39	$	464,893	40	$	1,721,134	38	$	1,271,670	39
Agency operations		589,632	35		393,034	33		1,547,386	35		1,128,453	34
		1,244,493	74		857,927	73		3,268,520	73		2,400,123	73
Specialty Insurance		55,180	3		37,426	3		152,213	3		100,318	3
Trust and Other Services		10,523	1		9,647	1		30,630	1		32,341	1
		1,310,196	78		905,000	77		3,451,363	77		2,532,782	77
Information Technology:
Mortgage Information		163,473	10		119,718	10		459,837	10		336,378	10
Property Information		97,952	6		71,024	6		278,254	6		183,587	6
Credit Information		62,200	3		56,642	5		193,844	4		160,189	5
Screening Information		47,625	3		26,732	2		116,565	3		74,101	2
		371,250	22		274,116	23		1,048,500	23		754,255	23
Total Operating Revenues	$	1,681,446	100	$	1,179,116	100	$	4,499,863	100	$	3,287,037	100

Financial Services. Operating revenues from direct title operations increased 40.9% and 35.3% for the three and nine months ended September 30, 2003, respectively, when compared with the same periods of the prior year. These increases were primarily due to an increase in the number of title orders closed by the Company’s direct operations. The Company’s direct operations closed 589,300 and 1,578,100 title orders during the current three and nine month periods, respectively, increases of 38.7% and 31.6% when compared with 425,000 and 1,199,500 closed during the same periods of the prior year. These increases were primarily due to the factors mentioned above in the Overview section. Operating revenues from agency operations increased 50.0% and 37.1% for the three and nine months ended September 30, 2003, respectively, when compared with the same periods of the prior year. These fluctuations were primarily due to the same factors affecting direct title operations and to the timing of the reporting of agency remittances. Specialty insurance operating revenues increased 47.4% and 51.7% for the three and nine months ended September 30, 2003, respectively, when compared with the same periods of the prior year. These increases were primarily due to geographic expansion at the Company’s home warranty division and market share growth at the property and casualty insurance division.

Information Technology. Mortgage information operating revenues increased 36.6% and 36.7% for the three and nine months ended September 30, 2003, respectively, when compared with the same periods of the prior year. These increases were primarily due to market share gains and to the increase in real estate activity. Property information operating revenues increased 37.9% and 51.6% for the three and nine months ended September 30, 2003, respectively, when compared with the same periods of the prior year. These increases were primarily attributable to market share gains, the increase in real estate activity, and $15.1 million and $44.5 million of operating revenues contributed by new acquisitions. Credit information operating revenues increased 9.8% and 21.0% for the three and nine months ended September 30, 2003, respectively, when compared with the same periods of the prior year. These increases were primarily due to an increase in the demand for mortgage credit information offset in part by a $6.2 million reduction in operating revenues for the nine months ended September 30, 2003, due to the previously announced sale of the Company’s subsidiary, FASTRAC Systems, Inc., in the latter part of the third quarter of 2002. Screening information operating revenues increased 78.2% and 57.3% for the three and nine months ended September 30, 2003, respectively, when compared with the same periods of the prior year. These increases were primarily attributable to $19.9 million and $37.3 million of operating revenues contributed by new acquisitions for the respective periods.

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INVESTMENT AND OTHER INCOME

Investment and other income totaled $29.5 million and $81.9 million for the three and nine months ended September 30, 2003, respectively, representing increases of $6.7 million, or 29.2%, and $20.7 million, or 33.7%, when compared with the same periods of the prior year. These increases resulted primarily from an increase in earnings from unconsolidated affiliates, which are accounted for under the equity method of accounting.

NET REALIZED INVESTMENT GAINS (LOSSES)

Net realized investment gains totaled $5.8 million and $19.9 million for the three and nine months ended September 30, 2003, respectively, compared with losses totaling $5.9 million and 18.5 million for the three and nine months ended September 30, 2002, respectively. The current nine-month period included a $13.1 million realized investment gain associated with the merger of the Company’s Credit Online business with DealerTrack Holdings, Inc. Included in both prior year periods was a $2.6 million loss associated with the sale of the Company’s subsidiary, FASTRAC Systems, Inc., and in the prior year nine-month period, $13.6 million of investment losses resulting from the write-down of WorldCom bonds.

TOTAL OPERATING EXPENSES

Financial Services. Salaries and other personnel costs for the Financial Services group, which primarily reflects the title insurance segment, were $362.6 million and $976.9 million for the three and nine months ended September 30, 2003, respectively, increases of $80.6 million, or 28.6%, and $168.3 million, or 20.8%, when compared with the same periods of the prior year. These increases were primarily attributable to incremental labor costs incurred to service the increase in business volume, offset in part by operational efficiencies in the title insurance segment which resulted from the Company’s FAST technology and related cost-cutting initiatives. Salaries and other personnel costs as a percentage of operating revenues for the Financial Services group were 27.7% and 28.3% for the three and nine months ended September 30, 2003, respectively, and 31.2% and 31.9% for the respective periods of the prior year.

Agents retained $477.5 million and $1.25 billion of title premiums generated by agency operations for the three and nine months ended September 30, 2003, respectively, which compares with $322.1 million and $915.3 million for the same periods of the prior year. The percentage of title premiums retained by agents ranged from 80.9% to 82.0% 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 for the Financial Services group, which primarily reflect the title insurance segment, were $205.2 million and $554.9 million for the three and nine months ended September 30, 2003, respectively, increases of $56.5 million, or 38.0%, and $124.3 million, or 29.0%, when compared with the same periods of the prior year. These increases were primarily the result of incremental costs incurred to service the increase in business volume. Other operating expenses as a percentage of operating revenues for the Financial Services group were 15.7% and 16.1% for the three and nine months ended September 30, 2003, and 16.4% and 17.0% for the respective periods of the prior year.

The provision for policy losses and other claims primarily represents title insurance claims, home warranty claims and property and casualty insurance claims. For the title insurance segment, the claims provision as a percentage of title insurance operating revenues was 4.1% for the current nine-month period and 4.0% for the same period of the prior year. This increase in rate reflects marginal adverse claims development experience for certain prior policy years. For the home warranty business, the claims provision as a percentage of home warranty operating revenues was 49.5% for the current nine-month period and 50.4% for the same period of the prior year. This decrease in rate was primarily due to a reduction in the average cost per claim, which was primarily attributable to the elimination of higher-cost vendor contractors that were servicing claims in new geographic areas. For the property and casualty business, the claims provision as a percentage of property and casualty insurance operating revenues was 66.6% for the current nine-month period and 64.6% for the same period of the prior year. This increase in rate was due to high claims activity experienced primarily during the first quarter of 2003 resulting from insured property damaged in Southern California as a result of extraordinarily high wind conditions.

Premium taxes, which relate to the title insurance and specialty insurance segments, were $36.8 million and $24.5 million for the nine months ended September 30, 2003 and 2002, respectively. Premium taxes as a percentage of title insurance and specialty insurance operating revenues were 1.1% for the current nine-month period and 1.0% for the same period of the prior year. The slight variation in rate was primarily due to the composition and geographical mix of the operating revenues (i.e., tax rates and bases vary from state to state).

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Information Technology. Information technology personnel and other operating expenses were $251.3 million and $715.6 million for the three and nine months ended September 30, 2003, respectively, increases of $58.3 million, or 30.2%, and $163.2 million, or 29.6%, when compared with the same periods of the prior year. Excluding acquisition activity, the increases were $25.9 million, or 13.4% for the current three-month period, and $98.4 million, or 17.8% for the current nine-month period. These increases were primarily due to costs incurred to service the increase in business volume and increased technology costs. Personnel and other operating expenses as a percentage of operating revenues for the information technology group were 67.7% and 68.3% for the three and nine months ended September 30, 2003, respectively, down from 70.4% and 73.2% for the same periods of the prior year.

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

Set forth below is a summary of income before income taxes and minority interests for each of the Company’s segments (in thousands except percentages).

	Three Months Ended September 30								Nine Months Ended September 30
	2003			%	2002			%	2003			%	2002			%
Financial Services
Title Insurance and Services	$	167,478		58	$	80,026		50	$	394,279		53	$	169,788		44
Speciality Insurance		8,741		3		6,014		4		22,821		3		17,855		5
Trust and Other Services		2,960		1		2,443		1		8,403		1		11,255		3
		179,179		62		88,483		55		425,503		57		198,898		52
Information Technology
Mortgage Information		64,733		23		39,188		24		173,183		23		100,245		26
Property Information		26,976		9		21,405		13		82,809		11		48,070		13
Credit Information		14,987		5		10,943		7		59,565		8		30,827		8
Screening Information		2,525		1		1,120		1		6,258		1		3,868		1
		109,221		38		72,656		45		321,815		43		183,010		48
Total before corporate		288,400		100		161,139		100		747,318		100		381,908		100
Corporate		(27,641	)			(32,117	)			(83,313	)			(84,273	)
Total	$	260,759			$	129,022			$	664,005			$	297,635

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. Most of the businesses included in the Information Technology group are database intensive, with a relatively high proportion of fixed costs. As such, profit margins generally improve as revenues increase. Revenues for the mortgage and property information segments, like the title insurance segment, are primarily dependent on the level of real estate activity and the cost and availability of mortgage funds. Revenues for the credit information segment are in part impacted by real estate activity, but also by the consumer and automobile sectors.

INCOME TAXES

The effective income tax rate (income tax expense as a percentage of pretax income after minority interest expense) was 39.3% for the nine months ended September 30, 2003, and 39.8% for the same period of the prior year. The decrease in effective rate was primarily attributable to changes in the ratio of permanent differences to pretax profits. A large portion of the Company’s minority interest expense is attributable to a limited liability company subsidiary which, for tax purposes, is treated as a partnership. Accordingly, no income taxes have been provided for that portion of the minority interest expense.

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MINORITY INTERESTS

Minority interest expense was $26.8 million and $75.9 million for the three and nine months ended September 30, 2003, respectively, increases of $7.9 million and $29.9 million when compared with the same periods of the prior year. These increases were primarily attributable to the increase in operating results of the Company’s joint venture with Experian.

NET INCOME

Net income for the three and nine months ended September 30, 2003, was $141.8 million, or $1.62 per diluted share, and $356.9 million, or $4.15 per diluted share, respectively. Net income for the three and nine months ended September 30, 2002, was $67.4 million, or $0.84 per diluted share, and $151.6 million, or $1.91 per diluted share, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Total cash and cash equivalents increased $355.0 million and $90.5 million for the nine months ended September 30, 2003 and 2002, respectively. The increase for the current year period as well as for the prior year period was primarily due to cash generated by operating activities, offset in part by capital expenditures, purchases of debt and equity securities, the cash effect of company acquisitions, the repayment of debt, distributions to minority shareholders and cash dividends.

Notes and contracts payable as a percentage of total capitalization decreased to 21.6% at September 30, 2003 from 25.6% at December 31, 2002. This decrease was primarily due to net income for the nine months ended September 30, 2003 and debt repayments. In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial instruments with Characteristics of both Liabilities and Equity. This statement became effective for the current quarter and establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. The implementation of this statement required the Company to reclassify its “Mandatorily redeemable preferred securities of the Company’s subsidiary trust whose sole assets are the Company’s $100,000,000 8.5% deferrable interest subordinated notes due 2012” as debt.

On October 1, 2003, the Company completed the previously announced acquisition of Transamerica Finance Corporation’s real estate tax service and flood hazard certification businesses for a net purchase price of $375.0 million. The acquisition was made through the Company’s 80% owned joint venture with Experian. There was no debt assumed in the transaction and the purchase price was funded with $125.0 million of existing cash at the joint venture, a $200.0 million contribution from the Company and a $50.0 million contribution from Experian.

Management believes that all of its anticipated operating cash requirements for the immediate future will be met from internally generated funds.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s risk since filing its Form 10K for the year ended December 31, 2002.

Item 4.    Controls and Procedures

The Company’s President and Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, have concluded that, as of the end of the fiscal quarter covered by this report on Form 10-Q, the Company’s disclosure controls and procedures were effective to provide reasonable assurances that information required to be disclosed in the reports filed or submitted under such Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There was no change in the Company’s internal control over financial reporting during the quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II: Other Information

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

(10	)(a)	Amendment No. 1, dated June 30, 2003, to Contribution and Joint Venture Agreement By and Among The First American Financial Corporation and Experian Information Solutions, Inc., et al, dated November 30, 1997.
(10	)(b)	Amendment No. 2, dated September 23, 2003, to Contribution and Joint Venture Agreement By and Among The First American Financial Corporation and Experian Information Solutions, Inc., et al., dated November 30, 1997.
(31	)(a)	Certification by Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
(31	)(b)	Certification by Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
(32	)(a)	Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
(32	)(b)	Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

(b) Reports on Form 8-K

During the quarterly period covered by this report, the Company filed a report on Form 8-K dated September 4, 2003 (announcing the Company’s intent to acquire Transamerica Finance Corporation’s tax and flood companies). Subsequent to such quarterly period, the Company filed a report on Form 8-K dated October 1, 2003 (announcing the completion of the acquisition of Transamerica Finance Corporation’s tax and flood companies) and furnished a report on Form 8-K dated October 22, 2003 (reporting on third quarter 2003 earnings).

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 CORPORATION

(Registrant)

/s/    THOMAS A. KLEMENS        

Thomas A. Klemens
Executive Vice President
Chief Financial Officer

/s/    MAX O. VALDES        

Max O. Valdes
Vice President
Chief Accounting Officer

Date: November 14, 2003

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EXHIBIT INDEX

Exhibit No.	Description	Sequentially Numbered Page
(10)(a)	Amendment No. 1, dated June 30, 2003, to Contribution and Joint Venture Agreement By and Among The First American Financial Corporation and Experian Information Solutions, Inc., et al, dated November 30, 1997.
(10)(b)	Amendment No. 2, dated September 23, 2003, to Contribution and Joint Venture Agreement By and Among The First American Financial Corporation and Experian Information Solutions, Inc., et al., dated November 30, 1997.
(31)(a)	Certification by Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
(31)(b)	Certification by Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
(32)(a)	Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
(32)(b)	Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

EX-10.A

Exhibit (10)(a)

AGREEMENT OF AMENDMENT

AGREEMENT OF AMENDMENT, dated as of June 30, 2003 (this “Amendment”), by and between, The First American Corporation, a California corporation (“First American”), for itself and on behalf of the First American Subsidiaries (as defined below), and Experian Information Solutions, Inc., an Ohio corporation (“Experian”; First American, together with Experian, each a “Party” and, collectively, the “Parties”).

W I T N E S S E T H:

WHEREAS, First American, certain subsidiaries of First American (the “First American Subsidiaries”) and Experian are parties to that certain Contribution and Joint Venture Agreement, made as of November 30, 1997 (the “Contribution Agreement”);

WHEREAS, First American, the First American Subsidiaries and Experian are parties to that certain Operating Agreement for First American Real Estate Solutions, a California limited liability company (“FARES”), dated as of November 30, 1997 (the “Operating Agreement”);

WHEREAS, First American Real Estate Information Services, Inc., one of the First American Subsidiaries (“FAREISI”), and Experian have formed a new California limited liability company, First American Real Estate Solutions II LLC (“FARES II”) for the purpose of owning and operating the ultimate entity which will own and operate the assets and liabilities of Abstracters’ Information Service, Inc., which assets and liabilities FAREISI contributed to FARES II on even date hereof.

WHEREAS, the Parties desire to amend the Contribution Agreement and the Operating Agreement as provided herein.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows:

1. Defined Terms. Unless otherwise defined herein, capitalized terms used in (a) Section 3 of this Amendment shall have the meaning given thereto in the Contribution Agreement and (b) Section 4 of this Amendment shall have the meaning given thereto in the Operating Agreement.

2. Effectiveness of this Amendment. This Amendment shall become effective as of the date first above referenced (such date, the “Effective Date”).

3. Amendment to the Contribution Agreement. The Contribution Agreement is amended as follows:

(a) The following definition is added to Section 1.01:

““FARES II” shall mean First American Real Estate Solutions II LLC, a California limited liability company.

(b) The definition of “Adjusted Earnings” in Section 1.01 is deleted in its entirety and replaced with the following definition:

““Adjusted Earnings” means, for any period, the profits of NEWCO and FARES II, on a consolidated basis, assuming an effective tax rate of 40% (which percentage the Parties may from time to time hereafter agree to adjust to reflect material changes in tax rates), as determined in accordance with US GAAP and excluding extraordinary gains and charges, restructuring charges and other unusual or infrequently occurring items.”

(c) The phrase “NEWCO’s gross revenues” in both Section 5.10(a) and Section 5.10(b) is deleted in its entirety and replaced with the following phrase: “NEWCO’s and FARES II’s gross revenues, on a consolidated basis,”.

(d) The phrase “so long as the value of the Membership Interest then owned by EXPERIAN” in Section 6.01(a) is deleted in its entirety and replaced with the following phrase: “so long as the collective value of the Membership Interest and the membership interest in FARES II then owned by EXPERIAN”.

(e) The phrase “100% of the Membership Interest then owned by EXPERIAN” in each of Section 6.01(a) and 6.02(a) is deleted in its entirety and replaced with the following phrase: “100% of the Membership Interest then owned by Experian and 100% of the membership interest in FARES II then owned by EXPERIAN”.

(f) The phrase “100% of the Membership Interest of EXPERIAN” in Section 6.01(b) and 6.02(b) is deleted in its entirety and replaced with the following phrase: “100% of the Membership Interest then owned by EXPERIAN and 100% of the membership interest of FARES II then owned by EXPERIAN”.

(g) The phrase “EXPERIAN’s Membership Interest” in Section 6.01(b) and 6.02(b) is deleted in its entirety and replaced with the following phrase: “EXPERIAN’s Membership Interest and EXPERIAN’s membership interest in FARES II”.

(h) [Intentionally left blank.]

(i) [Intentionally left blank.]

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(j) The phrase “of the Membership Interest then owned by EXPERIAN” in Section 6.02(c) is deleted in its entirety and replaced with the following phrase: “of the Membership Interest then owned by EXPERIAN and the membership interest of FARES II then owned by EXPERIAN”.

(k) The phrase “100% of the Membership Interest then owned by EXPERIAN” in Section 6.03 is deleted in its entirety and replaced with the following phrase: “100% of the Membership Interest then owned by EXPERIAN and 100% of the membership interest in FARES II then owned by EXPERIAN”.

(l) The phrase “100% of its Membership Interest” in Section 6.03 is deleted in its entirety and replaced with the following phrase: “100% of its Membership Interest and 100% of its membership interest in FARES II”.

(m) The phrase “sell its Membership Interest” in Section 6.03 is deleted in its entirety and replaced with the following phrase: “sell its Membership Interest and its membership interest in FARES II”.

(n) The phrase “representing such Membership Interest” in Section 6.03 is deleted in its entirety and replaced with the following phrase: “representing such Membership Interest and such membership interest in FARES II”.

(o) The phrase “sale of EXPERIAN’s Membership Interest” in Section 6.03 is deleted in its entirety and replaced with the following phrase: “sale of EXPERIAN’s Membership Interest and EXPERIAN’s membership interest in FARES II”.

(p) The phrase “100% of the Membership Interest then owned by EXPERIAN” in Section 6.04 is deleted in its entirety and replaced with the following phrase: “100% of the Membership Interest and 100% of the membership interests of FARES II then owned by EXPERIAN”.

(q) The phrase “100% of its Membership Interest” in Section 6.04 is deleted in its entirety and replaced with the following phrase: “100% of its Membership Interest and 100% its membership interest in FARES II”.

(r) The phrase “at which such Membership Interest” in Section 6.04 is deleted in its entirety and replaced with the following phrase: “at which such Membership Interest and such membership interest in FARES II”.

(s) The phrase “its Membership Interest pursuant” in Section 6.04 is deleted in its entirety and replaced with the following phrase: “its Membership Interest and membership interest in FARES II pursuant”.

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(t) The phrase “representing such Membership Interest” in Section 6.04 is deleted in its entirety and replaced with the following phrase: “representing such Membership Interest and such membership interest in FARES II”.

(u) The phrase “sale of EXPERIAN’s Membership Interest” in Section 6.04 is deleted in its entirety and replaced with the following phrase: “sale of EXPERIAN’s Membership Interest and EXPERIAN’s membership interest in FARES II”.

(v) The phrase “value of the Membership Interest then owned” in Section 6.05(b) is deleted in its entirety and replaced with the following phrase: “value of the Membership Interest and the value of the membership interest in FARES II then owned”.

(w) Both instances of the phrase “100% of the Membership Interest then owned by EXPERIAN” in Section 6.05(b) are deleted in their entirety and replaced with the following phrase: “100% of the Membership Interest and 100% the membership interest in FARES II then owned by EXPERIAN”.

(x) The phrase “100% of its Membership Interest” in Section 6.05(b) is deleted in its entirety and replaced with the following phrase: “100% of its Membership Interest and 100% its membership interest in FARES II”.

(y) The phrase “sale of EXPERIAN’s Membership Interest” in Section 6.05(b) is deleted in its entirety and replaced with the following phrase: “sale of EXPERIAN’s Membership Interest and EXPERIAN’s membership interest in FARES II”.

(z) Section 6.05(b)(w) is deleted in its entirety and replaced with the following text: “(w) FAFCO shall deliver to EXPERIAN the cash purchase price in the amount of $80,000,000 in immediately available funds,”.

(aa) A new subsection (d) is added to Section 6.07 containing the following text:

“(d) It is the intent of the Parties that (i) EXPERIAN’s Membership Interest (including its Percentage Interest) in NEWCO shall at all times equal EXPERIAN’s membership interest (including its percentage interest) in FARES II and (ii) the FAFCO Members’ collective Membership Interest (including its Percentage Interest) in NEWCO shall at all times equal the FAFCO Members’ membership interest (including its percentage interest) in FARES II. If a transaction or other event occurs which results in a change in the FAFCO Members’ or EXPERIAN’s membership interest in NEWCO or FARES II without a corresponding change in such Party’s membership interest in FARES II or NEWCO, respectively (including, without limitation, a capital call by either NEWCO or FARES II in which either the FAFCO Members (or FAREISI with respect to FARES II) or EXPERIAN fails to participate in accordance with Section 4.04 of the Operating Agreement or the Operating Agreement of FARES II, as the case may be), each of the

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Parties hereto agrees to negotiate in good faith to amend, modify or supplement the provisions of this Article VI (which may include adjusting the Put Price, the Call Price, the Trigger Date, the Put Option ceiling set forth in Section 6.01(c) and the Call Option floor set forth in Section 6.02(c)), in order to give effect to the Put Option and the Call Option and each of the Parties’ respective rights relating thereto on economic terms comparable to those set forth herein after taking into account any disparities in the Parties’ relative ownership of NEWCO and FARES II.”

(bb) The phrase “purchase of EXPERIAN’S Membership Interest” in each of Section 6.08(a) and (d) is deleted in its entirety and replaced with the following phrase: “purchase of EXPERIAN’S Membership Interest and EXPERIAN’S membership interest in FARES II”.

(cc) The address for EXPERIAN in Section 10.06(a) is deleted in its entirety and replaced with the following:

“Experian Information Solutions, Inc.

475 Anton Blvd.

Costa Mesa, California 92626-7036

Telephone: (714) 830-5331

Facsimile: (714) 830-2513

Attention: Senior Vice President and Lead Counsel”.

(dd) The address for FAFCO, FAREISI or any other FAFCO Member in Section 10.06(b) is deleted in its entirety and replaced with the following:

“The First American Corporation

1 First American Way

Santa Ana, California 92707

Telephone: (714) 800-3000

Facsimile: (714) 800-3403

Attention: President

with a copy to:

White & Case LLP

633 West Fifth Street, 19th Floor

Los Angeles, California 90071

Telephone: (213) 620-7700

Facsimile: (213) 687-0758

Attention: Neil W. Rust”.

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4. Amendment to the Operating Agreement. The Operating Agreement is amended as follows:

(a) The following definitions are added to Section 1.01:

““FARES II” means First American Real Estate Solutions II LLC, a California limited liability company.

“FARES II Net Profits” shall mean Net Profits as defined pursuant to the FARES II Operating Agreement.

“FARES II Operating Agreement” means that certain Operating Agreement of FARES II, dated as of June 30, 2003.”

(b) In Section 4.03(a) the text “(alone or together with FARES II) is inserted after the phrase “any acquisition by the Company”.

(c) In Section 4.03(a)(ii) the text “and/or FARES II” is inserted after the phrase “(ii) the Company”.

(d) In Section 4.03(b) the text “with any assets of FARES II sold, transferred or disposed in such transaction or a related transaction,” is inserted after the text “, in the aggregate,”.

(e) In Section 4.03(g) the text “, together with any loan by or use of assets of FARES II,” is inserted after the phrase “singularly or in the aggregate”.

(f) In Section 4.03(k) the text “, together with consideration paid to or by FARES II in such transaction or a related transaction,” is inserted after the phrase “involving estimated consideration”.

(g) The text “Company) and (2) for the” in Section 5.05(a)(y) is deleted in its entirety and replaced with the following text: “Company), (2) for the”.

(h) The following text is added at the end of Section 5.05(a) before the period: “, (3) for the six month period from July 1, 2003 to December 31, 2003, the Management Committee shall distribute an amount equal to one-half of the difference of (A) the net income of FARES II for such six month period minus (B) any distribution made pursuant to clause (i) of Section 5.05(a) of the FARES II Operating Agreement for such six month period and (4) for the one year period from January 1, 2004 to December 31, 2004, the Management Committee shall distribute an amount equal to one-half of the difference of (A) the FARES II Net Profits minus (B) any distribution made pursuant to clause (i) of Section 5.05(a) of the FARES II Operating Agreement for such one year period.

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(i) The address for the Company in Section 10.03 is deleted in its entirety and replaced with the following:

“c/o The First American Corporation

1 First American Way

Santa Ana, California 92707

Telephone:	(714) 800-3000
Facsimile:	(714) 800-3403
Attention:	President”

(j) The address for the FAFCO Members in Section 10.03 is deleted in its entirety and replaced with the following:

“The First American Corporation

1 First American Way

Santa Ana, California 92707

Telephone:	(714) 800-3000
Facsimile:	(714) 800-3403
Attention:	President”

with a copy to:

White & Case LLP

633 West Fifth Street, 19th Floor

Los Angeles, California 90071

Telephone:	(213) 620-7700
Facsimile:	(213) 687-0758
Attention:	Neil W. Rust”.

(k) The address for EXPERIAN in Section 10.03 is deleted in its entirety and replaced with the following:

“Experian Information Solutions, Inc.

475 Anton Blvd.

Costa Mesa, California 92626-7036

Telephone: (714) 830-5331

Facsimile: (714) 830-2513

Attention: Senior Vice President and Lead Counsel”.

5. Dissolution Event. Upon the occurrence of a Dissolution Event (as defined in that certain Operating Agreement for First American Real Estate Solutions, dated November 30, 1997, to which First American and Experian are parties (the “Operating Agreement”)), First American and Experian agree, and First American agrees to cause the First American Subsidiaries to agree, to sell to the Remaining Members (as defined in the Operating Agreement), if such Remaining Members consent to the continuation of the business of the Company, all of their respective membership interests in FARES II to the Remaining Members for no additional consideration, it being understood and agreed that the purchase price payable pursuant to Section

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8.03 of the Operating Agreement includes the consideration payable in connection with the purchase of FARES II.

6. Miscellaneous.

(a) Except as expressly modified by this Amendment, the Contribution Agreement shall continue to be and remain in full force and effect in accordance with its terms. Any future reference to the Contribution Agreement shall from and after the Effective Date be deemed to be a reference to the Contribution Agreement as amended by this Amendment.

(b) This Amendment may be executed in any number of counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument.

(c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

(d) This Amendment may be executed by facsimile signature and each such signature shall be treated in all respects as having the same effect as the original signature.

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IN WITNESS WHEREOF, each of the Parties has caused its name to be hereunto subscribed by its officer thereunto duly authorized, all as of the day and year first above written.

THE FIRST AMERICAN CORPORATION
By:	/s/    KENNETH D. DEGIORGIO
	Name: Title:

EXPERIAN INFORMATION SOLUTIONS, INC.
By:	/s/    SCOTT N. LESLIE
	Name: Scott N. Leslie Title:  Assistant Secretary

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EX-10.B

Exhibit (10)(b)

SECOND AGREEMENT OF AMENDMENT

SECOND AGREEMENT OF AMENDMENT, dated as of September 23, 2003 (this “Amendment”), by and between, The First American Corporation, a California corporation (“First American”), for itself and on behalf of the First American Subsidiaries (as defined below), and Experian Information Solutions, Inc., an Ohio corporation (“Experian”; First American, together with Experian, each a “Party” and, collectively, the “Parties”).

W I T N E S S E T H:

WHEREAS, First American, certain subsidiaries of First American (the “First American Subsidiaries”) and Experian are parties to that certain Contribution and Joint Venture Agreement, made as of November 30, 1997 (the “Original Contribution Agreement”), as amended by that certain Agreement of Amendment, dated June 30, 2003, by and between First American and Experian (the “First Amendment”; the Original Contribution Agreement, as amended by the First Amendment, the “Contribution Agreement”);

WHEREAS, First American, the First American Subsidiaries and Experian are parties to that certain Operating Agreement for First American Real Estate Solutions, a California limited liability company (“FARES”), dated as of November 30, 1997 (the “Original Operating Agreement”), as amended by the First Amendment (the Original Operating Agreement, as amended by the First Amendment, the “Operating Agreement”);

WHEREAS, FARES is currently in negotiations with Transamerica Finance Corporation, a Delaware corporation, to acquire all of the equity interests in Transamerica Real Estate Tax Service, a Delaware corporation, and Transamerica Flood Hazard Certification, Inc., a Delaware corporation, or any successor entity or entities thereto (the “TA Transaction”).

WHEREAS, the Parties desire to amend the Contribution Agreement and the Operating Agreement as provided herein.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows:

1. Defined Terms. Unless otherwise defined herein, capitalized terms used in (a) Section 3 of this Amendment shall have the meaning given thereto in the Contribution Agreement and (b) Section 4 of this Amendment shall have the meaning given thereto in the Operating Agreement.

2. Effectiveness of this Amendment. This Amendment shall become effective on the date hereof (such date, the “Effective Date”).

3. Amendment to the Contribution Agreement. The Contribution Agreement is amended as follows:

(a) The defined term “Trigger Date” in Section 1.01 is deleted in its entirety and replaced with the following:

“TA Transaction” shall have the meaning provided in the definition of “Trigger Date”, below.

“Trigger Date” shall mean November 30, 2002, provided, that upon the closing of NEWCO’s purchase from Transamerica Finance Corporation, a Delaware corporation, of all of the equity interests in Transamerica Real Estate Tax Service, a Delaware corporation, and Transamerica Flood Hazard Certification, Inc., a Delaware corporation, or any successor entity or entities thereto (the “TA Transaction”), the Trigger Date shall be the fifth anniversary of the closing date of the TA Transaction.”

4. Amendment to the Operating Agreement. The Operating Agreement is amended as follows:

(a) The following definitions are added to Section 1.01:

““Covered Period” shall have the meaning provided in Section 5.05(a)(1).

“TA Abandonment” means the date on which the Company abandons its efforts to pursue the TA Transaction, whether (i) by cessation of any further negotiations regarding the TA Transaction prior to entry into definitive agreements with respect thereto, (ii) by termination of any definitive agreements to enter into the TA Transaction other than following the consummation of the TA Transaction or (iii) otherwise.

“TA Closing” means the date on which the closing of the TA Transaction occurs.

“TA Companies” means Transamerica Real Estate Tax Service, a Delaware corporation, and Transamerica Flood Hazard Certification, Inc., a Delaware corporation, or any successor entity thereto.

“TA Transaction” means the Company’s purchase from Transamerica Finance Corporation, a Delaware corporation, of all of the equity interests in the TA Companies, or any successor entity or entities thereto.”

(a) Section 5.05(a) is deleted in its entirety and replaced with the following text:

“(a) Subject to applicable law and any limitations contained elsewhere in this Agreement (including, without limitation, Section 4.05(b)), the Management Committee (i) shall, at the time of any payment by the Members in respect of their

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income tax obligations attributable to their respective Membership Interests, distribute to the Members, based upon their then respective Percentage Interests, 40% (which percentage the Management Committee may from time to time hereafter, upon the unanimous vote of the Managers, adjust to reflect material changes in tax rates) of the consolidated Net Profits and (ii) may, in its sole discretion, elect from time to time to otherwise distribute Distributable Cash to the Members; provided that:

(1) until the fifth anniversary of the TA Closing or the TA Abandonment (whichever shall occur) (the “Covered Period”), the Management Committee shall distribute for each year of such period an amount equal to not less than one-half of the difference of (A) the consolidated Net Profits for the applicable year minus (B) any distribution made pursuant to subsection (a), clause (i) of this Section 5.05 for such year;

(2) for the six month period from July 1, 2003 to December 31, 2003, the Management Committee shall distribute an amount equal to one-half of the difference of (A) the consolidated net income of FARES II for such six month period minus (B) any distribution made pursuant to clause (i) of Section 5.05(a) of the FARES II Operating Agreement for such six month period;

(3) for each year during the Covered Period commencing after December 31, 2003, the Management Committee shall distribute an amount equal to one-half of the difference of (A) the consolidated FARES II Net Profits minus (B) any distribution made pursuant to clause (i) of Section 5.05(a) of the FARES II Operating Agreement for such year; and

(4) during the Covered Period, promptly following any distributions made pursuant to clause (1) and either clause (2) or clause (3) of this proviso, the Management Committee shall distribute any cash held by the Company in excess of $100,000,000; provided that for purposes of calculating cash held by the Company, cash held by the Company, FARES II and their respective subsidiaries shall be deemed cash held by the Company.

The parties agree that in the six month period prior to the end of the Covered Period they will negotiate in good faith to determine the formula or method by which distributions over and above tax distributions (contemplated by Section 5.05(a)(i) or otherwise) will be made by the Company; it being understood and agreed that it is the intent of the parties that the Company makes distributions of its cash flow in excess of its working capital needs and other cash needs, including, without limitation, adequate reserves for reasonable future contingencies and acquisitions, based upon an agreed formula or method of determination.”

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5. Consent. Experian hereby consents to the TA Transaction substantially on the terms set forth in that certain Letter of Intent, dated August 15, 2003, a copy of which is attached hereto as Exhibit A.

6. Miscellaneous.

(a) Except as expressly modified by this Amendment, the Contribution Agreement and the Operating Agreement shall continue to be and remain in full force and effect in accordance with their respective terms. Any future reference to the Contribution Agreement shall from and after the Effective Date be deemed to be a reference to the Contribution Agreement as amended by this Amendment. Any future reference to the Operating Agreement shall from and after the Effective Date be deemed to be a reference to the Operating Agreement as amended by this Amendment.

(b) This Amendment may be executed in any number of counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument.

(c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

(d) This Amendment may be executed by facsimile signature and each such signature shall be treated in all respects as having the same effect as the original signature.

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IN WITNESS WHEREOF, each of the Parties has caused its name to be hereunto subscribed by its officer thereunto duly authorized, all as of the day and year first above written.

THE FIRST AMERICAN CORPORATION
By:	/s/    PARKER S. KENNEDY
	Name: Title:

EXPERIAN INFORMATION SOLUTIONS, INC.
By:	/s/    DONALD ROBERT
	Name: Title:

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EXHIBIT A

LETTER OF INTENT

A-1

LETTER OF INTENT

August 15, 2003

re: Acquisition of Transamerica Real Estate Tax Service, Inc., a Delaware corporation, and Transamerica Flood Hazard Certification, Inc., a Delaware corporation (together with their respective subsidiaries each, a “Company” and collectively, the “Companies”)

Mr. Christopher L. Gillock

Executive Vice President – Corporate Development,

Marketing & Communications

Transamerica Finance Corporation

9399 W. Higgins Road, Suite 600

Rosemont, IL 60018

Dear Mr. Gillock:

This letter (referred to hereinafter as this “Letter of Intent”) expresses the intentions of First American Real Estate Solutions LLC, a California limited liability company (“FARES”) owned 80% by The First American Corporation, a California corporation (“First American”) and 20% by Experian Information Solutions, Inc, an Ohio corporation (“Experian”), and Transamerica Finance Corporation, a Delaware corporation (“TFC”; FARES and TFC each, a “Party” and collectively, the “Parties”), with respect to the transactions described herein. This Letter of Intent supersedes any prior communications between us regarding the proposed transaction described herein.

FARES understands that TFC directly owns 100% of the voting and non-voting (if any) securities of each of the Companies. Subject to the terms and conditions set forth below, the transaction will consist of the purchase of all of the equity interests of the Companies (the “Interests”) by FARES (the “Transaction”).

Except as provided in Paragraph 10 hereof, this Letter of Intent is not intended to be (and the Parties specifically acknowledge that it is not) a legally binding obligation of the Parties. The Parties would attempt to negotiate legally binding definitive agreement or

Mr. Christopher L. Gillock

August 15, 2003

Page 2

agreements (collectively, the “Definitive Agreement”) based on the proposal described in this Letter of Intent, which would be drafted, negotiated and executed by the Parties within 30 days after the date hereof. The proposal would include, but not be limited to, the following key elements:

        1. In consideration of the satisfaction of TFC’s obligations in the Transaction, including, without limitation, the conveyance to FARES of the Interests, FARES will deliver to TFC cash, by wire transfer of immediately available funds, in an amount equal to $400,000,000. The parties intend that the Transaction will be consummated promptly following receipt of necessary consents and expiration of required waiting periods (the date of such consummation, the “Closing Date”).

        2. Prior to the Closing Date, TFC will convert each Company to a Delaware limited liability company pursuant to the laws of the State of Delaware, including, without limitation, Section 18-214 of the Delaware Limited Liability Company Act.

        3. The Transaction will be accomplished pursuant to the terms of the Definitive Agreement, which will be in form and content mutually satisfactory to the Parties. The Definitive Agreement will include customary terms (including appropriate materiality and knowledge qualifiers), conditions, representations, warranties, covenants, closing conditions and indemnification provisions, including, without limitation:

(a) Seller Representations and Warranties – representations and warranties made by TFC with respect to (i) the existence and good standing of TFC and the Companies, (ii) the binding effect of the Definitive Agreement on TFC, (iii) TFC’s authorization and capacity to enter into the Definitive Agreement and to consummate the Transaction, (iv) the outstanding equity of the Companies and other matters related to the equity of the Companies, (v) investments made by the Companies and the fact that the Companies have no subsidiaries, (vi) the financial statements and financial condition of the Companies, (vii) the books and records of the Companies, (viii) the Companies’ title to their respective properties and encumbrances on those properties, (ix) real property owned by a Company, (x) leases and other material contracts to which a Company is a party, including specific representations regarding agreements with major customers and suppliers of each Company, (xi) restrictive documents to which a Company is a party or which affect a Company or which may prevent TFC from entering into the Definitive Agreement or consummate the Transaction, (xii) litigation to which a Company is a party or which may effect a Company or which may prevent TFC from entering into the Definitive Agreement or consummate the Transaction, (xiii) taxes of and tax matters relating to each Company, (xiv) insurance policies covering a Company, (xv) intellectual property owned or licensed by the Companies, (xvi) compliance with the law by the Companies, (xvii) governmental licenses held by a Company and governmental, regulatory or similar approvals or authorizations benefiting a Company, (xviii) labor matters affecting a Company and employee benefit plans of a Company and a list of employees of each

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August 15, 2003

Page 3

Company together with each employee’s years of service, current salary, most recent bonus, if any, and bonus target, (xix) interests held by TFC and its affiliates in clients, suppliers, competitors and other persons or entities related to or affecting a Company, (xx) changes in a Company since the June 30, 2003 balance sheets, (xxi) consents and approvals necessary to enter into the Definitive Agreement and consummate the Transaction and the lack of violations resulting therefrom, (xxii) the effect of the consummation of the Transaction on material agreements involving a Company, (xxiii) broker’s or finder’s fees payable in connection with the Transaction, (xxiv) environmental matters relating to a Company and (xxv) claims history with respect to the products of each Company.

(b) Buyer Representations and Warranties – representations and warranties made by FARES with respect to (i) the existence and good standing of FARES, (ii) the binding effect of the Definitive Agreement on FARES, (iii) FARES’s authorization and capacity to enter into the Definitive Agreement and to consummate the Transaction, (iv) litigation affecting the ability of FARES to enter into the Definitive Agreement or consummate the Transaction, (v) restrictive documents which may prevent FARES from entering into the Definitive Agreement or consummate the Transaction, (vi) consents and approvals necessary to enter into the Definitive Agreement and consummate the Transaction and the lack of violations resulting therefrom and (vii) the sufficiency of FARES’s financing to consummate the Transaction;

(c) Interim Covenant – an agreement by TFC to cause the Companies to operate in the ordinary course between the date on which the parties sign the Definitive Agreement and the Closing Date; and an agreement by First American and its affiliates to use its reasonable best efforts to refrain from using the pendency of the Transaction for any commercial advantage vis-à-vis TFC and its affiliates;

(d) Exclusive Dealing – an agreement by TFC to refrain from and to cause its affiliates and representatives to refrain from initiating, encouraging, negotiating or taking similar action with respect to the sale of a Company to a person or entity other than FARES;

(e) Inter-Company Debt – an agreement by TFC to satisfy, forgive or otherwise terminate and to cause TFC’s affiliates to satisfy, forgive or otherwise terminate all indebtedness and liabilities of a Company to affiliates of a Company (the “Mandatory Termination”). TFC may cause the Companies to forgive or otherwise terminate all indebtedness and liabilities of an affiliate of a Company to such Company (the “Voluntary Termination”). Specifically with respect to the inter-company loan from the Companies to TFC and its affiliates, including AEGON, USA (“AEGON”), on or immediately prior to the closing date of the Transaction, the Companies shall transfer to TFC or AEGON via dividend the full balance of such inter-company loan minus the Mandatory Closing Cash Balance as described in Paragraph 3(f) below. Immediately prior to the closing of the

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Transaction, but subsequent to the dividend described in the foregoing sentence, TFC or AEGON will repay the unpaid balance of the inter-company loan, which payment shall be for an amount equal to the Mandatory Closing Cash Balance;

(f) Cash Balances; Accounts Receivable – as of the closing of the Transaction, the Companies in the aggregate will have cash in an amount no less than $25,000,000 plus the difference resulting from the subtraction of the Net Accounts Receivable (as defined below) from $4,500,000 (the “Mandatory Closing Cash Balance”). “Net Accounts Receivable” means the difference resulting from the subtraction of the aggregate accounts payable and the claims loss reserve of the Companies as of the Closing Date from the aggregate accounts receivable of the Companies as of the Closing Date. In determining the Net Accounts Receivable, receivables older than 180 days shall be excluded. A true-up of the accounts receivable used to calculate the Net Accounts Receivable will occur no later than the eight month anniversary of the Closing Date;

(g) Severance; Executive Bonuses and Commissions – FARES will provide to employees of the Companies, at FARES’ cost and expense, for a minimum period of 12 months following the consummation of the Transaction, severance and separation pay benefits and terms that are the same in all respects as those applicable to employees of the Companies on the date of this Letter of Intent (including such benefits and payments that would be provided upon a sale of Company assets); provided, however, that TFC or one of its affiliates will assume obligations to pay (i) all amounts due under the TFC Finance Corporation 2002-2004 DAP ROE Bonus Plan or any similar plan or obligation and (ii) all amounts and benefits payable under any of the Companies annual bonus plans as a result of the consummation of the Transaction. In addition to the Mandatory Closing Cash Balance, the Companies will fund or otherwise pay a pro rata portion of the bonuses payable to the employees of the Companies through the Closing Date;

(h) Other TFC Covenants – agreements by TFC regarding, among other matters, (i) due diligence of the Companies, (ii) use of reasonable best efforts to consummate the Transaction, (iii) termination of benefit plans maintained by a Company prior to the closing, (iv) delivery of resignation letters from members of the board of directors and officers of each Company and (v) delivery of corporate records and minute books of the Companies to FARES;

(i) FARES Covenants – agreements by FARES to use its best efforts to consummate the Transaction and to maintain the confidence of materials provided during due diligence;

(j) Mutual Closing Conditions – a condition on either Party’s obligation to close the Transaction in the event (i) the Transaction has been enjoined, (ii) laws are in effect or approvals have not been obtained which would prohibit the

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Transaction or (iii) litigation has been instituted which would prohibit the consummation of the transaction;

(k) TFC’s Closing Conditions – a condition on TFC’s obligation to close the Transaction in the event (i) FARES’s representations or warranties are not true and accurate in all material respects, (ii) FARES has materially breached one of its agreements in the Definitive Agreement, (iii) FARES has failed to deliver a certified copy of its governing documents and a good standing certificate, (iv) FARES has failed to take all corporate action necessary to consummate the Transaction or (v) FARES fails to deliver an opinion of counsel in form and substance reasonably satisfactory to TFC;

(l) FARES’s Closing Conditions – a condition on FARES’s obligation to close the Transaction in the event (i) TFC’s representations or warranties are not true and accurate in all material respects, (ii) TFC has materially breached one of its agreements in the Definitive Agreement, (iii) TFC has failed to deliver a certified copy of its and the Companies’ governing documents and good standing certificates, (iv) TFC has failed to take all corporate action necessary to consummate the Transaction, (v) TFC fails to deliver an opinion of counsel in form and substance reasonably satisfactory to FARES, (vi) there has been a material adverse effect on either Company (excluding any such effect to the extent resulting from or arising in connection with (A) changes or conditions generally affecting the industries or segments in which the Companies operate, (B) changes in general economic, market or political conditions or changes in market interest rates, (C) the negotiation, execution or announcement of the Transaction, the Definitive Agreement or the transactions contemplated thereby, including the impact thereof on relationships with customers and employees), (vii) TFC fails to deliver a FIRPTA certificate of TFC (if deemed necessary by the parties), (viii) the Mandatory Termination has not occurred or TFC has failed to deliver written evidence thereof in a form reasonably satisfactory to FARES and (ix) TFC and/or its affiliates, as relevant, have failed to execute and deliver to FARES a transition services agreement providing for the provision at current cost of such services by TFC and/or its affiliates to FARES and/or the Companies as may be necessary to facilitate the transition of the Companies into FARES (including the temporary provision of payroll services with respect to the employees of the Companies);

(m) Termination – a right to terminate the Definitive Agreement without further liability or obligation (subject to limited exceptions regarding matters such as confidentiality and payment of expenses) (i) by mutual agreement, (ii) by one Party in the event its conditions to close have not be satisfied on or prior to the Termination Date (as defined below), (iii) by either Party if the Transaction has been permanently and finally enjoined and (iv) by FARES if as a condition to receiving the approval of the Transaction by any governmental entity it is required to (A) divest, sell or hold separate or agree to license to its competitors, before or after the Closing Date, any material portion of its or the Companies’ businesses, product lines, properties or assets, as the case may be, (B)

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August 15, 2003

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make any material changes or accept material restrictions in the operation of such businesses, product lines, properties or assets or (C) make any material changes or accept any material restrictions to this Agreement or the transactions contemplated hereby. For the avoidance of doubt, a termination of the Definitive Agreement shall have no effect on FARES’s obligations under Paragraph 8 of this letter of intent.

(n) Indemnification – an agreement among the parties that the representations and warranties made by the parties shall survive until April 30th of the calendar year that is two calendar years following the calendar year in which the Closing Date occurs, subject to customary carve-outs for certain representations and warranties, including those made with respect to title to the stock, power and authority, capitalization and broker’s fees, which will survive in perpetuity, and benefit plans, which will survive for a period of four months following the expiration of the applicable statute of limitations. Each Party will indemnify the other for damage caused by a breach of its representations and warranties, subject to a basket equal to $2,000,000 and a cap equal to $135,000,000, subject to customary carve-outs for certain indemnification obligations;

(o) Tax Matters – in addition to standard agreements regarding tax matters, an agreement among the parties regarding (i) the filing of tax returns of the Companies, (ii) the survival of tax representations and warranties and (iii) the allocation of all taxes for pre-closing periods, including a pro rata portion of all taxes for the pre-closing portion of periods that begin prior to the Closing Date and end after the Closing Date, to TFC and all taxes for post-closing period, including a pro rata portion of all taxes for the post-closing portion of period that begin prior to the Closing Date and end after the Closing Date, to FARES. TFC and FARES will share transfer, sales and use, registration, stamp and similar taxes, if any, imposed in connection with the sale of the Interests; provided, however, FARES shall pay all taxes, if any, attributable to the conversion of each Company to a Delaware limited liability company as set forth in Paragraph 2, above, but only to the extent such taxes exceed the taxes that would have been paid had the transaction been structured as sale by TFC of the stock of the Companies, without the aforementioned conversion, with the making of an election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended. TFC will pay all taxes incurred in connection with the Mandatory Termination and the Voluntary Termination; and

(p) Governing Law and Disputes – an agreement among the parties that the Definitive Agreement shall be governed by New York law and that all disputes under Definitive Agreement or arising out of the Transaction will be governed by New York law.

        4. Until the earlier of the termination of this Letter of Intent pursuant to Paragraph 11 or the 60th day after the date of this Letter of Intent, each of AEGON and TFC agrees that it will not and will not cause its affiliates or either Company or their respective

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representatives to, directly or indirectly (a) offer to sell either Company, in whole or in part, or offer to enter into any transaction similar to the Transaction, (b) agree to sell either Company, in whole or in part, to, or agree to enter into any transaction similar to the Transaction with, any individual or entity other than FARES, (c) make or assist anyone else in making any proposal to purchase either Company or to enter into any transaction similar to the Transaction, (d) encourage, solicit or initiate discussions or negotiations with or provide any information to, any individual or entity other than FARES concerning any merger, consolidation, sale of assets, sale of securities or acquisition of beneficial ownership of any stock of either Company or any transaction similar to the Transaction, or (e) otherwise knowingly take any action which would prejudice the ability of TFC or FARES to complete the Transaction.

        5. Each of the Parties shall bear its own legal, accounting and other expenses in connection with the proposed Transaction. In particular, legal, accounting, investment banking and other expenses of TFC and/or the Companies in connection with the Transaction shall not be (or become) liabilities of either Company after the Closing or in any way assumed by FARES or its affiliates.

        6. Upon receipt of a signed counterpart of this Letter of Intent, FARES will cause its counsel to prepare a draft of the Definitive Agreement for submission to TFC and its counsel and shall cause its personnel, accountants, counsel and advisors to complete their investigation and evaluation of the Companies as promptly as practicable.

        7. Concurrent with, or promptly following, the execution of this Letter of Intent, the Parties will cooperate to effect all necessary regulatory filings, including but not limited to the filing (the “HSR Filing”) pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “Act”) in connection with the Transaction. FARES will pay the filing fee associated with the HSR Filing and each Party shall otherwise bear its own legal, accounting and other expenses in connection therewith.

        8. On the date that the HSR Filing is submitted to the appropriate governmental entities, FARES will deposit cash in the amount of $10,000,000 (the “InitialDeposit”) into a third-party escrow account (the “Escrow Account”), on terms consistent with the terms of this Letter of Intent and otherwise mutually agreeable to the Parties and the third-party escrow agent. All deposits made into the Escrow Account pursuant to this Paragraph 8 are collectively referred to herein as the “Escrow Amount”.

                (a) Unless the waiting period under the Act has terminated or expired on or prior to the 100th day following the date on which the waiting period under the Act has commenced, FARES shall have the right in its discretion to unilaterally terminate the Definitive Agreement on or prior to such date, in which event, unless the Definitive Agreement is terminated by FARES for any reason specified and identified in the Definitive Agreement (other than as a result of the failure of the termination or expiration of the waiting period under the Act), TFC shall be entitled to the Initial Deposit together with any interest earned thereon. If the Definitive Agreement has been executed by the Parties, on the 101st day after the date on which the waiting

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period under the Act has commenced (or if such date is not a business day, the business day immediately following), FARES will make a second deposit of cash in the amount of $5,000,000 into the Escrow Account (the “Second Deposit”), unless (a) the waiting period under the Act has terminated or expired on or prior to such date or (b) the Definitive Agreement has been terminated on or prior to such date; provided, however, that TFC shall have the right in its discretion to unilaterally terminate the Definitive Agreement on the 110th day after the date on which the waiting period under the Act has commenced, in which event the Initial Deposit and, if made, the Second Deposit, shall be returned to FARES, together with any interest earned thereon, and FARES shall not be required to make any subsequent deposits to the Escrow Account.

                (b) Unless the waiting period under the Act has terminated or expired after the 101st day and on or prior to the 180th day following the date on which the waiting period under the Act has commenced, FARES shall have the right in its discretion to unilaterally terminate the Definitive Agreement on or prior to such date, in which event, unless the Definitive Agreement is terminated by FARES for any reason specified and identified in the Definitive Agreement (other than as a result of the failure of the termination or expiration of the waiting period under the Act), TFC shall be entitled to (i) the Initial Deposit and (ii) the Second Deposit, together with any interest earned thereon. If the Definitive Agreement has been executed by the Parties, on the 181st day after the date the waiting period under the Act has commenced (or if such date is not a business day, the business day immediately following), FARES will make a third deposit of cash in the amount of $5,000,000 into the Escrow Account (the “Third Deposit”), unless (i) the waiting period under the Act has terminated or expired on or prior to such 180th day or (ii) the Definitive Agreement has been terminated on or prior to such 180th day.

                (c) If FARES, after the 180th day following the date on which the waiting period under the Act has commenced, unilaterally terminates the Definitive Agreement and if, at such time, certain conditions to closing to be negotiated and specified under the Definitive Agreement have been satisfied other than termination or expiration of the waiting period under the Act, upon such termination TFC shall be entitled to the Escrow Amount, together with any interest earned thereon.

                (d) If the Transaction is not consummated within 90 days after the date on which the Third Deposit is made (or required to be made), either Party may at its discretion terminate the Definitive Agreement and if, at such time, the waiting period under the Act has not terminated or expired and provided FARES did not terminate the Definitive Agreement for any reason specified and identified in the Definitive Agreement (other than as a result of the failure of the termination or expiration of the waiting period under the Act), then upon such termination (the “Termination Date”), TFC shall be entitled to the Escrow Amount, together with any interest earned thereon; provided, however, that if FARES and TFC mutually agree in good faith that the waiting period under the Act will terminate or expire within 90 days following the Termination Date, the Termination Date may be extended for up to an additional 90 days, after which date either Party may at its discretion terminate the Definitive Agreement and if, upon such termination, the waiting period under the Act has not terminated or expired and provided FARES

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did not terminate the Definitive Agreement for any reason specified and identified in the Definitive Agreement (other than as a result of the failure of the termination or expiration of the waiting period under the Act), TFC shall be entitled to the Escrow Amount, together with any interest earned thereon.

                (e) If the Parties cannot agree upon the terms of a Definitive Agreement, the Definitive Agreement is terminated for any reason specified and identified in the Definitive Agreement other than as a result of the failure of the termination or expiration of the waiting period under the Act or upon the consummation of the Transaction, FARES shall be entitled to the Escrow Amount, together with any interest earned thereon.

                (f) TFC and FARES agree to use reasonable best efforts to cause the waiting period under the Act to terminate or expire as soon as practicable.

        9. Each Party agrees that no disclosure of, or reference to, this Letter of Intent or the Transaction or the identity of the Parties, the Companies or any affiliate thereof shall be made without the consent of the other Party, except disclosure by the Parties on a need-to-know basis only to their respective counsel, accountants, financial advisors and employees who are directly involved in the transactions described herein, each of whom shall agree to be bound by the provisions of this Paragraph 9; provided, however, that nothing in this Paragraph 9 shall prevent a Party from making any such disclosure so long as it obtains a written opinion from counsel independent of such Party and its affiliates that such disclosure is required by law or in connection with any judicial or regulatory proceeding and the other Party is given reasonable opportunity to resist disclosure thereof prior thereto at its own expense; provided, further, that nothing in this Paragraph 9 shall prevent or restrict the Parties from disclosing information in connection with the HSR Filing and related regulatory proceedings. The Parties further agree that each Party shall have the right, prior to disclosure or presentation of any kind, to review and approve the timing, content and the manner (including, without limitation, any press release) in which this Letter of Intent or the Transaction or the identity of such Party or any affiliate thereof is disclosed or presented to any person other than a Party’s counsel, accountants, financial advisors and employees who are directly involved in the transactions described herein. The terms and provisions of the letter agreement between First American and Transamerica Corporation, dated May 5, 2003, regarding confidentiality of evaluation material (the “Confidentiality Agreement”), shall continue in full force and effect in accordance with its terms, except that the parties hereby agree that such letter agreement is hereby amended and shall be construed to provide that (a) FARES or First American may provide Evaluation Material (as defined in the Confidentiality Agreement) with Experian and its affiliates and may discuss with Experian and its affiliates its participation in the Transaction, provided that as a condition to provision of such Evaluation Material Experian agrees to be bound by the provision of the Confidentiality Agreement (as modified by this Letter of Intent), (b) FARES or First American may discuss the existence of the Transaction with a single employee of J.P. Morgan Chase & Co. and its affiliates and such employee shall agree in writing to be bound by the Confidentiality Agreement, (c) First American and TFC may make such disclosures concerning the Transaction as each, in its

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reasonable opinion, determines to be necessary under the securities laws of the United States or any state and (d) in the second full paragraph on page 3 of the Confidentiality Agreement, the word “not” in the second line of that paragraph shall be deleted so that the language shall read “[y]ou agree that for a period of 18 months from the date of this letter agreement, neither you nor any of your subsidiaries or affiliates will solicit . . . .”.

        Notwithstanding anything contained in the Confidentiality Agreement, this Letter of Intent or in any other document, agreement or understanding relating to the transactions contemplated by this Letter of Intent, each Party (and each employee, representative, or other agent of such party) is authorized to disclose to any and all persons, beginning immediately upon commencement of discussions regarding the transactions contemplated by this Letter of Intent, and without limitation of any kind, the tax treatment and tax structure of such transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to such party (or any employee, representative, or other agent of such party) relating to such tax treatment and tax structure. For purposes of this authorization, the “tax treatment” of a transaction means the purported or claimed U.S. federal income tax treatment of the transaction, and the “tax structure” of a transaction means any fact that may be relevant to understanding the purported or claimed U.S. federal income tax treatment of the transaction. None of the Parties to the transactions contemplated by this Letter of Intent provides U.S. tax advice, and each Party should consult its own advisors regarding its participation in the transactions contemplated by this Letter of Intent.

        10. FARES agrees, and by TFC’s acceptance of this Letter of Intent, it agrees, that the provisions set forth in Paragraphs 4, 5, 7, 8, 9, 10, 12 and the last sentence of Paragraph 11 hereof (the “Binding Provisions”) shall constitute legally binding obligations of the respective parties. FARES agrees, and by TFC’s acceptance of this Letter of Intent, it agrees, that the provisions set forth in this Letter of Intent, other than the Binding Provisions, are an expression of intent only, and do not set forth all of the matters upon which the Parties must reach agreement in order for the Transaction to be consummated. The respective rights and obligations of the Parties remain to be defined in the Definitive Agreement and related documents, the terms and conditions of which will be subject to approval by the Parties. Accordingly, except as set forth in the first sentence of this Paragraph 10, this Letter of Intent does not, and upon its acceptance by TFC will not, constitute a legally binding document and does not create any legal obligations on the part of, or any rights in favor of, FARES, TFC or any other person.

        11. Except as otherwise agreed to in writing by the parties, this Letter of Intent will automatically terminate at 11:59 p.m. (Los Angeles, California time) sixty days after the date hereof or at any time prior to this date if FARES notifies TFC in writing that it is not interested in pursuing the Transaction. Upon termination of this Letter of Intent, the Parties will have no further obligations hereunder, except as stated in Paragraphs 4, 5, 7, 8, 9, 10, 12 and this sentence of this Letter of Intent, which will survive any such termination.

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        12. This Letter of Intent shall be governed by New York law.

(intentionally left blank)

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If the foregoing correctly reflects your understanding of our mutual intentions (and, as set forth in Paragraph 10 hereof, agreements), please so indicate by signing and returning the enclosed copy of this Letter of Intent.

Very truly yours,
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC
By:	/s/    Kenneth D. De Giorgio
Name:	Kenneth D. De Giorgio
Title:	Vice President
THE FIRST AMERICAN CORPORATION
By:	/s/    Kenneth D. De Giorgio
Name:	Kenneth De Giorgio
Title:	Vice President

ACKNOWLEDGED AND AGREED TO

AS OF THE DATE OF THIS LETTER:

TRANSAMERICA FINANCE CORPORATION.
By:	/s/    Christopher L. Gillock
Name:	Christopher L. Gillock
Title:	Executive Vice President

EX-31.A

Exhibit 31(a)

CERTIFICATIONS

I, Parker S. Kennedy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The First American Corporation (“registrant”);

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented this report our conclusions about effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: November 14, 2003

/s/    PARKER S. KENNEDY        

Parker S. Kennedy

President

(Principal Executive Officer)

EX-31.B

Exhibit 31(b)

CERTIFICATIONS

I, Thomas A. Klemens, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The First American Corporation (“registrant”);

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented this report our conclusions about effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: November 14, 2003

/s/    THOMAS A. KLEMENS        

Thomas A. Klemens

Senior Executive Vice President,

Chief Financial Officer

(Principal Financial Officer)

EX-32.A

Exhibit (32)(a)

Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Form 10-Q of The First American Corporation (the “Company”) for the period ended June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Parker S. Kennedy, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    PARKER S. KENNEDY        

Parker S. Kennedy

Chief Executive Officer

November 14, 2003

EX-32.B

Exhibit (32)(b)

Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002

In connection with the Form 10-Q of The First American Corporation (the “Company”) for the period ended June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas A. Klemens, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    THOMAS A. KLEMENS        

Thomas A. Klemens

Chief Financial Officer

November 14, 2003