EX-99.2 4 a03175exv99w2.htm EXHIBIT 99.2 exv99w2
 

Exhibit 99.2

 
Item 6. Selected Financial Data

      The information set forth below should be read in conjunction with the consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Form 8-K. Share and per share data has been retroactively adjusted for stock dividends and splits since our inception, including the 10% stock dividend in February 2004. Certain reclassifications have been made to the prior year amounts to conform with the 2003 presentation.

                                             
Year Ended December 31,

2003 (1)(2) 2002 2001 (3)(4) 2000(5) 1999





(In thousands, except per share and other data)
Operating Data:
                                       
Revenue     7,715,215       5,082,640       3,874,107       2,741,994       1,355,854  
     
     
     
     
     
 
 
Expenses:
                                       
   
Personnel costs
    2,465,026       1,476,430       1,187,177       845,349       407,078  
   
Other operating expenses
    1,707,512       1,021,893       829,433       624,087       334,578  
   
Agent commissions
    1,823,241       1,521,573       1,098,328       884,498       423,675  
   
Provision for claim losses
    255,694       177,391       134,724       97,322       52,713  
   
Goodwill amortization
                54,155       35,003       6,638  
   
Interest expense
    43,103       34,053       46,569       59,374       15,626  
     
     
     
     
     
 
      6,294,576       4,231,340       3,350,386       2,545,633       1,240,308  
     
     
     
     
     
 
 
Earnings before income taxes, minority interest and cumulative effect of a change in accounting principle
    1,420,639       851,300       523,721       196,361       115,546  
 
Income tax expense
    539,843       306,468       209,488       86,624       46,065  
     
     
     
     
     
 
 
Earnings before minority interest and cumulative effect of a change in accounting principle
    880,796       544,832       314,233       109,737       69,481  
 
Minority interest
    18,976       13,115       3,048       1,422       (1,372 )
     
     
     
     
     
 
 
Earnings before cumulative effect of a change in accounting principle
    861,820       531,717       311,185       108,315       70,853  
 
Cumulative effect of a change in accounting principle, net of income taxes
                (5,709 )            
     
     
     
     
     
 
   
Net earnings
  $ 861,820     $ 531,717     $ 305,476     $ 108,315     $ 70,853  
     
     
     
     
     
 
Per Share Data:
                                       
 
Basic earnings per share before cumulative effect of a change in accounting principle
  $ 5.81     $ 4.05     $ 2.41     $ 1.11     $ 1.43  
 
Cumulative effect of a change in accounting principle, net of income taxes, basic basis
                (.05 )            
     
     
     
     
     
 
   
Basic net earnings per share
  $ 5.81     $ 4.05     $ 2.36     $ 1.11     $ 1.43  
     
     
     
     
     
 
 
Weighted average shares outstanding, basic basis
    148,275       131,135       129,316       97,863       49,599  
 
Diluted earnings per share before cumulative effect of a change in accounting principle
  $ 5.63     $ 3.91     $ 2.34     $ 1.07     $ 1.36  
 
Cumulative effect of a change in accounting principle, net of income taxes, diluted basis
                (.05 )            
     
     
     
     
     
 
   
Diluted net earnings per share
  $ 5.63     $ 3.91     $ 2.29     $ 1.07     $ 1.36  
     
     
     
     
     
 
 
Weighted average shares outstanding, diluted basis
    153,171       135,871       133,189       101,383       52,135  
 
Dividends declared per share
  $ .54     $ .32     $ .26     $ .24     $ .18  

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Year Ended December 31,

2003(1)(2) 2002 2001(3)(4) 2000(5) 1999





(In thousands, except per share and other data)
Balance Sheet Data:
                                       
 
Investments(6)
  $ 2,689,817     $ 2,565,815     $ 1,823,512     $ 1,685,331     $ 506,916  
 
Cash and cash equivalents(7)
    459,655       482,600       542,620       262,955       38,569  
 
Total assets
    7,263,175       5,245,951       4,415,998       3,833,985       1,042,546  
 
Notes payable
    659,186       493,458       565,690       791,430       226,359  
 
Reserve for claim losses
    940,217       887,973       881,053       907,482       239,962  
 
Minority interests and preferred stock of subsidiary
    14,835       131,797       47,166       5,592       4,613  
 
Stockholders’ equity
    3,873,359       2,253,936       1,638,870       1,106,737       432,494  
 
Book value per share(8)
  $ 23.50     $ 17.13     $ 12.65     $ 9.57     $ 9.56  
Other Data:
                                       
 
Orders opened by direct title operations
    4,820,700       3,228,300       2,635,200       1,352,000       743,000  
 
Orders closed by direct title operations
    3,694,000       2,290,300       1,770,600       971,000       551,000  
 
Provision for claim losses to title insurance premiums
    5.4 %     5.0 %     5.0 %     5.0 %     5.6 %
 
Title related revenue(9):
                                       
   
Percentage direct operations
    61.0 %     57.1 %     59.0 %     52.8 %     53.6 %
   
Percentage agency operations
    39.0 %     42.9 %     41.0 %     47.2 %     46.4 %


(1)  Our financial results for the year ended December 31, 2003 include the results of FIS for the period from April 1, 2003, the acquisition date, through December 31, 2003, and include the results of operations of various other entities acquired on various dates during 2003, as discussed in “Recent Developments” and Note B of Notes to Consolidated Financial Statements.
 
(2)  During the third quarter of 2003, we recorded $26.3 million in pre-tax expenses relating to the migration of data center operations from FNIS to FIS and $12.9 million in pre-tax expenses relating to the relocation of our corporate headquarters to Jacksonville, Florida. In addition, in the third quarter of 2003, we recorded a pre-tax expense of $7.9 million relating to the write-off of intangible assets, software and license fees. See Notes A and B of Notes to Consolidated Financial Statements. 2003 also includes a realized gain of $51.7 million as a result of InterActive Corp’s acquisition of Lending Tree Inc. and the subsequent sale of our InterActive Corp common stock in the third quarter and a realized gain of $25.0 million on the sale of New Century Financial Corporation common stock. During the third quarter of 2003, we adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), for stock-based employee compensation, effective as of the beginning of 2003, as discussed in Note L of Notes to Consolidated Financial Statements. Under this method, stock-based employee compensation cost is recognized from the beginning of 2003 as if the fair value method of accounting had been used to account for all employee awards granted, modified, or settled in years beginning after December 31, 2002. Net income, as a result of the adoption of SFAS No. 123, for the year ended December 31, 2003 reflects an expense of $3.9 million, which is included in the reported financial results.
 
(3)  Our financial results for the year ended December 31, 2001 include the results of the former operations of Vista Information Solutions, Inc. (“Vista”) for the period from August 1, 2001, the acquisition date, through December 31, 2001. In the fourth quarter of 2001, we recorded certain charges totaling $10.0 million, after applicable taxes, relating to the discontinuation of small-ticket lease origination at FNF Capital and the wholesale international long distance business at Micro General Corporation.
 
(4)  During 2001, we recorded a $5.7 million, after-tax charge, reflected as a cumulative effect of a change in accounting principle, as a result of adopting Emerging Issues Task Force No. 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets”, (“EITF 99-20”).
 
(5)  Our financial results for the year ended December 31, 2000 include the operations of Chicago Title for the period from March 20, 2000, the merger date, through December 31, 2000. In the first quarter of 2000, we recorded certain charges totaling $13.4 million, after applicable taxes, relating to the revaluation of non-title assets and the write-off of obsolete software.

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(6)  Investments as of December 31, 2003, 2002, 2001 and 2000 include securities pledged to secure trust deposits of $448.1 million, $474.9 million, $319.1 million and $459.4 million, respectively.
 
(7)  Cash and cash equivalents as of December 31, 2003, 2002, 2001 and 2000 include cash pledged to secure trust deposits of $231.1 million, $295.1 million, $367.9 million and $132.1 million, respectively.
 
(8)  Book value per share is calculated as stockholders’ equity at December 31 of each year presented divided by actual shares outstanding at December 31 of each year presented.
 
(9)  Includes title insurance premiums and escrow and other title related fees.

Selected Quarterly Financial Data (Unaudited)

      Selected quarterly financial data is as follows:

                                 
Quarter Ended

March 31, June 30, September 30,(3) December 31,




(In thousands, except per share data)
2003(1)(2)
                               
Revenue
  $ 1,436,876     $ 2,006,301     $ 2,230,411     $ 2,041,627  
Earnings before income taxes and minority interest
    230,454       412,030       460,288       317,867  
Net earnings
    139,973       248,289       277,342       196,216  
Basic earnings per share
    1.06       1.67       1.87       1.20  
Diluted earnings per share
    1.02       1.62       1.81       1.16  
Dividends paid per share
    .09       .22       .16       .16  
2002
                               
Revenue
  $ 1,066,860     $ 1,142,964     $ 1,282,847     $ 1,589,969  
Earnings before income taxes and minority interest
    161,543       178,756       230,248       280,753  
Net earnings
    100,985       112,286       143,511       174,935  
Basic earnings per share
    .78       .85       1.09       1.33  
Diluted earnings per share
    .75       .82       1.05       1.29  
Dividends paid per share
    .07       .07       .07       .09  


(1)  Our financial results for the year ended December 31, 2003 include the results of FIS for the period from April 1, 2003, the acquisition date, through December 31, 2003, and include the results of operations of various other entities acquired on various dates during 2003, as discussed in “Recent Developments” and Note B of Notes to Consolidated Financial Statements.
 
(2)  During the third quarter of 2003, we adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), for stock-based employee compensation, effective as of the beginning of 2003, as discussed in Note L of Notes to Consolidated Financial Statements. Under this method, stock-based employee compensation cost is recognized from the beginning of 2003 as if the fair value method of accounting had been used to account for all employee awards granted, modified, or settled in years beginning after December 31, 2002. Net income, as a result of the adoption of SFAS No. 123, for the year ended December 31, 2003 reflects an expense of $3.9 million, which is included in the reported financial results. The adoption of SFAS 123 increased compensation cost by $5.8 million for the three months ended March 31, 2003, which resulted in a reduction of the reported net earnings of $3.6 million, or $.03 per diluted per share. Compensation cost decreased by $47,000 for the three months ended June 30, 2003, which resulted in an increase in reported net earnings of $29,000, which had no change to diluted earnings per share. Amounts for the first and second quarters of 2003 are presented as if we adopted SFAS 123 in the first quarter of 2003.
 
(3)  During the third quarter of 2003, we recorded $26.3 million in pre-tax expenses relating to the migration of data center operations from FNIS to FIS and $12.9 million in pre-tax expenses relating to the relocation of our corporate headquarters to Jacksonville, Florida. In addition, in the third quarter of 2003, we recorded a pre-tax expense of $7.9 million relating to the write-off of intangible assets, software and license fees. The third quarter of 2003 also includes a realized gain of $51.7 million as a result of InterActive Corp’s acquisition of Lending Tree Inc. and the subsequent sale of our InterActive Corp common stock.

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