-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OBAan9lppK6ujFdIfSg/eWHrGqTfm+wqiRCgPB1F4b81WKzuoflQE7JfYF91sLDA /wSXRsOP75mu1k9qPzGLoQ== 0000916641-96-000353.txt : 19960514 0000916641-96-000353.hdr.sgml : 19960514 ACCESSION NUMBER: 0000916641-96-000353 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAWYERS TITLE CORP CENTRAL INDEX KEY: 0000877355 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 541589611 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13990 FILM NUMBER: 96562141 BUSINESS ADDRESS: STREET 1: 6630 W BROAD ST STREET 2: PO BOX 27567 CITY: RICHMOND STATE: VA ZIP: 23230 BUSINESS PHONE: 8042816700 MAIL ADDRESS: STREET 1: 6630 WEST BROAD ST STREET 2: PO BOX 27567 CITY: RICRICHMOND STATE: VA ZIP: 23230 10-Q 1 FORM 10-Q FOR 1ST QUARTER FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1996 Commission File No. 0-13990 LAWYERS TITLE CORPORATION (Exact name of registrant as specified in its charter) Virginia 54-1589611 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 6630 West Broad Street, Richmond, Virginia 23230 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (804) 281-6700 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock 8,887,316 April 30, 1996 ------------------ ------------------ No Par Value 1 LAWYERS TITLE CORPORATION AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: Consolidated Balance Sheets............................... 3 Consolidated Statements of Operations and Retained Earnings ................................ 5 Consolidated Statements of Cash Flows............................................ 6 Notes to Consolidated Financial Statements.................................. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................. 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings ...................................... 10 Item 6. Exhibits and Reports on Form 8-K........................ 11 Signatures.............................................. 12 2 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements LAWYERS TITLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (Unaudited)
March 31, December 31, ASSETS 1996 1995 - ------ ---- ---- INVESTMENTS: Fixed maturities: Available-for-sale - at fair value (amortized cost: 1996 - $182,877; 1995 - $179,182) $ 185,290 $ 187,270 Equity securities - at fair value (cost: 1996 - $44,290; 1995 - $43,327) 58,881 56,540 Mortgage loans (less allowance for doubtful accounts: 1996 and 1995 - $150) 1,005 1,015 Invested cash 19,585 21,805 ------------ ----------- Total investments 264,761 266,630 CASH 16,902 18,842 NOTES AND ACCOUNTS RECEIVABLE: Notes (less allowance for doubtful accounts: 1996 - $765; 1995 - $365) 7,047 7,565 Premiums (less allowance for doubtful accounts: 1996 - $1,981; 1995 - $1,898) 17,330 17,242 Income tax benefits - 301 ------------ ----------- Total notes and accounts receivable 24,377 25,108 PROPERTY AND EQUIPMENT - at cost (less accumulated depreciation and amortization: 1996 - $38,527; 1995 - $36,581) 21,254 20,850 TITLE PLANTS 48,814 48,731 GOODWILL (less accumulated amortization: 1996 - $10,548; 1995 - $10,174) 53,086 53,645 DEFERRED INCOME TAXES 16,701 16,127 OTHER ASSETS 28,308 25,910 ------------ ----------- $ 474,203 $ 475,843 ============ ===========
3 LAWYERS TITLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (Unaudited)
March 31, December 31, LIABILITIES 1996 1995 - ----------- ---- ---- POLICY AND CONTRACT CLAIMS $ 192,815 $ 193,791 ACCOUNTS PAYABLE AND ACCRUED EXPENSES 33,617 34,933 INCOME TAXES PAYABLE 651 - OTHER 7,312 8,734 ------------ ----------- Total liabilities 234,395 237,458 ------------ ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred stock, no par value, authorized 5,000,000 shares, none issued or outstanding - - Common stock, no par value, authorized 45,000,000 shares, issued and outstanding, 8,887,316 in 1996 and 8,885,991 in 1995 167,020 167,006 Unrealized investment gains (less related deferred income tax expense of $5,951 in 1996 and $7,456 in 1995) 11,053 13,845 Retained earnings 61,766 57,689 Receivable from employee benefit plan (31) (155) ------------ ----------- Total shareholders' equity 239,808 238,385 ------------ ----------- $ 474,203 $ 475,843 ============ ===========
See accompanying notes. 4 LAWYERS TITLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (In thousands of dollars except per share amounts) (Unaudited)
1996 1995 ---- ---- REVENUES Premiums $ 94,720 $ 88,086 Title search and escrow 22,749 16,752 Investment income, net 5,345 3,301 ------------ ----------- 122,814 108,139 ------------ ----------- EXPENSES Salaries and employee benefits 43,287 38,084 Agents' commissions 37,133 40,453 Provision for policy and contract claims 6,286 4,965 Other 29,391 23,242 ------------ ----------- 116,097 106,744 ------------ ----------- OPERATING INCOME BEFORE INCOME TAXES 6,717 1,395 INCOME TAX EXPENSE Current 1,264 (872) Deferred 932 1,252 ------------ ----------- 2,196 380 ------------ ----------- NET INCOME 4,521 1,015 DIVIDENDS (444) (267) RETAINED EARNINGS BEGINNING OF PERIOD 57,689 42,237 ------------ ----------- RETAINED EARNINGS END OF PERIOD $ 61,766 $ 42,985 ============ =========== EARNINGS PER COMMON SHARE $0.51 $0.11 ===== ===== AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 8,887 8,884
See accompanying notes. 5 LAWYERS TITLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (In thousands of dollars) (Unaudited)
1996 1995 ---- ---- Cash flows from operating activities: Net income $ 4,521 $ 1,015 Depreciation & amortization 2,072 1,919 Amortization of bond premium 217 377 Realized investment gains (2,171) (216) Deferred income tax 932 1,252 Change in assets & liabilities: Notes receivable 518 83 Premiums receivable (88) 1,396 Income taxes receivable/payable 952 (2,117) Policy & contract claims (976) (2,683) Accounts payable and accrued expenses (1,316) (7,201) Cash surrender value of life insurance (996) (574) Other (954) (511) ------------ ----------- Net cash provided by (used in) operating activities 2,711 (7,260) ------------ ----------- Cash flows from investing activities: Purchase of property & equipment - net (2,185) (1,018) Purchases of businesses, net of cash acquired - (3,511) Cost of investments acquired: Fixed maturities (29,687) (18,441) Equity securities (11,235) (7,985) Proceeds from investment sales or maturities: Fixed maturities 26,020 19,902 Equity securities 12,197 5,744 Mortgage loans 10 111 ------------ ----------- Net cash used in investing activities (4,880) (5,198) ------------ ----------- Cash flows from financing activities: Dividends paid (444) (267) Change in notes payable (1,547) 10,338 ------------ ----------- Net cash (used in) provided by financing activities (1,991) 10,071 ------------ ----------- Net decrease in cash and invested cash (4,160) (2,387) Cash & invested cash at beginning of period 40,647 31,989 ------------ ----------- Cash & invested cash at end of period $ 36,487 $ 29,602 ============ ===========
See accompanying notes. 6 LAWYERS TITLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands of dollars except per share amounts) 1. Interim Financial Information The unaudited 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 Form 10-K for the year ended December 31, 1995 filed with the Commission under the Securities Exchange Act of 1934. This report should be read in conjunction with the aforementioned Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of this information have been made. The results of operations for the interim periods are not necessarily indicative of results for a full year. 2. Pending Legal Proceedings For additional information, see Pending Legal Proceedings on page F-26 and Legal Proceedings on page 14 of the December 31, 1995 Form 10-K and Part II, Item 1 of this report. 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. LAWYERS TITLE CORPORATION AND SUBSIDIARIES Results of Operations Operating Revenues Operating revenues for the first quarter of 1996 were $117.5 million, compared to $104.8 million for the first quarter of 1995. This year-over-year revenue gain of more than 12.1 %, which was attributable to strength in the Company's direct operations, reflects the continuation of a modest recovery started in residential real estate markets earlier this year, as well as heavier residential refinancing activity resulting from the lower interest rate environment seen in the latter part of 1995 and early 1996. For the first quarter of 1996, new orders opened in Company offices were almost 107,000, an increase of over 45% from the first quarter of 1995 and the best quarter the Company has ever seen for new open orders. While there is no assurance that these open orders will close, and the recent increases in mortgage rates will likely dampen refinancing activity, the open order count seen in the first quarter sets a strong platform for the Company to move into the second quarter of 1996. Investment Income Investment income totaled $5.3 million in the first quarter of 1996 compared to $3.3 million in the comparable 1995 period. The change was primarily due to an increase in capital gains in the 1996 period compared to the 1995 period. Expenses The operating margin, before claims and investment income, showed strong improvement to 6.5% during the first quarter of 1996 as compared with 2.9% in the first quarter of 1995 when salary reductions were in place throughout much of the Company. Claims experience continued to show the positive effects of favorable development patterns seen throughout 1995 as claims were only 5.4% of title revenues. This compared to the 4.7% posted in the first quarter of 1995, which was benefited by favorable developments in two previously reserved large claims. The rate used for discounting loss reserves on current issues is determined at the beginning of each year. The rate established at the beginning of 1996 for the year was 6.0%. 8 Net Income Net earnings for the first quarter of 1996 were $4.5 million or $.51 per share compared to $1.0 million or $.11 per share in the first quarter of 1995. Liquidity and Capital Resources Management believes that the Company holds adequate resources to meet its short and long-term capital needs at March 31, 1996. At that date cash and invested cash balances of $36.5 million and fixed maturity and equity security balances totaling $245.2 million were held by the Company. Additionally, the Company maintained an unused $20.0 million line of credit at March 31, 1996. 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings With respect to the Brown and Segall litigation as reported on pages 14, 15 and 16 of the Registrant's December 31, 1995 Form 10-K (1995 Form 10-K), on May 3, 1996, the District Court in Arizona approved the settlement as described in the 1995 Form 10-K and authorized notice to the class. The Court still has pending before it petitions for attorneys' fees and costs. 10 Item 6. Exhibits and Reports on Form 8-K a. Exhibits None b. Reports on Form 8-K None 11 Signature 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. LAWYERS TITLE CORPORATION (Registrant) Date: May 13, 1996 /s/ Charles Henry Foster, Jr. Charles Henry Foster, Jr. Chairman and Chief Executive Officer Date: May 13, 1996 /s/ George William Evans George William Evans Vice President and Treasurer 12 EX-27 2 FINANCIAL DATA SCHEDULE
7 1,000 3-MOS DEC-31-1996 MAR-31-1996 185,290 0 0 58,881 1,005 0 264,761 16,902 0 0 474,203 192,815 0 0 0 0 0 0 167,020 72,788 474,203 94,720 5,345 0 22,749 6,286 0 109,811 6,717 2,196 4,521 0 0 0 4,521 0.51 0 0 0 0 0 0 0 0
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