-----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, HupespebklLeTHblh4jRPD8qr+pOU+pRhxhPSNYikzY65jFssPyVtgaanwFqzdv9 XBC1Hjb/RKAlMAt4J+facA== 0000916641-97-000823.txt : 19970813 0000916641-97-000823.hdr.sgml : 19970813 ACCESSION NUMBER: 0000916641-97-000823 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 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: 97657319 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 LAWYERS TITLE CORPORATION 10-Q 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 June 30, 1997 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 8,912,366 July 24, 1997 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 6. Exhibits and Reports on Form 8-K........................10 Signatures..............................................11 2 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements LAWYERS TITLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (Unaudited)
June 30, December 31, ASSETS 1997 1996 - ------ ---- ---- INVESTMENTS: Fixed maturities available-for-sale - at fair value (amortized cost: 1997 - $242,190; 1996 - $214,875) $ 245,125 $ 218,224 Equity securities - at fair value (cost: 1997 - $933; 1996 - $930) 1,716 1,725 Mortgage loans (less allowance for doubtful accounts: 1997 and 1996 - $150) 461 480 Invested cash 23,311 71,626 ------------ ----------- Total investments 270,613 292,055 CASH 26,927 23,997 NOTES AND ACCOUNTS RECEIVABLE: Notes (less allowance for doubtful accounts: 1997 - $1,249; 1996 - $1,008) 6,499 6,657 Accounts receivable (less allowance for doubtful accounts: 1997 - $2,351; 1996 - $2,197) 28,988 20,003 ------------ ----------- Total notes and accounts receivable 35,487 26,660 PROPERTY AND EQUIPMENT - at cost (less accumulated depreciation and amortization: 1997 - $49,233; 1996 - $44,670) 21,371 21,959 TITLE PLANTS 48,556 48,536 GOODWILL (less accumulated amortization: 1997 - $13,187; 1996 - $12,393) 59,279 59,669 DEFERRED INCOME TAXES 26,622 23,435 OTHER ASSETS 33,424 24,657 ------------ ----------- $ 522,279 $ 520,968 ============ ===========
3 LAWYERS TITLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (Unaudited)
June 30, December 31, LIABILITIES 1997 1996 - ----------- ---- ---- POLICY AND CONTRACT CLAIMS $ 198,023 $ 196,285 ACCOUNTS PAYABLE AND ACCRUED EXPENSES 41,671 47,211 INCOME TAXES PAYABLE 667 5,721 OTHER LIABILITIES 11,610 9,583 ------------ ----------- Total liabilities 251,971 258,800 ------------ ----------- 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, 8,912,366 in 1997 and 8,889,791 in 1996 167,494 167,044 Unrealized investment gains (less related deferred income tax expense of $1,301 in 1997 and $1,450 in 1996) 2,417 2,694 Retained earnings 100,397 92,430 ------------ ----------- Total shareholders' equity 270,308 262,168 ------------ ----------- $ 522,279 $ 520,968 ============ ===========
See accompanying notes. 4 LAWYERS TITLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 1997 AND 1996 (In thousands of dollars except per share amounts) (Unaudited)
Six Months Ended Three Months Ended June 30, June 30, 1997 1996 1997 1996 ---- ---- ---- ---- REVENUES Premiums $ 225,140 $ 213,187 $ 122,405 $ 118,467 Title search, escrow and other 54,048 48,167 29,613 25,418 Investment income 8,383 10,753 4,247 5,408 ---------- ---------- ---------- ---------- 287,571 272,107 156,265 149,293 ---------- ---------- ---------- ---------- EXPENSES Salaries and employee benefits 96,818 89,768 49,902 46,481 Agents' commissions 95,766 86,385 51,055 49,252 Provision for policy and contract claims 15,320 13,584 8,340 7,298 General, administrative and other 66,189 61,855 34,574 32,464 ---------- ---------- ---------- ---------- 274,093 251,592 143,871 135,495 ---------- ---------- ---------- ---------- OPERATING INCOME BEFORE INCOME TAXES 13,478 20,515 12,394 13,798 INCOME TAX EXPENSE Current 7,660 7,535 6,025 6,271 Deferred (3,040) (585) (1,642) (1,517) ---------- ---------- ---------- ---------- 4,620 6,950 4,383 4,754 ---------- ---------- ---------- ---------- NET INCOME 8,858 13,565 8,011 9,044 DIVIDENDS (891) (889) (446) (445) RETAINED EARNINGS BEGINNING OF PERIOD 92,430 57,689 92,832 61,766 ---------- ---------- ---------- ---------- RETAINED EARNINGS END OF PERIOD $ 100,397 $ 70,365 $ 100,397 $ 70,365 ========== ========== ========== ========== EARNINGS PER COMMON SHARE $ .99 $ 1.53 $ .90 $ 1.02 ========== ========== ========== ========== AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 8,906 8,887 8,912 8,887
See accompanying notes. 5 LAWYERS TITLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (In thousands of dollars) (Unaudited)
Six Months Ended June 30, 1997 1996 ---- ---- Cash flows from operating activities: Net income $ 8,858 $ 13,565 Depreciation & amortization 4,744 4,180 Amortization of bond premium 284 408 Realized investment gains (101) (4,437) Deferred income tax (3,040) (585) Change in assets & liabilities: Notes receivable 158 344 Premiums receivable (8,985) (409) Current income taxes (5,054) 4,719 Policy & contract claims 1,738 33 Cash surrender value of life insurance (8,478) (743) Accounts payable and accrued expenses (5,540) 1,513 Other (834) (2,817) ---------- --------- Net cash (used in) provided by operating activities (16,250) 15,771 ---------- --------- Cash flows from investing activities: Purchase of property & equipment - net (3,382) (4,202) Purchase of businesses, net of cash acquired - (2,320) Cost of investments acquired: Fixed maturities (71,308) (53,219) Equity securities (6) (19,907) Proceeds from investment sales or maturities: Fixed maturities 43,770 40,789 Equity securities 44 24,018 Mortgage loans 19 93 ----------- --------- Net cash used in investing activities (30,863) (14,748) ---------- --------- Cash flows from financing activities: Dividends paid (891) (889) Change in notes payable 2,619 1,095 ---------- --------- Net cash provided by financing activities 1,728 206 ---------- --------- Net (decrease) increase in cash and invested cash (45,385) 1,229 Cash & invested cash at beginning of period 95,623 40,647 ---------- --------- Cash & invested cash at end of period $ 50,238 $ 41,876 ========== =========
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, 1996 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. Certain 1996 amounts have been reclassified to conform to the 1997 presentation. 2. Pending Legal Proceedings For additional information, see Pending Legal Proceedings on page F-27 of the December 31, 1996 Form 10-K. 3. Accounting Pronouncements In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share (Statement 128), which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded and dual presentation is required regardless of the difference between basic and diluted earnings per share. The impact of Statement 128 on the calculation of primary and diluted earnings per share for these quarters is not expected to be material. 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. LAWYERS TITLE CORPORATION AND SUBSIDIARIES Results of Operations Net Income Net income reported for the second quarter 1997 was $8.0 million or $.90 per share compared to $9.0 million or $1.02 per share for the second quarter of 1996. The 1996 quarter included $2.3 million in capital gains before taxes, while there were no significant capital gains in the 1997 quarter. Net income for the first six months of 1997 was $8.9 million or $.99 per share compared to $13.6 million or $1.53 per share for the same period of 1997. The first half of 1996 benefited from the realization of $4.5 million of capital gains on a pretax basis while there were no significant capital gains in the first half of 1997. Operating Revenues Operating revenues improved 5.7% to $152.0 million in the second quarter of 1997 compared to $143.9 million reported in the second quarter of 1996. This improvement was attributed largely to strength in revenues in direct operations. In the six months ended June 30, 1997 revenues improved 6.8% to $279.2 million in comparison to the six months ended June 30, 1996. Although orders opened in direct offices decreased 4.0% for the first six months of 1997 compared to the same period of 1996, orders for the second quarter of 1997 were approximately 2.0% greater than the second quarter of 1996. While there is no assurance that opened orders will close, this level of order activity provides a strong base for the start of the third quarter of 1997. Investment Income Investment income decreased in the three and six-month periods ended June 30, 1997 compared to the same periods of 1996. These decreases were primarily attributable to the decreases in capital gains activity previously discussed. These capital gains decreases were offset by increases in interest and dividend income resulting from the move of a portion of the Company's investment portfolio out of equity securities and into fixed maturity securities in the fourth quarter of 1996. 8 Expenses The operating margin before claims and investment income was 10.8% in the second quarter of 1997 virtually flat with the margin for the second quarter of 1996. The margin in 1997 was protected despite an increase in average agents' commission rates of 1.0% reflecting increased competition for agency business. The provision for policy and contract claims was 5.5% of operating revenue in the second quarter and first half of 1997 compared to 5.1% and 5.2% for the comparable periods of 1996. These ratios are consistent with the claims experience of recent quarters. Liquidity and Capital Resources As of June 30, 1997 the Company held cash and invested cash of $50.2 and fixed-maturity securities of $245.1 million. Additionally, the Company had unutilized lines of credit totaling $31.0 million at that time. Management believes that the Company can meet both its short and long-term capital needs as of June 30, 1997. Reference is made to Item 7, "Forward-Looking and Cautionary Statements" on page 26 of the December 31, 1996 Form 10-K, regarding important factors that could cause actual results to differ materially from those contained in any forward-looking statement made by or on behalf of the Company, including forward-looking statements contained in Item 2 of this Form 10-Q. 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits None b. Reports on Form 8-K None 10 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: August 12, 1997 /s/ Charles Henry Foster, Jr. ------------------------ -------------------------------- Charles Henry Foster, Jr. Chairman and Chief Executive Officer Date: August 12, 1997 /s/ George William Evans ------------------------ ---------------------------- George William Evans Vice President and Treasurer 11 EX-27 2 EXHIBIT 27
7 1,000 6-MOS DEC-31-1997 JUN-30-1997 245,125 0 0 1,716 461 0 270,613 26,927 0 0 522,279 198,023 0 0 0 0 0 0 167,494 102,814 522,279 225,140 8,383 0 54,038 15,320 0 258,773 13,478 4,620 8,858 0 0 0 8,858 .99 0 196,285 0 0 0 0 198,023 0
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