-----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, EWvVUAyqhgUpur2WKguED/7cyeJLYO7VP/iwraMeQHrB5SRqnXnkF76qFeb53lQo qDWaDT2tsmLUm4doK8pvcQ== 0000891092-04-000746.txt : 20040217 0000891092-04-000746.hdr.sgml : 20040216 20040217123428 ACCESSION NUMBER: 0000891092-04-000746 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040217 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEWART INFORMATION SERVICES CORP CENTRAL INDEX KEY: 0000094344 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 741677330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-02658 FILM NUMBER: 04605948 BUSINESS ADDRESS: STREET 1: 1980 POST OAK BLVD CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7136258100 MAIL ADDRESS: STREET 1: 1980 POST OAK BLVD CITY: HOUSTON STATE: TX ZIP: 77056 8-K 1 e16940_8k.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------- DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): February 17, 2004 STEWART INFORMATION SERVICES CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-12688 74-1677330 (STATE OR OTHER (COMMISSION FILE NO.) (I.R.S. EMPLOYER JURISDICTION) IDENTIFICATION NO.) 1980 Post Oak Blvd, Houston, Texas 77056 (Address Of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (713) 625-8100 ================================================================================ ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) EXHIBITS Exhibit No. Description - ----------- ----------- 99.1 Press release of Stewart Information Services Corporation dated February 17, 2004, reporting financial results for the three months and year ended December 31, 2003 ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. A press release issued by Stewart Information Services Corporation on February 17, 2004 regarding financial results for the three months and year ended December 31, 2003 is attached hereto as Exhibit 99.1, and the second and third paragraphs thereof and the financial tables therein, are incorporated herein by reference. This information is not deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act registration statements. 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. STEWART INFORMATION SERVICES CORPORATION (Registrant) By: /s/ Max Crisp -------------- (Max Crisp, Executive Vice President, Secretary-Treasurer, Director and Principal Financial and Accounting Officer) Date: February 17, 2004 EX-99.1 3 e16940ex99_1.txt PRESS RELEASE Exhibit 99.1 Stewart Announces Record Year 2003 HOUSTON, Feb. 17 /PRNewswire-FirstCall/ -- Stewart Information Services Corporation (NYSE: STC) today reported results for the fourth quarter and year end 2003. For the second year in a row, annual revenues, net earnings, orders and earnings per share were the largest in the company's history. Revenues for the year 2003 were $2.2 billion, a 26 percent increase from 2002. Net earnings for the year 2003 were $123.8 million, or $6.88 per diluted share, compared with net earnings of $94.5 million, or $5.30 per diluted share, for 2002. Stewart's assets now exceed $1 billion for the first time in the company's history. Stewart earned $20.8 million, or $1.15 per diluted share, for the fourth quarter of 2003, compared with earnings of $43.8 million, or $2.46 per diluted share, for the fourth quarter of 2002. Revenues for the fourth quarter increased to $614.9 million compared with $551.3 million a year ago. Although revenues for the fourth quarter increased by 12 percent over the fourth quarter of 2002, earnings declined by 53 percent. The fourth quarter included a significantly higher proportion of revenues from agency operations in 2003 (66 percent) compared with the 2002 period (59 percent). In high- volume years like 2003, agency operations generate a lower percentage of earnings to revenues than do direct operations. Employee costs for the rollout of SureClose(R) to more than 400 company locations in 2003 also affected the full year and the fourth quarter. Additionally, reserves taken on litigation in progress and a loss on a mapping/automation contract reduced earnings per share by approximately $0.13 in the fourth quarter. Refinancing transactions declined in the second half of 2003 as a result of an overall increase in mortgage interest rates. Most industry experts project current interest rates to continue or move slightly higher and are forecasting significantly fewer refinancing transactions for 2004. Stewart's incoming orders in the fourth quarter of 2003 were down 29 percent from the same quarter a year ago. Fourth quarter orders were off 26 percent from the third quarter. Stewart Morris, Jr., president and co- chief executive officer, said, "We monitor our incoming orders daily and weekly. Our employee counts at the end of the year had been reduced by approximately 10 percent from the peak month of July 2003. Our employee costs for the fourth quarter were approximately 13 percent less than the employee costs for the third quarter. We are continuing to lower staff levels and expenses to allow for reduced revenues, while maintaining superior core service to our customers. "We continued our systematic analyses and acquisitions of title agencies and real estate information companies, concentrating on transactions that will be accretive to earnings and shareholder wealth," said Morris. "By completing process flow analyses and installing our integrated technology, we create further gains for our shareholders. "Our investment in technology allows us to attract top quality personnel and support their effectiveness in serving our customers. The installation of our SureClose(R) transaction management system will allow us to increase the volume of delivery of bundled packages of services for lenders and title agencies," added Morris. "The implementation of our SureClose system is transforming our company to a real estate transaction management business. It also facilitates a shift from paper-based transactions to electronic processing improving both internal efficiency and service to our customers. By year-end we increased the number of SureClose installations to over 400 company locations with more than 140,000 files in the system. Extra startup expenses are incurred in implementation; however, when fully implemented we believe this will provide us a competitive advantage and help the company better manage its costs through all types of market conditions." "The resumption of a payment of an annual cash dividend in the fourth quarter of 2003 of $0.46 per share, the continuing emphasis on growth in book value to $34.47 and all-time record earnings per share in 2003 illustrate our focus on being a value-creating entity," said Malcolm S. Morris, chairman and co-chief executive officer. Indicative of this focus on growing shareholder return, Stewart has been included on the prestigious Forbes Platinum 400 list of the best performing big companies in America for the third consecutive year. "The challenge going forward is to right-size in an ever-changing economic landscape, but doing so with the expectation of long run increases in revenues and profitability regardless of short term hurdles," said Morris. Fannie Mae estimates that one-to-four family lending will drop by more than 50 percent in 2004 when compared with 2003 -- with substantially all of the decline coming from reduced refinance transactions. They project 2004 existing and new home sales to be the second best year in history. Industry expectations are for commercial transactions to continue to gain volume. Stewart's recent acquisition of Title Associates, Inc. demonstrates its ongoing emphasis on expansion in the higher premium commercial sector. Stewart Information Services Corporation is a technology driven, strategically competitive, global real estate information company. Stewart provides title insurance and related information services through more than 7,200 issuing locations in the United States and several international markets. Stewart meets the needs of the real estate and mortgage industries through the delivery of information services required for settlement using e-commerce. These services include title reports, flood determinations, document preparation, property reports and background checks. Stewart also supplies post-closing services to lenders, automated county clerk land records, property ownership mapping, and GIS for governmental entities. Stewart provides expertise in tax-deferred exchanges. More information about Stewart can be found at www.stewart.com . This press release may contain forward-looking statements, which include all statements other than statements of historical facts. Forward-looking statements are not guarantees of performance and no assurance can be given that Stewart's expectations will be achieved. In particular, historical order counts do not necessarily indicate future revenues because Stewart cannot predict the number of orders that will result in closings. Stewart Information Services Corporation Three months ended December 31 2003 2002 Revenues $614,875,000 $551,269,000 Net earnings $20,782,000 $43,828,000 Average shares - diluted 18,095,000 17,800,000 Earnings per share: Basic $1.16 $2.47 Diluted $1.15 $2.46 Year ended December 31 2003 2002 Revenues $2,243,262,000 $1,779,716,000 Net earnings $123,755,000 $94,480,000 Average shares - diluted 17,980,000 17,826,000 Earnings per share: Basic $6.93 $5.33 Diluted $6.88 $5.30 STEWART INFORMATION SERVICES CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (In thousands of dollars, except per share amounts) Three months ended Year ended December 31 December 31 2003 2002 2003 2002 (A) Revenues Title insurance: Direct operations 199,748 214,965 892,686 689,588 Agency operations 391,255 307,342 1,249,800 995,283 Real estate information services 17,099 19,495 78,666 71,119 Investment income 5,220 5,747 19,800 20,694 Investment gains - net 1,553 3,720 2,310 3,032 614,875 551,269 2,243,262 1,779,716 Expenses Amounts retained by agencies 320,820 249,418 1,024,282 814,651 Employee costs 137,114 127,862 573,486 453,304 Other operating expenses 85,567 70,697 311,741 250,933 Title losses and related claims 28,266 23,970 94,827 75,920 Depreciation 6,741 5,559 25,240 21,383 Goodwill --- --- --- --- Interest 158 32 721 725 Minority interests 2,225 2,431 13,462 8,940 580,891 479,969 2,043,759 1,625,856 Earnings before taxes 33,984 71,300 199,503 153,860 Income taxes 13,202 27,472 75,748 59,380 Net earnings 20,782 43,828 123,755 94,480 Average number of diluted shares outstanding (000) 18,095 17,800 17,980 17,826 Earnings per share - diluted 1.15 2.46 6.88 5.30 Segment information: Title revenues 597,776 531,774 2,164,596 1,708,597 Title pretax earnings 34,050 68,892 187,377 145,059 REI revenues 17,099 19,495 78,666 71,119 REI pretax earnings(A) (66) 2,408 12,126 8,801 Three months ended Year ended December 31 December 31 2003 2002 2003 2002 (A) Selected financial information (000): Cash flow from operations 35,556 70,133 193,540 162,551 Title loss payments - net of recoveries 18,656 15,270 57,996 48,406 Other comprehensive earnings - net of taxes 1,349 (2,016) 5,675 5,195 Average number basic shares 17,975 17,722 17,862 17,736 Number of title orders opened 171.4 240.6 986.9 833.3 Dec 31 Dec 31 2003 2002 Stockholders' equity 621,389 493,592 Number of shares outstanding 18,026 17,731 Book value per share 34.47 27.84 (A) The fourth quarter of 2003 includes expenses of $3.5 million relating to litigation and a REI mapping/computer system project. Net earnings were reduced by $2.3 million, or $.13 per share. STEWART INFORMATION SERVICES CORPORATION CONSOLIDATED BALANCE SHEETS (condensed) (In thousands of dollars) December 31 December 31 2003 2002 Assets Cash and cash equivalents 114,202 139,156 Short-term investments 153,322 50,673 Investments - statutory reserve funds 375,421 306,501 Investments - other 59,035 69,260 Receivables 79,025 69,041 Property and equipment 74,174 61,158 Title plants 43,216 40,307 Goodwill 79,084 66,885 Other 54,388 41,005 1,031,867 843,986 Liabilities Notes payable 24,583 14,195 Accounts payable and accrued liabilities 82,147 83,961 Estimated title losses 268,089 230,058 Deferred income taxes 22,440 11,284 Minority interests 13,219 10,896 Contingent liabilities and commitments Stockholders' equity Common and Class B Common Stock and additional paid-in capital 141,168 134,927 Retained earnings 469,107 353,226 Accumulated other comprehensive earnings 15,019 9,344 Treasury stock (3,905) (3,905) Total stockholders' equity 621,389 493,592 1,031,867 843,986 February 17, 2004 SOURCE Stewart Information Services Corporation -0- 02/17/2004 /CONTACT: Ted C. Jones, Director - Investor Relations of Stewart Information Services Corporation, +1-713-625-8014/ /Photo: http://www.newscom.com/cgi-bin/prnh/20030429/STEWLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com / /Web site: http://www.stewart.com / (STC) CO: Stewart Information Services Corporation ST: Texas IN: FIN RLT SU: ERN -----END PRIVACY-ENHANCED MESSAGE-----