1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000March 31, 2001
[ ] 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 1-12688
STEWART INFORMATION SERVICES CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 74-1677330
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1980 Post Oak Blvd., Houston TX 77056
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(713) 625-8100
----------------------------------------------------
(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, 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 13,997,67714,177,137
Class B Common 1,050,012
2
FORM 10-Q
QUARTERLY REPORT
Quarter Ended September 30, 2000March 31, 2001
TABLE OF CONTENTS
Item No. Page
- -------- ----
Part I
1. Financial Statements 1
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item No. Page
- -------- ----
Part I
1. Financial Statements 1
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
3. Quantitative and Qualitative Disclosures About
Market Risk 6
Part II
1. Legal Proceedings 8
5. Other Information 8
Part II
1. Legal Proceedings 10
5. Other Information 10
6. Exhibits and Reports on Form 8-K 7
Signature 9
Signature 11
3
STEWART INFORMATION SERVICES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
FOR THE QUARTERS AND NINETHREE MONTHS ENDED
SEPTEMBER 30,MARCH 31, 2001 and 2000 and 1999
THIRD QUARTER NINETHREE MONTHS --------------------- --------------------ENDED
------------------
2001 2000
1999 2000 1999
---------- --------- -------- --------------- ------
($000 Omitted)
($000 Omitted) ($000 Omitted)
Revenues
Title premiums, fees and other revenues 219,459 246,460 616,905 749,293223,941 191,582
Real estate information services 14,019 14,507 39,246 45,82314,462 12,199
Investment income 5,519 5,394 16,006 15,1865,545 4,762
Investment gains (losses) --- net 7 20 (280) 50
--------- -------- -------- ------
239,004 266,381 671,877 810,352353 (340)
------- -------
244,301 208,203
Expenses
Amounts retained by agents 100,514 124,186 280,771 378,582101,044 90,839
Employee costs 75,398 72,030 217,208 215,49379,352 68,674
Other operating expenses 43,465 43,321 125,013 122,89842,150 39,061
Title losses and related claims 9,340 9,937 27,447 31,1239,595 8,560
Depreciation and amortization 5,575 4,968 15,801 13,1615,268 5,091
Interest 497 314 1,364 910659 381
Minority interests 1,341 1,377 3,786 3,803
--------- -------- --------1,225 944
------- 236,130 256,133 671,390 765,970
--------- -------- ---------------
239,293 213,550
------- -------
Earnings (loss) before taxes 2,874 10,248 487 44,3825,008 (5,347)
Income taxes 1,116 4,150 209 16,958
--------- -------- --------(benefit) 1,935 (1,993)
------- -------
Net earnings 1,758 6,098 278 27,424
========= ======== ========(loss) 3,073 (3,354)
======= =======
Average number of shares outstanding ---
assuming dilution (000) 15,018 14,762 14,913 14,56215,268 14,811
Earnings (loss) per share --- basic 0.12 0.42 0.02 1.900.20 (0.23)
Earnings (loss) per share --- diluted 0.12 0.41 0.02 1.88
========= ========= ========0.20 (0.23)
======= =======
Comprehensive earnings:
Net earnings 1,758 6,098 278 27,424(loss) 3,073 (3,354)
Changes in unrealized investment gains,
(losses),
net of taxes of $916, $(700), $1,129$1,160 and $(3,950),$293, respectively 1,701 (1,300) 2,097 (7,335)
--------- -------- --------2,155 544
------- -------
Comprehensive earnings 3,459 4,798 2,375 20,089
========= ========= ========(loss) 5,228 (2,810)
======= =======
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4
STEWART INFORMATION SERVICES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000MARCH 31, 2001 AND DECEMBER 31, 19992000
SEP 30MAR 31 DEC 31
2001 2000
1999
---------- ---------------- ------
($000 Omitted)
($000 Omitted)
Assets
Cash and cash equivalents 34,359 36,80344,985 35,728
Short-term investments 64,221 65,58348,914 53,748
Investments --- statutory reserve funds 194,955 186,917212,548 206,150
Investments --- other 51,484 57,71148,750 52,242
Receivables 46,295 48,58051,678 57,039
Property and equipment 47,487 45,90044,753 45,459
Title plants 27,809 26,25833,524 32,491
Goodwill 37,515 31,64147,348 36,693
Deferred income taxes 12,535 12,3787,318 7,352
Other 29,177 23,970
---------- ----------
545,837 535,741
========== ==========35,996 36,546
------- -------
575,814 563,448
======= =======
Liabilities
Notes payable 28,954 19,05440,806 32,543
Accounts payable and accrued liabilities 34,056 41,30333,086 38,617
Estimated title losses 184,951 183,787191,725 190,298
Minority interests 6,625 6,6737,129 6,901
Contingent liabilities and commitments
Stockholders' equity
Common and Class B Common Stock and
additional paid-in capital 84,590 79,12687,404 84,653
Retained earnings 209,732 209,454213,133 210,060
Accumulated other comprehensive deficit (1,559) (3,656)earnings 4,043 1,888
Treasury stock - 116,900 shares (1,512) -
---------- -----------(1,512)
------- -------
Total stockholders' equity ($19.3619.91 per
share at September 30, 2000) 291,251 284,924
---------- -----------
545,837 535,741
========== ===========March 31, 2001) 303,068 295,089
------- -------
575,814 563,448
======= =======
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5
STEWART INFORMATION SERVICES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2001 AND 2000 AND 1999
2001 2000 1999
-------- --------
($000 Omitted)
($000 Omitted)
Cash provided (used) by operating activities (Note) 17,272 42,11410,220 (9,095)
Investing activities:
Purchases of property and equipment and title plants
--- net (16,446) (19,794)(3,803) (4,822)
Proceeds from investments matured and sold 51,360 32,83934,612 30,361
Purchases of investments (48,863) (57,269)(28,964) (19,059)
Increases in notes receivable (2,795) (5,838)(897) (2,281)
Collections on notes receivable 860 5,315
Proceeds from sale of equity investment - 5,840704 338
Cash paid for the acquisition of subsidiaries --- net (8,537) (5,166)
---------- ---------(5,185) (3,844)
------- -------
Cash used(used) provided by investing activities (24,421) (44,073)(3,533) 693
Financing activities:
Dividends paid - (1,612)
Repurchases of common stock (1,512) -
Distribution to minority interests (3,568) (2,871)
Proceeds from issuance of stock - 39(961) (824)
Proceeds of notes payable 13,842 8,4704,907 4,488
Payments on notes payable (4,057) (5,745)
---------- ---------(1,376) (1,327)
------- -------
Cash provided (used) by financing activities 4,705 (1,719)
---------- ---------
Decrease2,570 2,337
------- -------
Increase (decrease) in cash and cash equivalents (2,444) (3,678)
========== ==========
NOTE: Reconciliation of net earnings to the above amounts -
9,257 (6,065)
======= =======
NOTE: Reconciliation of net earnings (loss) to the
above amounts --
Net earnings 278 27,424(loss) 3,073 (3,354)
Add (deduct):
Depreciation and amortization 15,801 13,1615,268 5,091
Provision for title losses in excess of payments 1,164 7,2061,427 39
Provision for uncollectible amounts --- net 38 (465)(149) 0
Decrease in accounts receivable --- net 4,218 5,4775,969 1,036
Decrease in accounts payable and accrued liabilities
--- net (7,450) (12,918)(5,686) (12,123)
Minority interest expense 3,786 3,8031,225 944
Equity in net earnings of investees (166) (750)(160) (41)
Realized investment (gains) losses (gains) --- net 280 (50)
Gain on sale of equity investment - (1,145)(353) 340
Stock bonuses 541 598356 482
Increase in other assets (2,228) (846)(801) (1,893)
Other --- net 1,010 619
---------- ---------51 384
------- -------
Cash provided (used) by operating activities 17,272 42,114
========== =========10,220 (9,095)
======= =======
Supplemental information:
Assets acquired (purchase method)
Goodwill 10,958 3,867
Title plants 1,019 88
Other 523 455
Liabilities assumed (4,815) (126)
Common Stock issued (2,500) (440)
-------- -------
Cash paid for acquisitions 5,185 3,844
======== =======
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6
STEWART INFORMATION SERVICES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
Note 1: Interim Financial Statements
The financial information contained in this report for the three and nine month periods
ended September 30,March 31, 2001 and 2000, and 1999, and as of September 30, 2000,March 31, 2001, is unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of this
information for all unaudited periods, consisting only of normal recurring
accruals, have been made. The results of operations for the interim periods are
not necessarily indicative of results for a full year.
Certain amounts in the 19992000 condensed consolidated financial statements have
been reclassified for comparative purposes. Net earnings,loss, as previously reported,
werewas not affected.
Note 2: Segment Information
The Company's two reportable segments are title and real estate information.
Selected financial information related to these segments follows:
Real Estate
Title Information Total
----- ----------- -----
($000 Omitted)
Revenues:
- ---------
Three months ended
9/30/3/31/01 229,839 14,462 244,301
3/31/00 224,985 14,019 239,004
9/30/99 251,874 14,507 266,381
Nine months ended
9/30/00 632,631 39,246 671,877
9/30/99 764,529 45,823 810,352196,004 12,199 208,203
Pretax Earnings (Losses)(Loss):
- ------------------------------------------------
Three months ended
9/30/3/31/01 4,345 663 5,008
3/31/00 3,945 (1,071) 2,874
9/30/99 9,675 573 10,248
Nine months ended
9/30/00 4,392 (3,905) 487
9/30/99 41,551 2,831 44,382(3,656) (1,691) (5,347)
Identifiable Assets:
- --------------------
9/30/3/31/01 536,341 39,473 575,814
12/31/00 505,717 40,120 545,837
12/31/99 496,191 39,550 535,741525,045 38,403 563,448
Note 3: Earnings (Loss) Per Share
The Company's basic earnings (loss) per share figures were calculated by
dividing net earnings by the weighted average number of shares of Common Stock
and Class B Common Stock outstanding during the reporting period. The only
potentially dilutive effect on earnings (loss) per share for the Company related
to its stock option plans.
In calculating the effect of the options and determining a figure for diluted
earnings per share, the average number of shares used in calculating basic
earnings per share was increased by 97,000 and 138,000158,000 for the three month periodsperiod ending
September 30, 2000 and 1999, respectively and 98,000 and 138,000
for the nine month periods ending September 30, 2000 and 1999, respectively.
-4-
March 31, 2001.
Note 4: Contingent Liabilities and Commitments
The Company is presently named in a private class action brought under
California's Unfair Business Practices Act: Soriano v. Stewart Title. In a
related matter, The Company is an unnamed and unserved defendant in a large
class action filed by the California Attorney General against a class of all
title companies in the State of California. The lawsuit seeks restitution and
injunctive relief against an unidentified defendant class of all title companies
in the state, based on alleged title company practices concerning escheatment,
fees and banking services credits. The Company is in settlement discussion with
the California Attorney General. Although the ultimate disposition of these
lawsuits cannot be predicted with certainty, it is the opinion of the Company's
management, based on its analysis and discussions with its outside counsel, that
the outcome of any claim, whether individually or on a combined basis, will not
have a materially adverse effect on the consolidated financial condition of the
Company.
Note 5: Changes in Accounting Principles
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," requires companies to recognize
all derivatives as either assets or liabilities in the statement of financial
condition and to measure all derivatives at fair value. SFAS No. 133 requires
that changes in fair value of a derivative be recognized currently in earnings
unless specific hedge accounting criteria are met. Upon implementation of SFAS
No. 133, hedging relationships may be redesignated, and securities held to
maturity may be transferred to available for sale or trading. SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133", deferred the effective date of SFAS
No. 133 to all fiscal quarters of all fiscal years beginning after June 15,
2000. SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities" amended the accounting and reporting standards of SFAS No.
133 for certain derivative instruments, hedging activities, and decisions made
by the Derivatives Implementation Group.
The Company does not invest in hedging or derivative instruments nor does it
intend to do so in the future. Accordingly, SFASFAS 133, SFAS 137"Accounting for Derivative
Instruments and SFAS 138 will haveHedging Activities" (as amended), which became effective January
1, 2001 for the Company, has no impact on the condensed consolidated financial
statements.
-5--4-
7
Item 2:2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERALA comparison of the results of operations of the Company for the first quarter
of 2001 with the first quarter of 2000 follows.
GENERAL. The Company's two segments of operations are title insurance ("Title") and real estate
information ("REI"). In general, the principal factors that contribute to
increases in the Company's operating revenues for both segments include
declining mortgage interest rates (which usually increase home sales and
refinancing transactions), rising home prices, higher premium rates, increased
market share, additional revenues from new offices and increased revenues from
commercial transactions. Although relatively few in number, large commercial
transactions typically yield higher premiums.
MortgageAccording to published industry data, interest rates whichfor 30-year fixed
mortgages, excluding points, for the three months ended March 31, 2001 averaged
7.0%7.01% as compared to 8.26% for the same period a year earlier. The rates at
year-end 1999 were just over 8%. In 2000, an upward trend continued, with rates
reaching a peak of 8.5% in May. Then, rates declined for seven consecutive
months. At year-end 2000 rates were 7.4%.
Operating in these mortgage interest rate environments, real estate activity in
the first three months of 2001 was very strong. Refinancing transactions
increased significantly. Existing home sales increased 9.9% in the first quarter
of 1999, rose2001 over the rest of the year to about 7.9% at the end of the year. Rates in 2000
increased again to an average of 8.3% during the first six months, but dropped
to about 7.9% in September.
According to the most recent industry sources available, existing home sales
declined about 4.4% in the first nine months of 2000 compared with the first
nine months of 1999. Refinancing transactions decreased significantly beginning
in the second half of 1999 and continued at much lower levels in 2000. Refinance
activity dropped from representing 34.4 percent of total applications in the
first nine months of 1999 to 16.6 percent in the same period in 2000. A comparisonThe ratio of the results of operations of the Companyrefinancings to total loan
applications was 56.9% for the first ninequarter of 2001 compared to 18.7% for the
first quarter of 2000.
TITLE REVENUES. The Company's revenues from premiums, fees and other revenues
increased 16.9% the first three months of 2000 with the first nine months of 1999 follows.
REVENUES
For the first nine months of 2000, revenues from title premiums and fees
decreased $132.4 million, or 17.7%, from a year ago. Mortgage interest rates
were significantly higher in 2000 than in2001 over the same period a year ago, which
reduced real estate sales and refinancing transactions.in 2000.
Revenues from direct business increased 27.5% to $100.2 million. The number of
direct closings handled by the Company decreased 12.3%. Closings
decreasedincreased 32.9% in California, Texas, Arizona, Colorado2001. Direct closings
relate only to files closed by the Company's underwriters and most other states.subsidiaries and
do not include closings from agents. The average revenue per closing increaseddecreased
4.4% in 2000 due to higher home prices and a
smaller2001 because of the significant increase in 2001 in the number of
refinancings which generatewith their lower premiums. IncreasesThere were no major revenue rate changes
in revenues from commercial transactions also contributed to higher revenues per
closing in2001 or 2000.
Premiums from independent agents were $347.9increased 9.5% to $123.7 million in 20002001. The
increase resulted primarily from increased refinancings and $467.2 million in 1999.
While nearly all states declined, theregular transactions
handled by agents nationwide. The largest decreasesincreases were in California, Florida
and Florida. The decrease in premiums from agents was primarily attributable to the
reduced number of refinancing and other transactions resulting from a higher
interest rate environment.
Other revenues in the first nine months of 1999 included a $1.1 million pretax
gain resulting from a settlement of a lawsuit and a related sale of an equity
ownership in a title agency.Texas.
REI REVENUES. Real estate information revenues were $39.2$14.5 million in 20002001 and
$45.8$12.2 million in 1999.2000. The 14.4% decrease wasincrease in 2001 resulted primarily due tofrom providing an
increased number of post-closing services, Section 1031 tax-deferred exchanges
and electronic mortgage documents resulting from the declineincrease in real estate
activity. REI profits were reduced in the first nine months of 1999 by a $1.3
million pretax charge resulting from the settlement of a lawsuit.transactions.
INVESTMENTS. Investment income increased 5.4%16.4% in 2000 over 19992001 primarily due to an increasebecause of
increases in yields. Investment gains in 2001 were realized as part of the
average balances invested.
EXPENSESongoing management of the investment portfolio for the purpose of improving
performance.
AGENT RETENTION. The amounts retained by agents, as a percentage of premiums
from agents, were 80.7%81.7% and 81.0%80.4% in 2000the years 2001 and 1999,2000, respectively.
Amounts retained by title agents are based on contracts between agents and the
title insurance underwriters of the Company. The percentage that amounts
retained by agents bearsbear to agent revenues may vary from year to year because of
the geographical mix of agent operations and the volume of title revenues.
EMPLOYEE COSTS. Employee costs for the combined business segments increased
15.5% in 2001. The number of persons employed by the Company at March 31, 2001
and March 31, 2000 was 5,873 and 5,614 respectively. The increase in staff in
2001 was primarily the result of acquisitions of new offices.
In the REI segment, employee costs increased in 2001 and 2000 primarily due to a
continuing shift in focus to providing more post-closing services to lenders.
These services are significantly more labor intensive.
OTHER OPERATING EXPENSES. Other operating expenses for the combined business
segments increased $1.7 million, or
0.8%,7.9% in 2000. Employee costs for both the title and REI segments increased.2001. The number of employeesoverall increase in existing title offices at the end of the first nine
months of 2000 was reduced approximately 10.7% from a year ago. The reduction in
the number of employees was offset, however, by significant increases in newly
acquired and startup offices, expansion of national marketing operations to gain
market share and continued expansion in technology.
-6-
Otherother operating
expenses increased by $2.1 million, or 1.7%,for the combined business segments in 2000. Increased
expenses include expenses of2001 was in new offices, computer
costs, rent and search fees. These were offset partially by reductions in bad
debts and products purchased for resale.
Other components
of other operating expenses arealso include title plant expenses, supplies, computertravel, delivery
costs, premium taxes, business promotion, REI expenses, telephone, travel,supplies and
policy forms. Most of these expenses follow, to varying degrees, the changes in
transaction volume and revenues.
-5-
8
The Company's labor and certain other operating costs are sensitive to
inflation. To the extent inflation causes increases in the prices of homes and
other real estate, premium taxes, policy forms, delivery
costs and costrevenues are also increased. Premiums are determined
in part by the insured values of resale products purchased.the transactions handled by the Company.
TITLE LOSSES. Provisions for title losses, and related claims were down $3.7 million, or 11.8%,
in 2000. Asas a percentage of title premiums,
fees and relatedother revenues, the
provisionwere 4.3% in 2000 was 4.4% versus 4.2%2001 and 4.5% in 1999.2000. The continued
improvement in industry trends in claims and increases in refinancing
transactions, which result in lower loss exposure, have led to lower loss ratios
in recent years.
INCOME TAXES. The provision for federal and state income taxes represented
effective tax rates of 42.9%38.6% and 38.2%37.3% in 2001 and 2000, and 1999, respectively.
A comparison of the results of operations of the Company for the third quarter
of 2000 with the third quarter of 1999 follows.
REVENUES
For the third quarter of 2000, revenues from title premiums and fees decreased
$27.0 million, or 11.0%, from a year ago. Mortgage interest rates were
significantly higher in the third quarter of 2000 than in the same period a year
ago, which reduced real estate sales and refinancing transactions.
The number of direct closings handled by the Company increased slightly.
Closings in new offices offset the decreases in Arizona, Texas, California and
many other states. The average revenue per closing increased in 2000 due to
higher home prices and a smaller number of refinancings, which generate lower
premiums. Increases in revenues from commercial transactions also contributed to
higher average revenues per closing in 2000.
Premiums from agents decreased $28.7 million from $153.3 million in the third
quarter of 1999 to $124.6 million in the third quarter of 2000. While nearly all
states declined, the largest decreases were in California and Florida. The
decrease in premiums from agents was primarily attributable to the reduced
number of refinancing and other transactions resulting from a higher interest
rate environment.
Real estate information revenues were $14.0 million in 2000 and $14.5 million
in 1999. The decrease wasprimarily due to the decline in real estate activity.
Investment income increased 2.3% in 2000 over 1999 primarily due to an increase
in the average yield.
EXPENSES
The amounts retained by agents, as a percentage of premiums, were 80.7% and
81.0% in 2000 and 1999, respectively. Amounts retained by agents are based on
contracts between agents and the title underwriters of the Company. The
percentage that amounts retained by agents bears to agent revenues may vary from
year to year because of the geographical mix of agent operations and the volume
of title revenues.
Employee expenses for the combined business segments increased $3.4 million, or
4.7%, in 2000. Employee costs for both the title and REI segments increased. The
number of employees in existing title offices at the end of the third quarter of
2000 was reduced approximately 10.7% from a year ago. The reduction in the
number of employees was offset, however, by significant increases in newly
acquired and startup offices, expansion of national marketing operations to gain
market share and continued expansion in technology.
Other operating expenses increased by $0.1 million, or 0.3%, in 2000. Increased
expenses include expenses of new offices and search fees. Other components of
other operating expenses are rent, title plant expenses, supplies, computer
costs, business promotion, telephone, travel, premium taxes, policy forms,
delivery costs and cost of resale products purchased.
Provisions for title losses and related claims were down $0.6 million, or 6.0%
in 2000. As a percentage of title premiums, fees and related revenues, the
provision in the third quarter of 2000 increased to 4.3% versus 4.0% in 1999.
The provision for income taxes represented effective tax rates of 38.8% and
40.5% in 2000 and 1999, respectively.
-7-
YEAR 2000 ISSUE
Information technology is a crucial part of the Company's business. Accordingly,
the Company completed a comprehensive Year 2000 ("Y2K") readiness program that
addressed challenges associated with the Y2K issue. As a result of this program,
the Company encountered no major automation or business disruption due to Y2K
issues. The Company continues to operate normally across all business units and
geographies and will continue to monitor operations through 2000. The total
costs incurred for the Y2K readiness program were $3.6 million.
LIQUIDITY AND CAPITAL RESOURCESRESOURCES. Cash provided by operations represents the
primary source of financing for the Company, but this may be supplemented by
bank borrowings. The capital resources of the Company and the present
debt-to-equity relationship are considered satisfactory.
During the first ninethree months of 2000,2001, the Company financed a portion of various
acquisitions through the issuance of Common Stock totaling $4.9$2.5 million.
Acquisitions during the first ninethree months of 20002001 have resulted in an increase
inadditions to
goodwill of $7.3$11.0 million.
FORWARD LOOKING STATEMENTSTo facilitate further acquisitions, the Company filed a registration statement
with the Securities and Exchange Commission to sell from time to time up to $75
million of common stock. The registration was filed on March 30, 2001 and has
not yet become effective. This statement does not constitute an offer of any
securities for sale.
FORWARD-LOOKING STATEMENTS. All statements included in this report other than statements of historical
facts, which
address activities, events or developments that the Company expects or
anticipates will or may occur in the future are forward-looking statements. Such
forward-looking statements are subject to risks and uncertainties including,
among other things, changes in mortgage interest rates, employment levels,
actions of competitors, changes in real estate markets, general economic conditions and
legislation, (primarilyprimarily legislation related to insurance)insurance, and other risks and
uncertainties discussed in the Company's filings with the Securities and
Exchange Commission.
Item 3:3. Quantitative and Qualitative Disclosures Aboutabout Market Risk
There have been no material changes in the Company's investment strategies,
types of financial instruments held or the risks associated with such
instruments which would materially alter the market risk disclosures made in the
Company's Annual StatementStatements on Form 10-K for the year ended December 31, 1999.
-8-2000.
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9
PART II
Page
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Page
----
Item 1. Legal Proceedings 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K
(a) Index to exhibits
(b) There were no reports on Form 8-K filed during the quarter ended
March 31, 2001.
-7-
10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K
(a) Index to exhibits
(b) There were no reports on Form 8-K filed during the quarter ended
September 30, 2000.
-9-
ITEM 1. LEGAL PROCEEDINGS
The Registrant is a party to routine lawsuits incidental to its business,
most of which involve disputed policy claims. In many of these suits, the
plaintiff seeks exemplary or treble damages in excess of policy limits based on
the alleged malfeasance of an issuing agent of the Registrant. The Registrant
does not expect that any of these proceedings will have a material adverse
effect on its financial condition.
ITEM 5. OTHER INFORMATION
The Company paid regular quarterly cash dividends on its Common Stock from
1972 through 1999. During 1999, the Board of Directors has approved a plan to
repurchase up to 5 percent (680,000 shares) of the Company's currently issued and outstanding Common
Stock. The Board also determined that the Company's regular quarterly dividend
should be discontinued in favor of returning those and additional funds to
stockholders through the stock purchaserepurchase plan. As of September 30, 2000,Under this plan, the Company
had repurchased a total of 116,900 shares under this plan.
-10-of Common Stock during 2000. No repurchases have been
made during the first three months of 2001.
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11
SIGNATURE
Pursuant to the requirements of the Securities and 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
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(Registrant)
November 9, 2000May 11, 2001
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Date
By: /S/ MAX CRISP
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Max Crisp
(Vice President-Finance, Secretary-Treasurer,
Director and Principal Financial and
Accounting Officer)
-11--9-
12
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4. - Rights of Common and Class B Common Stockholders
27.0 - Financial data schedule
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4. - Rights of Common and Class B Common Stockholders
99.1 - Details of investments