UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(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, 2005~~

March 31, 2006

¨	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: 001-31666

FIRST ADVANTAGE CORPORATION

(Exact name of registrant as specified in its charter)


Incorporated in Delaware		61-1437565
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

One Progress Plaza, Suite 2400

St. Petersburg, Florida 33701

(Address of principal executive offices, including zip code)

(727) 214-3411

(Registrant’s telephone number, including area code)

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 (or for such shorter period that the registrant was required to file such reports), Yesx No¨ and (2) has been subject to such filing requirements for the past 90 days.

Yesx No¨

Indicate by check mark whether the registrant is ana large accelerated filer, ~~(as defined~~accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange ~~Act). Yes~~¨ NoxAct (check one):


Large accelerated filer¨		Accelerated filerx		Non-accelerated filer¨

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule ~~12b-2 of the Exchange Act.):~~12b 2). Yes¨ Nox

There were ~~9,178,956~~10,010,843 shares of outstanding Class A Common Stock of the registrant as of ~~November 8, 2005.~~

May 5, 2006.

There were ~~46,076,066~~47,726,521 shares of outstanding Class B Common Stock of the registrant as of ~~November 8, 2005.~~May 5, 2006.

INDEX


Part I. FINANCIAL INFORMATION

	Item 1.		Financial Statements		1

			Consolidated Balance Sheets as of ~~September 30, 2005~~March 31, 2006 and December 31, ~~2004~~2005 (unaudited)		32

			Consolidated Statements of Income and Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2006 and March 31, 2005 ~~and September 30, 2004~~(unaudited)		3

			Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2006 (unaudited)		4

			Consolidated ~~Statement~~Statements of ~~Changes in Stockholders’ Equity~~Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2006 and March 31, 2005 (unaudited)		5

		~~Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and September 30, 2004 (unaudited)~~		6

	Notes to Consolidated Financial Statements (unaudited)		76

	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

	Item 3.		Quantitative and Qualitative Disclosures About Market Risk		3428

	Item 4.		Controls and Procedures		3529

Part II. OTHER INFORMATION

	Item 1.		Legal Proceedings		3529

	Item 1A.		Risk Factors		29

	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		3630

	Item 3.		Defaults Upon Senior Securities		3630

	Item 4.		Submission of Matters to a Vote of Security Holders		3630

	Item 5.		Other Information		3730

	Item 6.		Exhibits		3730

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

-1-

First Advantage Corporation

Consolidated ~~Financial Statements~~Balance Sheets (Unaudited)

~~For the Nine Months Ended~~


*(in thousands)*	March 31, 2006		December 31, 2005
Assets
Current assets:
Cash and cash equivalents	$	24,799	$	28,380
Accounts receivable (less allowance for doubtful accounts of $5,365 and $4,918 in 2006 and 2005, respectively)		118,060		106,555
Income taxes receivable		—		1,250
Deferred income tax asset		8,614		8,019
Due from affiliates		3,236		2,756
Prepaid expenses and other current assets		6,815		6,240

Total current assets		161,524		153,200
Property and equipment, net		57,229		56,684
Goodwill		612,361		605,884
Intangible assets, net		108,816		111,274
Database development costs, net		10,378		10,127
Investment in equity investee		45,819		45,710
Other assets		2,816		3,185

Total assets	$	998,943	$	986,064

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	36,303	$	37,152
Accrued compensation		31,713		27,448
Accrued liabilities		17,482		21,949
Deferred income		6,763		6,809
Income taxes payable		5,283		—
Current portion of long-term debt and capital leases		27,928		38,444

Total current liabilities		125,472		131,802
Long-term debt and capital leases, net of current portion		181,551		182,127
Deferred income tax liability		37,081		35,232
Other liabilities		5,675		6,343
Minority interest		48,659		47,712

Total liabilities		398,438		403,216

Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value; 1,000 shares authorized, no shares issued or outstanding		—		—
Class A common stock, $.001 par value; 125,000 shares authorized; 9,792 and 9,689 shares issued and outstanding as of March 31, 2006 and December 31, 2005, respectively		10		10
Class B common stock, $.001 par value; 75,000 shares authorized; 47,727 and 46,076 shares issued and outstanding as of March 31, 2006 and December 31, 2005, respectively		48		46
Additional paid-in capital		434,955		430,026
Retained earnings		165,150		152,405
Accumulated other comprehensive income		342		361

Total stockholders’ equity		600,505		582,848

Total liabilities and stockholders’ equity	$	998,943	$	986,064

~~September 30, 2005 and 2004~~The accompanying notes are an integral part of these consolidated financial statements.

-2-

First Advantage Corporation

Consolidated ~~Balance Sheets~~Statements of Income and Comprehensive Income (Unaudited)

   September 30,
2005
   December 31,
2004
Assets

Current assets:

Cash and cash equivalents
   $ 17,438,000    $ 9,996,000
Accounts receivable (less allowance for doubtful accounts of $4,203,000 and $3,444,000 in 2005 and 2004, respectively)
   97,462,000    67,981,000
Notes receivable
   —      4,000,000
Due from affiliates
   —      553,000
Prepaid expenses and other current assets
   6,770,000    3,217,000


Total current assets
   121,670,000    85,747,000
Property and equipment, net
   49,947,000    44,966,000
Goodwill
   437,442,000    380,596,000
Intangible assets, net
   54,187,000    43,596,000
Database development costs, net
   10,039,000    9,688,000
Investment in equity investee
   36,086,000    34,854,000
Deferred income tax asset
   17,369,000    —
Other assets
   4,808,000    3,657,000


Total assets
   $ 731,548,000    $ 603,104,000


Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable
   $ 10,675,000    $ 14,726,000
Accrued compensation
   24,232,000    19,918,000
Accrued liabilities
   28,578,000    19,482,000
Deferred income
   6,125,000    4,558,000
Due to affiliates
   3,835,000    —
Income taxes payable
   473,000    4,381,000
Current portion of long-term debt and capital leases
   31,685,000    24,326,000


Total current liabilities
   105,603,000    87,391,000
Long-term debt and capital leases, net of current portion
   95,208,000    86,480,000
Deferred income tax liability
   —      8,454,000
Other liabilities
   2,523,000    861,000


Total liabilities
   203,334,000    183,186,000


Commitments and contingencies

Stockholders’ equity:

Preferred stock, $.001 par value; 1,000,000 shares authorized, no shares issued or outstanding
   —      —
Class A common stock, $.001 par value; 125,000,000 and 75,000,000 shares authorized; 8,223,667 and 7,226,801 shares issued and outstanding as of September 30, 2005 and December 31, 2004, respectively
   8,000    7,000
Class B common stock, $.001 par value; 75,000,000 shares authorized; 46,076,066 and 42,856,553 shares issued and outstanding as of September 30, 2005 and December 31, 2004, respectively
   46,000    43,000
Additional paid-in capital
   386,043,000    298,243,000
Retained earnings
   141,730,000    121,367,000
Accumulated other comprehensive income
   387,000    258,000


Total stockholders’ equity
   528,214,000    419,918,000


Total liabilities and stockholders’ equity
   $ 731,548,000    $ 603,104,000


*(in thousands, except per share amounts)*	For the Three Months Ended March 31,
	2006			2005
Service revenue	$	181,219		$	128,105
Reimbursed government fee revenue		13,129			12,216

Total revenue		194,348			140,321

Cost of service revenue		56,589			38,162
Government fees paid		13,129			12,216

Total cost of service		69,718			50,378

Gross margin		124,630			89,943

Salaries and benefits		58,634			39,275
Facilities and telecommunications		7,051			4,994
Other operating expenses		22,551			15,327
Depreciation and amortization		9,210			5,755

Total operating expenses		97,446			65,351

Income from operations		27,184			24,592

Other (expense) income:
Interest expense		(3,241	)		(1,069	)
Interest income		140			12

Total other (expense), net		(3,101	)		(1,057	)
Equity in earnings of investee		109			467

Income before income taxes and minority interest		24,192			24,002
Provision for income taxes		10,500			10,010

Income before minority interest		13,692			13,992
Minority interest		947			—

Net income		12,745			13,992
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(19	)		(16	)

Comprehensive income	$	12,726		$	13,976

Per share amounts:
Basic	$	0.23		$	0.27

Diluted	$	0.22		$	0.27

Weighted-average common shares outstanding:
Basic		55,997			51,099
Diluted		57,833			51,380

The accompanying notes are an integral part of these consolidated financial statements.

-3-

First Advantage Corporation

Consolidated Statement of Changes in Stockholders’ Equity

~~Consolidated Statements of Income and Comprehensive Income~~For the Three Months Ended March 31, 2006 (Unaudited)

   For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,

   2005
2004
2005
2004

Service revenue
   $ 157,746,000 $ 122,865,000 $ 437,022,000 $ 356,526,000
Reimbursed government fee revenue
   12,200,000 11,208,000 36,669,000 33,569,000


Total revenue
   169,946,000 134,073,000 473,691,000 390,095,000


Cost of service revenue
   49,881,000 37,219,000 133,026,000 112,901,000
Government fees paid
   12,200,000 11,208,000 36,669,000 33,569,000


Total cost of service
   62,081,000 48,427,000 169,695,000 146,470,000


Gross margin
   107,865,000 85,646,000 303,996,000 243,625,000


Salaries and benefits
   46,646,000 37,018,000 130,308,000 105,876,000
Facilities and telecommunications
   6,205,000 5,333,000 18,974,000 15,673,000
Other operating expenses
   20,193,000 15,115,000 57,845,000 48,919,000
Depreciation and amortization
   6,685,000 5,878,000 19,085,000 17,134,000


Total operating expenses
   79,729,000 63,344,000 226,212,000 187,602,000


Income from operations
   28,136,000 22,302,000 77,784,000 56,023,000


Other (expense) income:

Interest expense
   (1,580,000 ) (714,000 ) (4,115,000 ) (1,665,000 )
Interest income
   22,000 150,000 48,000 567,000


Total other (expense), net
   (1,558,000 ) (564,000 ) (4,067,000 ) (1,098,000 )
Equity in earnings of investee
   280,000 349,000 1,232,000 986,000


Income before income taxes
   26,858,000 22,087,000 74,949,000 55,911,000
Provision for income taxes
   10,835,000 9,125,000 32,251,000 23,067,000


Net income
   16,023,000 12,962,000 42,698,000 32,844,000


Other comprehensive income, net of tax:

Foreign currency translation adjustments
   189,000 130,000 129,000 141,000


Comprehensive income
   $ 16,212,000 $ 13,092,000 $ 42,827,000 $ 32,985,000


Per share amounts:

Basic
   $ 0.30 $ 0.26 $ 0.82 $ 0.67


Diluted
   $ 0.30 $ 0.26 $ 0.81 $ 0.66


Weighted-average common shares outstanding:

Basic
   53,200,609 49,683,345 52,132,551 49,318,123
Diluted
   53,964,766 50,128,761 52,616,858 49,646,664


*(in thousands)*	Common Stock Shares	Common Stock Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Retained Earnings		Total
Balance at December 31, 2005	55,765	$	56	$	430,026		$	361		$	152,405	$	582,848
Net income	—		—		—			—			12,745		12,745
Class A Shares issued in connection with prior year acquisitions	48		—		1,233			—			—		1,233
Class A Shares issued in connection with share based compensation	56		—		1,050			—			—		1,050
Class B Shares issued in connection with the CIG acquisition	1,650		2		(2	)		—			—		—
Tax benefit related to stock options	—		—		55			—			—		55
Contribution from First American for CIG liabilities prior to merger	—		—		(62	)		—			—		(62	)
Share based compensation	—		—		2,655			—			—		2,655
Other comprehensive loss	—		—		—			(19	)		—		(19	)

Balance at March 31, 2006	57,519	$	58	$	434,955		$	342		$	165,150	$	600,505

The accompanying notes are an integral part of these consolidated financial statements.

-4-

First Advantage Corporation

Consolidated Statement of ~~Changes in Stockholders’ Equity~~Cash Flows

For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2006 and 2005 (Unaudited)

   Common
Stock Shares
   Common
Stock Amount
   Additional
Paid-in Capital
   Accumulated
Other
Comprehensive
Income
   Retained
Earnings
Total

Balance at December 31, 2004, as previously reported
   23,254,087    $ 23,000    $ 271,995,000    $ 258,000    $ 17,895,000 $ 290,171,000
CIG acquisition
   26,829,267    27,000    26,248,000       103,472,000 129,747,000






December 31, 2004, as restated
   50,083,354    $ 50,000    $ 298,243,000    $ 258,000    $ 121,367,000 $ 419,918,000
Distribution to First American from CIG prior to the merger
   —      $ —      $ —      $ —      $ (22,335,000 ) $ (22,335,000 )
Net income
   —      —      —      —      42,698,000 42,698,000
Class A Shares issued in connection with acquisitions
   742,336    1,000    16,432,000    —      —   16,433,000
Class A Shares issued in connection with option, benefit and savings plans
   254,530    —      4,629,000    —      —   4,629,000
Class B Shares issued in connection with acquisitions
   2,243,903    2,000    46,553,000    —      —   46,555,000
Class B Shares issued in connection with conversion of debt
   975,610    1,000    19,999,000    —      —   20,000,000
Tax benefit related to stock options
   —      —      187,000    —      —   187,000
Foreign currency translation
   —      —      —      129,000    —   129,000






Balance at September 30, 2005
   54,299,733    $ 54,000    $ 386,043,000    $ 387,000    $ 141,730,000 $ 528,214,000


*(in thousands)*	For the Three Months Ended March 31,
	2006			2005
Cash flows from operating activities:
Net income	$	12,745		$	13,992
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,210			5,755
Share based compensation		2,850			—
Minority interest		947			—
Equity in earnings of investee		(109	)		(467	)
Deferred income taxes		1,191			—
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable		(10,324	)		(10,672	)
Prepaid expenses and other current assets		(558	)		(971	)
Goodwill, intangibles and other assets		487			(2,197	)
Accounts payable		(962	)		(2,098	)
Accrued liabilities		(3,253	)		4,513
Deferred income		(558	)		(1,298	)
Due (from) to affiliates		(480	)		3,756
Net change in income tax accounts		6,490			(3,477	)
Accrued compensation and other liabilities		3,719			(212	)

Net cash provided by operating activities		21,395			6,624

Cash flows from investing activities:
Database development costs		(1,081	)		(843	)
Purchases of property and equipment		(4,962	)		(2,524	)
Notes receivable		—			4,000
Cash paid for acquisitions		(7,871	)		(2,500	)
Cash balance of companies acquired		381			516

Net cash used in investing activities		(13,533	)		(1,351	)

Cash flows from financing activities:
Proceeds from long-term debt		5,633			11,500
Repayment of long-term debt		(17,743	)		(9,850	)
Proceeds from class A shares issued in connection with stock option plan and employee stock purchase plan		669			718
Distribution to First American from CIG prior to merger		—			(5,563	)

Net cash used in financing activities		(11,441	)		(3,195	)

Effect of exchange rates on cash		(2	)		(16	)
(Decrease) increase in cash and cash equivalents		(3,581	)		2,062
Cash and cash equivalents at beginning of period		28,380			9,996

Cash and cash equivalents at end of period	$	24,799		$	12,058

Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,635		$	967

Cash paid for income taxes	$	2,859		$	4,471

Non-cash investing and financing activities:
Class A shares issued in connection with prior years’ acquisitions	$	1,233		$	233

Notes issued in connection with acquisitions	$	1,000		$	—

Class A shares issued for benefit plan	$	381		$	902

Class B shares issued in connection with acquisitions	$	—		$	20,000

The accompanying notes are an integral part of these consolidated financial statements.

-5-

First Advantage Corporation

~~Consolidated Statements of Cash Flows~~

~~For the Nine Months Ended September 30, 2005 and 2004 (Unaudited)~~

   For the Nine Months Ended
September 30,

   2005
2004

Cash flows from operating activities:

Net income
   $ 42,698,000 $ 32,844,000
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
   19,085,000 17,134,000
Deferred income tax
   (25,823,000 ) (5,646,000 )
Equity in earnings of investee
   (1,232,000 ) (986,000 )
Change in operating assets and liabilities, net of acquisitions:

Accounts receivable
   (20,675,000 ) (21,230,000 )
Prepaid expenses and other current assets
   (3,363,000 ) 248,000
Goodwill, intangibles and other assets
   28,028,000 1,958,000
Accounts payable
   (5,933,000 ) 174,000
Accrued liabilities
   2,643,000 2,100,000
Deferred income
   (845,000 ) 2,000
Due to affiliates
   4,207,000 49,000
Income taxes
   (3,762,000 ) 4,845,000
Accrued compensation and other liabilities
   6,055,000 (2,163,000 )


Net cash provided by operating activities
   41,083,000 29,329,000


Cash flows from investing activities:

Database development costs
   (2,552,000 ) (2,226,000 )
Purchases of property and equipment
   (10,749,000 ) (5,803,000 )
Notes receivable
   4,000,000 1,000,000
Cash paid for acquisitions
   (31,041,000 ) (49,970,000 )
Cash balance of companies acquired
   6,486,000 3,212,000


Net cash used in investing activities
   (33,856,000 ) (53,787,000 )


Cash flows from financing activities:

Proceeds from long-term debt
   114,000,000 57,000,000
Repayment of long-term debt and capital leases
   (95,179,000 ) (18,308,000 )
Proceeds from class A shares issued in connection with stock option plan and employee stock purchase plan
   3,727,000 3,509,000
Distribution to First American from CIG prior to the merger
   (22,335,000 ) (19,152,000 )


Net cash provided by financing activities
   213,000 23,049,000


Effect of exchange rates on cash
   2,000 —
Increase (decrease) in cash and cash equivalents
   7,442,000 (1,409,000 )
Cash and cash equivalents at beginning of period
   9,996,000 8,623,000


Cash and cash equivalents at end of period
   $ 17,438,000 $ 7,214,000


Supplemental disclosures of cash flow information:

Cash paid for interest
   $ 4,221,000 $ 1,244,000


Cash paid for income taxes
   $ 11,210,000 $ 176,000


Non-cash investing and financing activities:

Class A shares issued in connection with acquisitions
   $ 16,433,000 $ 19,180,000


Class B shares issued in connection with acquisitions
   $ 46,555,000 $ —


Notes issued in connection with acquisitions
   $ 16,905,000 $ 30,819,000


Class A shares issued for benefit plan
   $ 902,000 $ —


Class B shares issued for converted debt
   $ 20,000,000 $ —


Class A shares issued in connection with convertible notes
   —   $ 8,961,000

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~-6-~~

~~First Advantage Corporation~~

Notes to Consolidated Financial Statements

~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ (Unaudited)

1.	Organization and Nature of Business

The Company operates in six primary business segments: Lender Services, Data Services, Dealer Services, Employer Services, Multifamily Services, and Investigative and Litigation Support Services. The business lines in the Lender Services segment ~~offers~~offer lenders ~~across the country~~ credit reporting solutions for mortgage and home equity information needs. The Data Services segment includes business lines that provide transportation credit reporting, motor vehicle record reporting, fleet management, supply chain theft and damage mitigation consulting, consumer location, criminal records reselling, subprime credit reporting, ~~and~~ consumer credit reporting services, and lead generation services. The Dealer Services business segment serves the automotive dealer marketplace by delivering consolidated consumer credit reports, credit automation software and automotive lead development services. The Employer Services segment is comprised of the business lines that deliver global employment background verifications, hiring management solutions, occupational health services, tax credits and incentives programs and other business tax consulting services that are frequently sold to support organization’s human resource functions. The Multifamily Services segment’s business lines include resident screening, property management software and renters insurance ~~services—providing solutions to property owners and managers across the nation.~~services. The Investigative and Litigation Support Services segment consists of the business lines that support businesses, insurers and law firms nationwide with their insurance fraud investigations, surveillance, computer forensics, electronic discovery, data recovery, due diligence reporting and corporate and litigation investigative needs.

The First American Corporation and affiliates (“First American”) own approximately ~~85%~~83% of the shares of capital stock of the Company as of ~~September 30, 2005.~~March 31, 2006. The Class B common stock owned by First American is entitled to ten votes per share on all matters presented to the stockholders for vote.

On March 23, 2006, the Company issued 1,650,455 shares of its Class B common stock to FADV Holdings LLC, a subsidiary of First American. The issuance of the Class B common stock was in accordance with the Master Transfer agreement with First American for the purchase of its Credit Information Group (“CIG”), which included the purchase of First American’s minority interest in DealerTrack Holdings, Inc. (“DealerTrack”). The Master Transfer agreement required the Company to issue additional shares of Class B common stock to First American in the event that DealerTrack consummated an initial public offering of its stock before the second anniversary of the closing of the CIG acquisition and the value of the minority interest in DealerTrack exceeded $50 million. The initial public offering was completed by DealerTrack on December 16, 2005. The Master Transfer agreement required the Company to issue the number of shares equal to the quotient of (x) 50% of the amount by which the value of the DealerTrack interest exceeds $50 million (based on the average closing price per share of DealerTrack’s stock over the 60 business day period beginning on the fifth business day after the completion of its initial public offering), divided by (y) $20.50.

2.	Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial information included in this report has been prepared in accordance with the instructions to Form 10-Q and does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments are of a normal recurring nature and are considered necessary for a fair statement of the results for the interim period. The year end balance data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2004~~2005 filed with the Securities and Exchange ~~Commission and the Proxy Statement filed June 30, 2005.~~Commission.

The accompanying financial statements have been prepared to give effect to the acquisition of the Consumer Information Group (“CIG”) Business by First Advantage. The acquisition of the CIG Business by First Advantage is a transaction between businesses under the common control of First American. In acquisition of businesses under common control, the acquiring company

~~-7-~~-6-

First Advantage Corporation

Notes to Consolidated Financial Statements

~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ (Unaudited)

records acquired assets and liabilities at historical costs. The historical income statements of First Advantage for the three and nine months ended September 30, 2005 and 2004 have been restated to include operations of the CIG business at historical cost assuming the acquisition was completed on January 1, 2004. The balance sheet at December 31, 2004 has been restated to reflect the acquisition.

On September 14, 2005 in connection with the consummation of the acquisition of the CIG Business and related businesses from First American, First Advantage repaid in full the principal amount of $20 million under a promissory note originally issued to First American, by issuing 975,610 shares of First Advantage’s Class B common stock.

In conjunction with the CIG acquisition, First Advantage will be obligated to issue additional shares of Class B common stock to First American in the future if DealerTrack (a 21% owned equity investee) consummates an initial public offering of its stock on or prior to September 14, 2007 and the value of the DealerTrack Interest exceeds $50 million. If DealerTrack completes an IPO within 180 days of September 14, 2005, the number of shares to be issued will be equal to the quotient of (x) 50% of the amount by which the value of the DealerTrack Interest exceeds $50 million (based on the average closing price per share of DealerTrack’s stock over the 60 business day period beginning on the fifth business day after the completion of its initial public offering),~~divided by~~(y) $20.50. If the DealerTrack IPO occurs after the 180-day period following September 14, 2005 (but prior to September 14, 2007), the number of additional Class B common shares issuable to First American will be equal to the quotient of (x) 50% of the amount by which the DealerTrack Interest exceeds $50 million (based on the average closing price per share of DealerTrack’s stock over the 60 business day period beginning on the fifth business day after its initial public offering),~~divided by~~(y) the average closing price per share of First Advantage’s Class A common stock during the 30 trading day period ending on the third trading day prior to the date of DealerTrack’s IPO, except that the minimum price per share will be $20.50.

First Advantage completed three ~~additional~~ acquisitions during the ~~third~~first quarter of ~~2005.~~2006. The Company’s operating results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ include results for the acquired entities ~~other than CIG,~~ from their respective dates of acquisition.

Operating results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ are not necessarily indicative of the results that may be expected for the entire fiscal year.

~~The results~~Certain reclassifications have been made to the 2005 consolidated financial statements to conform with classifications used as of ~~operations~~and for the ~~nine months~~period ended ~~September 30, 2005, include $3.2 million~~March 31, 2006.

As of ~~nondeductible merger costs that First Advantage incurred in connection with its pending acquisition of~~March 31, 2006, the ~~CIG Business from First American; $2.0 million of costs incurred in connection with the relocation of the company’s corporate headquarters~~Company’s significant accounting polices and ~~other office consolidations; and $0.6 million of costs related to the launch of the corporate branding initiative that was announced in June 2005. These costs~~estimates, which are ~~included~~detailed in the Company’s ~~Corporate segment.~~

~~Accounts Receivable~~

~~Accounts receivable are due from companies in a broad range of industries located throughout the United States. Credit is extended based~~Annual Report on ~~an evaluation of the customer’s financial condition, and generally, collateral is not required.~~

The allowance for all probable uncollectible receivables is based on a combination of historical data, cash payment trends, specific customer issues, write-off trends, general economic conditions and other factors. These factors are continuously monitored by management to arrive at the estimateForm 10-K for the amount of accounts receivable that may be ultimately uncollectible. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, the Company records a specific allowance for doubtful accounts against amounts due, to reduce the net recognized receivable to the amount it reasonably believes will be collected. Management believes that the allowance at September 30, 2005 andyear ended December 31, ~~2004 is reasonably stated.~~

~~-8-~~

~~First Advantage Corporation~~

~~Notes to Consolidated Financial Statements~~

~~September 30,~~ 2005, ~~and 2004 (Unaudited)~~

~~Comprehensive Income~~

have not changed from December 31, 2005, except for the adoption of Statement of Financial Accounting Standards (“SFAS”) No. ~~130, “Reporting Comprehensive Income”~~123R (revised 2004), governs the financial statement presentation of changes in stockholders’ equity resulting from non-owner sources. Comprehensive income includes all changes in equity except those resulting from investments by owners and distribution to owners.

“Share-Based Payment”.

~~Impairment of Intangible and Long-Lived Assets~~Share-Based Compensation

First Advantage carries intangible and long-lived assets at cost less accumulated amortization. Accounting standards require that assets be written down if they become impaired. Intangible and long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate thatEffective January 1, 2006, the carrying amount of an asset is not recoverable. At such time that an impairment in value of an intangible or long-lived asset is identified, the impairment will be measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. Fair value is determined by employing an expected present value technique, which utilizes multiple cash flow scenarios that reflect the range of possible outcomes and an appropriate discount rate.

~~Stock Based Compensation Plan~~

~~The~~ Company adopted SFAS No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure,” as of January 1, 2003 with respect to the disclosure requirements. The Company has elected to continue accounting for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. If the Company had elected or was required to apply the fair value recognition provisions of SFAS No. 123, “Accounting for Stock Based Compensation,” to stock-based employee compensation, net income and net income per share would have been reduced to the pro forma amounts indicated in the following table.

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
   2005
   2004
   2005
   2004
Net income, as reported
   $ 16,023,000    $ 12,962,000    $ 42,698,000    $ 32,844,000
Less: stock based compensation expense, net of tax
   1,008,000    820,000    3,146,000    2,502,000




Pro forma net income
   $ 15,015,000    $ 12,142,000    $ 39,552,000    $ 30,342,000




Earnings per share:

Basic, as reported
   $ 0.30    $ 0.26    $ 0.82    $ 0.67
Basic, pro forma
   $ 0.28    $ 0.24    $ 0.76    $ 0.62
Diluted, as reported
   $ 0.30    $ 0.26    $ 0.81    $ 0.66
Diluted, pro forma
   $ 0.28    $ 0.24    $ 0.75    $ 0.61

~~In December 2004, the FASB issued SFAS No.~~ 123R ~~(Revised~~(revised 2004), “Share-Based ~~Payment.~~Payment,” ~~SFAS No. 123R~~which is a revision of ~~FASB Statement~~SFAS No. 123 “Accounting for Stock-Based Compensation” and supersedes ~~APB~~Accounting Principles Board (“APB”) Opinion No. 25 “Accounting for Stock Issued to Employees” and its related implementation guidance. The Statement focuses primarily on

~~-9-~~

~~First Advantage Corporation~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2005 and 2004 (Unaudited)~~

accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). The cost ~~will be~~is recognized over the period during which an employee is required to provide services in exchange for the award. ~~In April 2005,~~The Company adopted SFAS No. 123R using the ~~Securities~~modified prospective method. Under this method, results of prior periods are not restated. Share-based compensation for the first quarter of 2006 was $2.9 million ($2.2 million after tax or $0.04 per basic and ~~Exchange Commission approved~~diluted share).

Commencing with the first quarter of fiscal 2006, the Company began transitioning from the Black-Scholes options model to a lattice model to estimate the fair value of new ~~rule that amended~~employee stock options on the ~~effective~~ date of ~~SFAS 123R, whereby~~grant. The Company believes the ~~Company will now be required~~lattice option pricing model provides a more refined estimate of the fair value of our employee stock options. The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model for all grants prior to ~~adopt this standard no later than~~ January 1, 2006. ~~Based~~For option grants in January 2006 and thereafter, the fair value of each option grant is estimated on ~~options outstanding at September 30, 2005,~~ the ~~Company estimates~~date of the ~~effects~~grant using the lattice option pricing model. Because the lattice option pricing model incorporates ranges of ~~FAS 123R will reduce diluted earnings per share by $0.09~~assumptions for inputs, those ranges are disclosed in ~~2006.~~the following table.

-7-

~~Revenue Recognition~~First Advantage Corporation

Notes to Consolidated Financial Statements

March 31, 2006 and 2005 (Unaudited)


	Three months ended March 31,
	2006 (Lattice)		2005 (Black-Scholes)
Expected dividend yield	0	%	0	%
Risk-free interest rate (1)	4.61	%	4.28	%
Expected volatility (2)	30	%	25	%
Expected life (3)	5 years		6 years

~~Revenue from~~

(1)

The risk-free rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant

(2)

The expected volatility is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate based primarily on the Company’s historical data.

(3)

The expected life is the period of time, on average, that participants are expected to hold their options before exercise based primarily on the Company’s historical data.

As share-based compensation expense recognized in the ~~sale~~Consolidated Statement of ~~reports~~Income for the first quarter of fiscal 2006 is ~~recognized~~based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123R requires forfeitures to be estimated at the time of ~~delivery, as~~grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based primarily on historical experience. In our pro forma information required under SFAS 123 for the periods prior to fiscal 2006, the Company ~~has~~accounted for forfeitures as they occurred.

As of March 31, 2006, $17.4 million of total unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of 1.5 years. There was no ~~significant ongoing obligation after delivery. Revenue from investigative services is recognized~~share-based compensation costs capitalized as ~~services are performed. In accordance with generally accepted accounting principles,~~of March 31, 2006.

The Company did not recognize compensation expense for employee share-based awards for the three months ended March 31, 2005. The exercise price of the Company’s employee stock awards equaled the market price of the underlying stock on the date of the grant per APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Prior to January 1, 2006, the Company ~~includes reimbursed government fees~~followed SFAS No. 123, “Accounting for Stock Based Compensation,” as amended by SFAS No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure,” through disclosure only. The Company accounted for share-based compensation using the intrinsic value method prescribed in ~~revenue~~APB Opinion No. 25, and ~~in cost~~related interpretations. The fair value for each option grant was estimated under SFAS No. 123 using the Black-Scholes pricing model. If the Company had elected or was required to apply the fair value recognition provisions of ~~service. Membership fees, billed monthly~~SFAS No. 123, “Accounting for Stock Based Compensation,” to ~~member’s accounts, are recognized~~share-based employee compensation, net income and net income per share would have been reduced to the pro forma amounts indicated in the ~~month~~following table for the ~~fee is earned. A portion of the membership revenue received is paid in the form of a commission~~three months ended March 31, 2005.

-8-

First Advantage Corporation

Notes to ~~clients~~Consolidated Financial Statements

March 31, 2006 and is reflected in other operating expenses. Revenue earned from providing services to third party issuers of membership based consumer products is recognized at the time the service is provided, generally on a monthly basis. Software maintenance revenues are recognized ratably over the term of the maintenance period. Custom programming and professional consulting service revenue is recognized using the percentage-of-completion method pursuant to Accounting Research Bulletin (ARB) No. 45 “Long-Term Construction-Type Contracts.” To the extent that interim amounts billed to clients exceed revenue earned, deferred income is recorded. Other revenue is recognized upon completion of the contractual obligation, which is typically evidenced by delivery of the product or performance of the service.2005 (Unaudited)


*(in thousands, except per share amounts)*	Three Months Ended March 31, 2005
Net income, as reported	$	13,992
Less: share based compensation expense, net of tax		1,308

Pro forma net income	$	12,684

Earnings per share:
Basic, as reported	$	0.27
Basic, pro forma	$	0.25
Diluted, as reported	$	0.27
Diluted, pro forma	$	0.25

3.	Acquisitions

During the first quarter of ~~2005,~~2006, the Company completed ~~two~~three acquisitions for $8.9 million in cash and notes, and made a scheduled ~~payment amounting to $233,000~~payments of $1.2 million of Class A shares, and $0.1 million in cash related to a prior year acquisition. During the second quarter of 2005, the Company acquired four companies. The Company acquired three companies in the third quarter of 2005. These acquisitions have been included in the Company’s Lender Services, Dealer Services, Employer Services, Multifamily Services, and Investigative and Litigation Support Services segments.previous year’s acquisitions. The preliminary allocation of the purchase price is based upon estimates of the assets and liabilities acquired in accordance with SFAS No. 141, “Business Combinations.” The allocations may be revised in ~~2005.~~2006. The acquisition of these companies is based on management’s consideration of past and expected future performance as well as the potential strategic fit with the long-term goals of the Company. The expected long-term growth, market position and expected synergies to be generated by inclusion of these

~~-10-~~

~~First Advantage Corporation~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2005 and 2004 (Unaudited)~~

companies are the primary factors which gave rise to an acquisition price which resulted in the recognition of goodwill.

The aggregate purchase price of acquisitions completed during ~~2005~~2006 is as follows:

Cash
   $ 30,960,000
Notes
   16,905,000
Stock (729,557 Class A shares)
   16,200,000
Stock (2,243,903 Class B shares)
   46,555,000

Purchase price
   $ 110,620,000


*(in thousands)*
Cash	$	7,871
Notes		1,000

Purchase price	$	8,871

The preliminary allocation of the aggregate purchase price of ~~these acquisitions~~this acquisition is as follows:


*(in thousands)*
Goodwill	$	87,168,000	$	6,593
Identifiable intangible assets		15,457,000		1,397
Net assets acquired		7,995,000		881

	$	110,620,000	$	8,871

-9-

First Advantage Corporation

Notes to Consolidated Financial Statements

March 31, 2006 and 2005 (Unaudited)

The changes in the carrying amount of goodwill, by operating segment, are as follows for the ~~nine~~three months ended ~~September 30, 2005:~~March 31, 2006:

Balance at
December 31, 2004
   Acquisitions
   Adjustments to net
assets acquired

Recognition of pre-
acquisition tax
loss carryforwards
Balance at
September 30, 2005
Lender Services
   $ 27,710,000    $ 12,210,000    $ —      $ —   $ 39,920,000
Data Services
   116,013,000    —      211,000    (16,911,000 ) 99,313,000
Dealer Services
   34,727,000    24,043,000    —      —   58,770,000
Employer Services
   123,834,000    43,553,000    355,000    (12,514,000 ) 155,228,000
Multifamily Services
   44,740,000    4,531,000    2,371,000    (3,909,000 ) 47,733,000
Investigative and Litigation Support Services
   33,572,000    2,831,000    75,000    —   36,478,000
            —





Consolidated
   $ 380,596,000    $ 87,168,000    $ 3,012,000    $ (33,334,000 ) $ 437,442,000


*(in thousands)*	Balance at December 31, 2005		Acquisitions		Adjustments to net assets acquired			Balance at March 31, 2006
Lender Services	$	47,082	$	—	$	—		$	47,082
Data Services		219,266		—		30			219,296
Dealer Services		56,893		—		—			56,893
Employer Services		180,114		6,593		(172	)		186,535
Multifamily Services		46,535		—		26			46,561
Investigative and Litigation Support Services		55,994		—		—			55,994

Consolidated	$	605,884	$	6,593	$	(116	)	$	612,361

The adjustment to net assets acquired represents changes in the fair value of net assets acquired in connection with acquisitions consummated within the past twelve months.

~~-11-~~

~~First Advantage Corporation~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2005 and 2004 (Unaudited)~~

Unaudited pro forma results of operations assuming all the acquisitions were consummated on January 1, ~~2004~~2005 are as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
*(in thousands, except per share amounts)*									For the Three Months Ended March 31,
	2005		2004		2005		2004		2006		2005
Total revenue	$	172,301,000	$	155,425,000	$	502,145,000	$	466,331,000	$	195,647	$	181,267

Net income	$	15,202,000	$	12,411,000	$	41,292,000	$	31,299,000	$	13,297	$	14,614

Earnings per share:
Basic	$	0.28	$	0.23	$	0.78	$	0.59	$	0.23	$	0.27
Diluted	$	0.28	$	0.23	$	0.77	$	0.59	$	0.23	$	0.27
Weighted-average common shares outstanding:
Basic		53,426,913		53,052,432		53,235,521		52,931,196		57,490		54,800
Diluted		54,191,069		53,126,248		53,719,828		53,092,063		57,841		55,081

4.	Goodwill and Intangible Assets

In accordance with SFAS ~~No.142,~~No. 142, “Goodwill and Other Intangible Assets,” the Company will complete the ~~transitional~~ goodwill impairment test for all reporting units. The annual test for impairment will be performed in the fourth quarter of ~~2005~~2006 (using the September 30 valuation date). There have been no impairments of goodwill during the ~~nine~~three months ending ~~September 30, 2005.~~

~~The Company has approximately $54.2 million of intangible assets at September 30, 2005, with definite lives ranging from 2 to 20 years.~~

March 31, 2006.

Goodwill and other intangible assets for the ~~years ended September 30, 2005~~periods as of March 31, 2006 and December 31, ~~2004~~2005 are as follows:

   September 30, 2005
December 31, 2004

Goodwill
   $ 437,442,000 $ 380,596,000


Intangible assets:

Customer lists
   $ 56,615,000 $ 44,841,000
Noncompete agreements
   5,295,000 3,356,000
Other
   2,113,000 913,000


   64,023,000 49,110,000
Less accumulated amortization
   (9,836,000 ) (5,514,000 )


Intangible assets, net
   $ 54,187,000 $ 43,596,000

~~-12-~~-10-

First Advantage Corporation

Notes to Consolidated Financial Statements

~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ (Unaudited)


*(in thousands)*	March 31, 2006			December 31, 2005

Goodwill	$	612,361		$	605,884

Intangible assets:
Customer lists	$	91,600		$	90,437
Noncompete agreements		13,760			13,530
Trade names		21,611			21,596
Other		129			129

		127,100			125,692
Less accumulated amortization		(18,284	)		(14,418	)

Intangible assets, net	$	108,816		$	111,274

Amortization of intangible assets totaled ~~$4,879,000~~approximately $3.9 million and ~~$2,649,000~~$1.3 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2006 and 2005, ~~and 2004,~~ respectively. Estimated amortization expense relating to intangible asset balances as of ~~September 30, 2005~~March 31, 2006, is expected to be as follows over the next five years:

2005
   $ 2,028,000
2006
   7,998,000
2007
   7,461,000
2008
   6,450,000
2009
   5,849,000
Thereafter
   24,401,000

   $ 54,187,000


*(in thousands)*
2006	$	11,976
2007		15,498
2008		14,270
2009		13,318
2010		13,043
Thereafter		40,711

	$	108,816

The changes in the carrying amount of identifiable intangible assets are as follows for the ~~nine~~three months ended ~~September 30, 2005:~~March 31, 2006:


	Intangible Assets
Balance, at December 31, 2004	$	43,596,000
*(in thousands)*				Intangible Assets
Balance, at December 31, 2005				$	111,274
Acquisitions		15,457,000			1,397
Adjustments		13,000			11
Amortization		(4,879,000	)		(3,866	)

Balance, at September 30, 2005	$	54,187,000
Balance, at March 31, 2006				$	108,816

~~-13-~~-11-

First Advantage Corporation

Notes to Consolidated Financial Statements

~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ (Unaudited)

Debt

Long-term debt consists of the following at ~~September 30, 2005:~~March 31, 2006:

Acquisition notes:

Weighted average interest rate of 4.75% with maturities through 2008
   $ 41,907,000
Bank notes:

$225 million Secured Credit Facility, interest at 30-day LIBOR plus 1.25% (5.11% at September 30, 2005), matures September 2010
   74,500,000
Promissory Note with First American:

$10 million revolving loan, interest at 30-day LIBOR plus 1.75% (5.61% at September 30, 2005), matures July 2006
   10,000,000
Capital leases and other debt:

Various interest rates with maturities through 2006
   486,000

Total long-term debt and capital leases
   126,893,000
Less current portion of long-term debt and capital leases
   31,685,000

Long-term debt and capital leases, net of current portion
   $ 95,208,000

On September 14, 2005, at the closing of the CIG Acquisition, the Company executed a $45 million unsecured subordinated promissory note in favor of First American. Under the note, First Advantage may borrow, repay and re-borrow for up to and including 90 days from closing. The note matures 135 days after September 14, 2005. The note bears interest at the rate payable under First Advantage’s line of credit with Bank of America, N.A. plus 0.5% per annum. Proceeds of the note may be used only for working capital of CIG. There is no outstanding balance at September 30, 2005.

On September 29, 2005, the Company executed of a revolving credit agreement, with a bank syndication (the “Credit Agreement”). Borrowings available under the Credit Agreement total up to $225 million. The Credit Agreement includes a $10 million sub-facility for the issuance of letters of credit and up to a $5 million swing loan facility. The credit facility maturity date is September 28, 2010.

~~The interest rate is based on the one of two options consisting of 1) the higher of Federal Funds Rate plus~~¹/2% and Bank of America’s announced “Prime Rate” or 2) a “LIBOR based rate”. The “LIBOR based rate” is based on LIBOR plus a margin that can range from 1.125% to 1.75% (based on progressive levels of leverage). First Advantage management must elect the LIBOR based option up to three days prior to its utilization.

The agreement contains usual and customary negative covenants for transactions of this type including but not limited to those regarding liens, investments, creation of indebtedness and fundamental changes, as well as financial covenants of consolidated leverage ratio and minimum consolidated fixed charge coverage ratio.

The agreement contains usual and customary provisions regarding acceleration. In the event of a default by the Company under the credit facility, the lenders will have no further obligation to make loans or issue letters of credit and in some cases may, at the option of a majority of the lenders, declare all amounts owed by the Company immediately due and payable and require the

~~-14-~~

~~First Advantage Corporation~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2005 and 2004 (Unaudited)~~

~~Company to provide collateral, and in some cases any amounts owed by the Company under the credit facility will automatically become immediately due and payable.~~


*(in thousands, except percentages)*
Acquisition notes:
Weighted average interest rate of 6.08% with maturities through 2010	$	68,087
Bank notes:
$225 million Secured Credit Facility, interest at 30-day LIBOR plus 1.25% (5.99% at March 31, 2006), matures September 2010		140,500
Capital leases and other debt:
Various interest rates with maturities through 2006		892

Total long-term debt and capital leases		209,479
Less current portion of long-term debt and capital leases		27,928

Long-term debt and capital leases, net of current portion	$	181,551

At ~~September 30, 2005,~~March 31, 2006, the Company was in compliance with the financial covenants of its loan agreement.

6.	~~Income Taxes~~

~~The effective tax rate was 40% and 43% for~~In the ~~three and nine months ended September 30, 2005, respectively. The nine month rate exceeds~~quarter ending March 31, 2006, the ~~Company's statutory tax rate primarily due to~~Company repaid, in full, the ~~nondeductible merger costs of $3.2 million that were incurred in the second quarter of 2005 in connection with the pending acquisition of the CIG Business from First American.~~

The net change in the total valuation allowance for the third quarter 2005 was a decrease of $33 million with an offsetting entry to goodwill. The valuation allowance relates primarily to deferred tax assets for federal net operating-loss carryforwards relating to acquisitions. Utilization of the pre-acquisition net operating losses is subject to limitations by the Internal Revenue Code and state jurisdictions. The Company evaluates the realizability of its deferred tax assets by assessing the valuation allowance and by adjusting theprincipal amount of ~~such allowance if necessary. The factors used~~$10 million to ~~assess the likelihood of realization are the Company’s forecast of future taxable income and available tax planning strategies that could be implemented~~First American scheduled to ~~realize the net deferred tax assets.~~

Based upon a sustained pattern of historical taxable income, projections for future taxable income over the periods in which the net operating losses will be deductible, and the impact the CIG acquisition had on the pooled historical taxable income and on the projections for future taxable income, management believes it is more likely than not that First Advantage will realize the benefits of the federal net operating losses. The valuation allowance relating to the state net operating-loss carryforwards will remain until further evidence is available to indicate that these deferred assets are realizable.mature July 2006.

7.6.	Earnings Per Share

A reconciliation of earnings per share and weighted-average shares outstanding is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
Net Income	$	16,023,000	$	12,962,000	$	42,698,000	$	32,844,000
Interest on convertible note, net of tax		—		40,000		—		81,000
*(in thousands, except per share amounts)*									Three Months Ended March 31,
									2006		2005
Net Income - numerator for basic and fully diluted earnings per share	$	16,023,000	$	13,002,000	$	42,698,000	$	32,925,000	$	12,745	$	13,992

Denominator:
Weighted-average shares for basic earnings per share		53,200,609		49,683,345		52,132,551		49,318,123		55,997		51,099
Effect of dilutive securities		764,157		73,816		484,307		160,868
Convertible notes		—		371,600		—		167,673
Effect of dilutive securities - contingent shares										1,485		—
Effect of dilutive securities - employee stock options and warrants										351		281

Denominator for diluted earnings per share		53,964,766		50,128,761		52,616,858		49,646,664		57,833		51,380

Earnings per share:
Basic	$	0.30	$	0.26	$	0.82	$	0.67	$	0.23	$	0.27
Diluted	$	0.30	$	0.26	$	0.81	$	0.66	$	0.22	$	0.27

-12-

First Advantage Corporation

Notes to Consolidated Financial Statements

March 31, 2006 and 2005 (Unaudited)

For the three months ended ~~September 30,~~March 31, 2006 and 2005, ~~and 2004,~~ options and warrants totaling ~~361,398~~815,251 and 2,163,305, respectively, were excluded from the weighted average diluted shares outstanding, as they were antidilutive. For the nine months ended September 30, 2005 and 2004, options and warrants totaling 312,125 and 1,853,676,1,316,065, respectively, were excluded from the weighted average diluted shares outstanding, as they were antidilutive.

7.	Share-Based Compensation

Employee Stock Purchase Plan

In August 2003, the Company’s board of directors approved the First Advantage Corporation 2003 Employee Stock Purchase Plan (the “Stock Purchase Plan”). The Stock Purchase Plan, which is intended to qualify under Section 423 of the Internal Revenue Code, allows eligible employees to purchase First Advantage Class A common stock through payroll deductions for 85% of the fair market value of the First Advantage Class A common stock. Participation in the plan is voluntary. Eligible employees may participate by authorizing payroll deductions of up to 15% of their base pay for each payroll period. At the end of each one-month offering period, each participant will receive an amount of First Advantage Class A common stock equal to the sum of that participant’s payroll deductions during such period divided by 85% of the fair market value of the common stock at the end of the period. No employee may participate in the plan if such employee owns or would own after the purchase of shares under the plan, 5% or more of the voting power of all classes of First Advantage stock. Shares of First Advantage Class A common stock issued under the Stock Purchase Plan must be held for a period of one year. A total of 1.0 million shares of First Advantage Class A common stock are reserved for issuance under the plan. A total of 20,403 and 29,446 shares have been issued in connection with the plan for the three months ended March 31, 2006 and the year ended December 31, 2005, respectively.

Incentive Compensation Plan

The Company’s board of directors and stockholders have adopted the 2003 First Advantage Incentive Compensation Plan. The plan is intended to promote the long-term success of the Company and increase stockholder value by attracting, motivating, and retaining key employees of the Company and its subsidiaries and affiliates, and by motivating consultants who provide significant services to the Company and its subsidiaries and affiliates. To achieve this purpose, the plan allows the granting of stock options, stock appreciation rights, restricted stock awards, performance unit awards, performance share awards and cash-based awards to eligible persons.

Subject to adjustment for certain changes in the Company’s capitalization, a total of 7.0 million shares of First Advantage Class A common stock are available for issuance under the plan. The plan is administered by the 401(k) committee, which is a sub committee of the compensation committee of the board of directors of the Company.

-13-

First Advantage Corporation

Notes to Consolidated Financial Statements

March 31, 2006 and 2005 (Unaudited)

Upon the occurrence of a change of control transaction (as defined in the plan), generally all awards under the plan accelerate, all restrictions are lifted and all performance goals are achieved, subject to certain limitations. The committee may provide that any award, the payment of which was deferred under the plan, will be paid or distributed as of, or promptly following, a change of control transaction. The committee may also provide that any awards subject to any such acceleration, payment, adjustment or conversion cannot be exercised after, or will terminate as of, a change of control transaction.

At March 31, 2006, 4,843,755 stock options to purchase shares of the Company’s common stock, 122,806 restricted stock awards, and 69,231 restricted stock units were granted under the First Advantage Corporation 2003 Incentive Compensation Plan. Share-based grants generally vest over three years at a rate of 33.4% for the first year and 33.3% for each of the two following years. The option grants expire ten years after the grant date. As of January 1, 2006, the Company accounts for these share-based grants in accordance with SFAS No. 123R, which requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. Share-based compensation for the first quarter of 2006 was $2.9 million ($2.2 million after tax or $0.04 per basic and diluted share). Prior to adoption of SFAS No. 123R, the Company applied APB Opinion No. 25 to account for its share-based awards. Under the provisions of APB Opinion No. 25, the company was not required to recognize compensation expense for the cost of stock options or shares issued under the Company’s Employee Stock Purchase Plan (“ESPP”).

Warrants and Options to Purchase Class A Common Stock, Assumed in the Merger

The Company agreed to assume the obligations of US SEARCH.com contained in all warrants to purchase common stock of US SEARCH.com outstanding on the closing date of the merger. Pursuant to the merger agreement and the terms of the warrants, the holders of the warrants are entitled to receive upon exercise thereof 0.04 of a share of First Advantage Class A common stock for each share of US SEARCH.com common stock that such warrant holder would have been entitled to receive pursuant to the warrant prior to the closing of the merger. The Company had outstanding warrants to purchase up to 185,158 shares of its common stock at exercise prices ranging from $0.25 to $29.38 per share as of March 31, 2006.

All outstanding stock options, stock appreciation rights, limited stock appreciation rights and stock purchase rights of US SEARCH.com were assumed by the Company and converted automatically into options to purchase shares of First Advantage Class A common stock calculated in accordance with the exchange ratio, rounded down to the nearest whole share. The exercise price is equal to the exercise price per share of US SEARCH.com common stock divided by the exchange ratio, rounded down to the nearest whole cent. The outstanding stock options, stock appreciation rights, limited stock appreciation rights and stock purchase rights of US SEARCH.com otherwise continue to be exercisable and vest subject to the terms and conditions applicable to

-14-

First Advantage Corporation

Notes to Consolidated Financial Statements

March 31, 2006 and 2005 (Unaudited)

them before the mergers. However, all outstanding stock options issued to US SEARCH.com employees and directors pursuant to the US SEARCH.com Amended and Restated 1998 Stock Incentive Plan and all outstanding stock options issued to US SEARCH.com’s non-employee directors pursuant to the US SEARCH.com 1999 Non-Employee Directors’ Stock Option Plan accelerated and became fully vested upon the occurrence of the mergers. As of March 31, 2006, the Company had outstanding options (previously issued by US SEARCH.com) to purchase up to 72,607 shares of its common stock at exercise prices ranging from $7.03 to $225.00 per share.

Stock option activity under the Company’s stock plan since December 31, 2005 is summarized as follows:


*(in thousands)*	Number of Shares		Weighted Average Exercise Price
Options outstanding at December 31, 2005	3,503		$	21.14

Options granted	760		$	24.93
Options exercised	(14	)	$	16.29
Options canceled	(33	)	$	21.38

Options outstanding at March 31, 2006	4,216		$	21.84


Options exercisable, end of the quarter	1,389		$	20.10

The following table summarizes information about stock options and warrants outstanding at March 31, 2006:

-15-

First Advantage Corporation

Notes to Consolidated Financial Statements

March 31, 2006 and 2005 (Unaudited)


*(in thousands, except for exercise prices, years and weighted average amounts*)
	Options Outstanding			Options Exercisable
Range of Exercise Prices	Shares	Weighted Avg Remaining Contractual Life in Years	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
$ 7.00 - $ 12.50	14	5.1	$10.40	13	$10.46
$12.51 - $ 25.00	3,485	8.3	$20.53	1,346	$19.35
$25.01 - $ 50.00	705	9.3	$27.40	18	$37.52
$50.01 - $242.25	12	4.3	$88.48	12	$88.44

	4,216			1,389



	Warrants Outstanding and Exercisable
Range of Exercise Prices	Shares	Weighted Avg Remaining Contractual Life in Years	Weighted Average Exercise Price
$0.25 - $22.50	87	2.78	$17.08
$22.51 - $26.10	95	0.30	$26.10
$26.11 - $29.38	3	0.90	$29.38

	185

8.	Segment Information

The Company operates in six primary business segments: Lender Services, Data Services, Dealer Services, Employer Services, Multifamily Services, and Investigative and Litigation Support Services.

~~-15-~~

~~First Advantage Corporation~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2005 and 2004 (Unaudited)~~

The Lender Services segment offers lenders ~~across the country~~ credit reporting solutions for mortgage and home equity information needs.

The Data Services segment includes business lines that provide transportation credit reporting, motor vehicle record reporting, fleet management, supply chain theft and damage mitigation consulting, consumer location, criminal records reselling, subprime credit reporting, ~~and~~ consumer credit reporting services, and lead generation services. Revenue for the Data Services segment includes ~~$68,000~~$1.1 million and ~~$230,000~~$0.6 million of inter-segment sales for the three months ended ~~September 30,~~March 31, 2006 and 2005, ~~and 2004, respectively, and $220,000 and $421,000 for the nine months ended September 30, 2005 and 2004,~~ respectively.

The Dealer Services business segment serves the automotive dealer marketplace by delivering consolidated consumer credit reports, credit automation software and automotive lead development services.

-16-

First Advantage Corporation

Notes to Consolidated Financial Statements

March 31, 2006 and 2005 (Unaudited)

The Employer Services segment includes employment background screening, hiring management solutions, occupational health services and tax incentive services. Products and services relating to employment background screening include criminal records searches, employment and education verification, social security number verification and credit reporting. Occupational health services include drug-free workplace programs, physical examinations and employee assistance programs. Tax incentive services include services related to the administration of employment-based and location-based tax credit and incentive programs, sales and use tax programs and fleet asset management programs. Revenue for the Employer Services segment includes ~~$210,000~~$0.3 million and ~~$213,000~~$0.2 million of inter-segment sales for the three months ended ~~September 30,~~March 31, 2006 and 2005, ~~and 2004, respectively, and $600,000 and $682,000 for the nine months ended September 30, 2005 and 2004,~~ respectively.

The Multifamily Services segment includes resident screening and software services. Resident screening services include criminal background and eviction searches, credit reporting, employment verification and lease performance and payment histories. Revenue for the Multifamily Services segment includes ~~$92,000~~$0.1 million and ~~$42,000~~$0.1 million of inter-segment sales for the three months ended ~~September 30,~~March 31, 2006 and 2005, ~~and 2004, respectively, and $228,000 and $42,000 for the nine months ended September 30, 2005 and 2004,~~ respectively.

The Investigative and Litigation Support Services segment includes all investigative services. Products and services offered by the Investigative and Litigation Support Services segment includes surveillance services, field interviews, computer forensics, electronic discovery, due diligence reports and other high level investigations.

The elimination of inter-segment revenue and cost of service revenue is included in Corporate. These transactions are recorded at cost.

International operations are included in the Employer Services segment and include revenue of ~~$2,854,000~~$3.4 million and ~~$352,000~~$0.4 for the three months ended ~~September 30,~~March 31, 2006 and 2005, ~~and 2004, respectively, and $6,011,000 and $780,000 for the nine months ended September 30, 2005 and 2004,~~ respectively.

~~-16-~~

~~First Advantage Corporation~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2005 and 2004 (Unaudited)~~

The following table sets forth segment information for the three ~~and nine~~ months ended ~~September 30, 2005~~March 31, 2006 and ~~2004.~~2005.

   Revenue
Depreciation
and Amortization
   Income (Loss)
From Operations
Assets
Three Months Ended September 30, 2005

Lender Services
   $ 43,907,000 $ 1,760,000    $ 12,971,000 $ 82,745,000
Data Services
   32,161,000 1,465,000    7,206,000 137,240,000
Dealer Services
   29,219,000 641,000    3,964,000 117,427,000
Employer Services
   40,404,000 1,371,000    3,560,000 221,343,000
Multifamily Services
   17,544,000 1,023,000    4,824,000 76,847,000
Investigative and Litigation Support Services
   8,237,000 385,000    353,000 49,169,000
Corporate and Eliminations
   (1,526,000 ) 40,000    (4,742,000 ) 46,777,000




Consolidated
   $ 169,946,000 $ 6,685,000    $ 28,136,000 $ 731,548,000




Three Months Ended September 30, 2004

Lender Services
   $ 33,870,000 $ 1,657,000    $ 9,125,000 $ 62,113,000
Data Services
   25,105,000 1,307,000    5,102,000 142,331,000
Dealer Services
   18,355,000 404,000    2,125,000 87,267,000
Employer Services
   34,733,000 1,080,000    3,822,000 152,409,000
Multifamily Services
   15,711,000 1,064,000    4,498,000 74,976,000
Investigative and Litigation Support Services
   6,770,000 343,000    612,000 45,616,000
Corporate and Eliminations
   (471,000 ) 23,000    (2,982,000 ) 18,784,000




Consolidated
   $ 134,073,000 $ 5,878,000    $ 22,302,000 $ 583,496,000




Nine Months Ended September 30, 2005

Lender Services
   $ 128,963,000 $ 4,942,000    $ 37,596,000 $ 82,745,000
Data Services
   92,083,000 4,403,000    20,956,000 137,240,000
Dealer Services
   72,252,000 1,639,000    10,522,000 117,427,000
Employer Services
   112,642,000 3,846,000    10,550,000 221,343,000
Multifamily Services
   49,134,000 3,003,000    14,155,000 76,847,000
Investigative and Litigation Support Services
   23,142,000 1,146,000    1,032,000 49,169,000
Corporate and Eliminations
   (4,525,000 ) 106,000    (17,027,000 ) 46,777,000




Consolidated
   $ 473,691,000 $ 19,085,000    $ 77,784,000 $ 731,548,000




Nine Months Ended September 30, 2004

Lender Services
   $ 103,480,000 $ 5,322,000    $ 31,012,000 $ 62,113,000
Data Services
   82,547,000 3,882,000    8,541,000 142,331,000
Dealer Services
   53,022,000 1,179,000    6,665,000 87,267,000
Employer Services
   92,480,000 3,194,000    6,838,000 152,409,000
Multifamily Services
   41,838,000 2,715,000    9,982,000 74,976,000
Investigative and Litigation Support Services
   18,687,000 790,000    621,000 45,616,000
Corporate and Eliminations
   (1,959,000 ) 52,000    (7,636,000 ) 18,784,000




Consolidated
   $ 390,095,000 $ 17,134,000    $ 56,023,000 $ 583,496,000

-17-

First Advantage Corporation

Notes to Consolidated Financial Statements

~~September 30,~~March 31, 2006 and 2005 ~~and 2004~~ (Unaudited)

9.	~~Subsequent Event~~

Subsequent to September 30, 2005, the Company has acquired four companies. In consideration for the purchase of the assets and membership interest, the Company paid the sellers an aggregate purchase price of $140.1 million comprised of $71.3 million in cash, $35.0 million of subordinated notes, and $33.8 million in Class A shares.


*(in thousands)*	Revenue			Depreciation and Amortization		Income (Loss) From Operations			Assets
Three Months Ended March 31, 2006
Lender Services	$	45,302		$	1,758	$	13,481		$	80,214
Data Services		47,037			3,010		9,635			317,678
Dealer Services		29,629			688		3,928			114,652
Employer Services		42,342			1,612		2,338			275,432
Multifamily Services		16,693			1,137		3,204			76,197
Investigative and Litigation Support Services		15,046			751		3,069			83,646
Corporate and Eliminations		(1,701	)		254		(8,471	)		51,124

Consolidated	$	194,348		$	9,210	$	27,184		$	998,943

Three Months Ended March 31, 2005
Lender Services	$	39,203		$	1,390	$	11,781		$	92,609
Data Services		29,128			1,462		6,285			151,457
Dealer Services		19,493			402		3,396			78,092
Employer Services		32,428			1,072		2,344			183,550
Multifamily Services		14,501			1,013		3,655			71,375
Investigative and Litigation Support Services		7,006			385		185			47,368
Corporate and Eliminations		(1,438	)		31		(3,054	)		11,846

Consolidated	$	140,321		$	5,755	$	24,592		$	636,297

-18-

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note of Caution Regarding Forward Looking Statements

Certain statements in this quarterly report on Form 10-Q relate to future results of the Company and are considered “forward-looking statements”. These statements, which may be expressed in a variety of ways, including the use of future or present tense language, relate to among other things, sufficiency and availability of cash flows and other sources of liquidity, current levels of operations, anticipated growth, future market positions, synergies from integration, ability to execute its growth strategy, levels of capital expenditures and ability to satisfy current debt. These forward-looking statements, and others forward-looking statements contained in other public disclosures of the Company are based on assumptions that involve risks and uncertainties, and that are subject to change based on various important factors (some of which are beyond the Company’s control). Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: general volatility of the capital markets and the market price of the Company’s Class A common stock; the Company’s ability to successfully raise capital; the Company’s ability to identify and complete acquisitions and to successfully integrate businesses it acquires; changes in applicable government regulations; the degree and nature of the Company’s competition; increases in the Company’s expenses; continued consolidation among the Company’s competitors and customers; unanticipated technological changes and requirements; the Company’s ability to identify suppliers of quality and cost-effective data; and other factors described in this quarterly report on Form 10-Q. Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties. The forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

-19-

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Overview

First Advantage Corporation (Nasdaq: FADV) (“First Advantage” or the “Company”) is a global risk mitigation and business solutions provider. The Company ~~now~~ operates in six primary business segments: Lender Services, Data Services, Dealer Services, Employer Services, Multifamily Services, and Investigative & Litigation Support Services. First Advantage is headquartered in St. Petersburg, Florida, and has approximately ~~3,700~~4,100 employees in offices throughout the United States and abroad. For the ~~nine~~three months ended ~~September 30, 2005,~~March 31, 2006, First Advantage has acquired ~~nine~~three companies, ~~and completed~~which are all included in the ~~merger of the CIG Business.~~

On September 14, 2005, the Company completed the acquisition to buy First American’s CIG Business under the terms of the master transfer agreement. First Advantage paid for the CIG Business and related businesses with 29,073,170 shares of its Class B common stock. The acquisition of CIG by First Advantage is a transaction between businesses under common control of First American. As such, First Advantage has recorded the assets and liabilities of CIG at historical cost. Historical income statements of First Advantage have been restated to include results of operations of CIG at historical costs.

Employer Services segment.

Operating results for the three ~~and nine~~ months ended ~~September 30, 2005~~March 31, 2006 included total revenue of ~~$169.9~~$194.3 million, ~~and $473.7 million, respectively,~~ representing an increase of ~~26.8% and 30.6%~~39% over the same ~~periods~~period in ~~2004,~~2005, with ~~11.0% and 8.4%~~6.2% of that growth being organic growth. Net income for the three ~~and nine~~ months ended ~~September 30, 2005~~March 31, 2006 was ~~$16.0 million and $42.7 million, respectively.~~$12.7 million. Net income ~~increased $3.1~~decreased $1.3 million for the three months ~~and $9.9 million for the nine months~~ ended ~~September 30, 2005~~March 31, 2006 in comparison to the same ~~periods~~period in ~~2004.~~

~~For~~2005. Net income for the ~~nine months~~quarter ended ~~September 30, 2005,~~March 31, 2006 includes the ~~results~~impact of ~~operations include $3.2~~adopting SFAS 123R “Share Based Payment,” which reduced net income by $2.2 million of nondeductible merger costs that First Advantage incurred in connection with its pending acquisition of the CIG Business from First American; $2.0 million of costs incurred in connection with the relocation of the company’s corporate headquarters and other office consolidations; and $.6 million of costs related to the launch of the corporate branding initiative that was announced in September 2005. These costs are included in the Company’s corporate segment.

or $0.04 per diluted share.

Critical Accounting Policies and Estimates

Critical accounting policies are those policies used in the preparation of the company’s financial statements that require management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosure of contingencies. A summary of these policies can be found in Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for year ended December 31, ~~2004~~2005.

Share-Based Compensation

Effective January 1, 2006, the Company accounts for employee share-based compensation costs in accordance with SFAS No. 123R. Commencing with the first quarter of fiscal 2006, the Company began transitioning from the Black-Scholes options model to a lattice model to estimate the fair value of new employee stock options on the date of grant. The Company believes the lattice option pricing model provides a more refined estimate of the fair value of the employee stock options. The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model for all grants prior to January 1, 2006. For option grants in January 2006 and thereafter, the ~~Proxy Statement filed June 30, 2005.~~fair value of each option grant is estimated on the date of the grant using the lattice option pricing model. The fair value calculation requires the input of highly subjective assumptions, including expected volatility and expected life. Further, as required under SFAS No. 123R, the Company now estimates forfeitures for options granted, which are not expected to vest. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation.

~~-20-~~

The following is a summary of the operating results by the Company’s business segments for the three months ended ~~September 30, 2005~~March 31, 2006 and ~~2004 and for the nine months ended September 30, 2005 and 2004.~~March 31, 2005.

Quarter ending September 30, 2005

Lender
Services

Data
Services
Dealer
Services
Employer
Services
Multifamily
Services
Invest/Litigation
Support Services
Corporate
Total

Service revenue
$ 43,907,000 $ 22,100,000 $ 29,219,000 $ 37,673,000 $ 17,544,000 $ 8,237,000 $ (934,000 ) $ 157,746,000
Reimbursed government fee revenue
—   10,061,000 —   2,731,000 —   —   (592,000 ) 12,200,000

Total revenue
43,907,000 32,161,000 29,219,000 40,404,000 17,544,000 8,237,000 (1,526,000 ) 169,946,000
Cost of service revenue
14,200,000 3,624,000 15,635,000 12,132,000 1,788,000 3,443,000 (941,000 ) 49,881,000
Government fees paid
—   10,061,000 —   2,731,000 —   —   (592,000 ) 12,200,000

Total cost of service
14,200,000 13,685,000 15,635,000 14,863,000 1,788,000 3,443,000 (1,533,000 ) 62,081,000
Gross margin
29,707,000 18,476,000 13,584,000 25,541,000 15,756,000 4,794,000 7,000 107,865,000
Salaries and benefits
12,500,000 3,922,000 4,222,000 13,559,000 6,064,000 2,715,000 3,664,000 46,646,000
Facilities and telecommunications
1,916,000 632,000 422,000 1,514,000 808,000 296,000 617,000 6,205,000
Other operating expenses
560,000 5,251,000 4,335,000 5,537,000 3,037,000 1,045,000 428,000 20,193,000
Depreciation and amortization
1,760,000 1,465,000 641,000 1,371,000 1,023,000 385,000 40,000 6,685,000

Income (loss) from operations
$ 12,971,000 $ 7,206,000 $ 3,964,000 $ 3,560,000 $ 4,824,000 $ 353,000 $ (4,742,000 ) $ 28,136,000

Operating margin percentage
29.5 % 32.6 % 13.6 % 9.4 % 27.5 % 4.3 % N/A 17.8 %
Quarter ending September 30, 2004

Lender
Services

Data
Services
Dealer
Services
Employer
Services
Multifamily
Services
Invest/Litigation
Support Services
Corporate
Total

Service revenue
$ 33,870,000 $ 16,678,000 $ 18,355,000 $ 31,952,000 $ 15,711,000 $ 6,770,000 $ (471,000 ) $ 122,865,000
Reimbursed government fee revenue
—   8,427,000 —   2,781,000 —   —   —   11,208,000

Total revenue
33,870,000 25,105,000 18,355,000 34,733,000 15,711,000 6,770,000 (471,000 ) 134,073,000
Cost of service revenue
10,020,000 2,957,000 8,652,000 11,396,000 1,624,000 3,041,000 (471,000 ) 37,219,000
Government fees paid
—   8,427,000 —   2,781,000 —   —   —   11,208,000

Total cost of service
10,020,000 11,384,000 8,652,000 14,177,000 1,624,000 3,041,000 (471,000 ) 48,427,000
Gross margin
23,850,000 13,721,000 9,703,000 20,556,000 14,087,000 3,729,000 —   85,646,000
Salaries and benefits
10,802,000 2,735,000 2,932,000 10,879,000 5,318,000 1,956,000 2,396,000 37,018,000
Facilities and telecommunications
1,561,000 538,000 562,000 1,446,000 784,000 262,000 180,000 5,333,000
Other operating expenses
705,000 4,039,000 3,680,000 3,329,000 2,423,000 556,000 383,000 15,115,000
Depreciation and amortization
1,657,000 1,307,000 404,000 1,080,000 1,064,000 343,000 23,000 5,878,000

Income (loss) from operations
$ 9,125,000 $ 5,102,000 $ 2,125,000 $ 3,822,000 $ 4,498,000 $ 612,000 $ (2,982,000 ) $ 22,302,000

Operating margin percentage
26.9 % 30.6 % 11.6 % 12.0 % 28.6 % 9.0 % N/A 18.2 %
Nine months ending September 30, 2005

Lender
Services

Data
Services
Dealer
Services
Employer
Services
Multifamily
Services
Invest/Litigation
Support Services
Corporate
Total

Service revenue
$ 128,963,000 $ 61,860,000 $ 72,252,000 $ 104,451,000 $ 49,134,000 $ 23,142,000 $ (2,780,000 ) $ 437,022,000
Reimbursed government fee revenue
—   30,223,000 —   8,191,000 —   —   (1,745,000 ) 36,669,000

Total revenue
128,963,000 92,083,000 72,252,000 112,642,000 49,134,000 23,142,000 (4,525,000 ) 473,691,000
Cost of service revenue
41,773,000 8,928,000 36,754,000 33,808,000 4,862,000 9,689,000 (2,788,000 ) 133,026,000
Government fees paid
—   30,223,000 —   8,191,000 —   —   (1,745,000 ) 36,669,000

Total cost of service
41,773,000 39,151,000 36,754,000 41,999,000 4,862,000 9,689,000 (4,533,000 ) 169,695,000
Gross margin
87,190,000 52,932,000 35,498,000 70,643,000 44,272,000 13,453,000 8,000 303,996,000
Salaries and benefits
37,764,000 11,161,000 10,435,000 37,175,000 16,662,000 7,846,000 9,265,000 130,308,000
Facilities and telecommunications
5,320,000 1,839,000 865,000 4,619,000 2,472,000 801,000 3,058,000 18,974,000
Other operating expenses
1,568,000 14,573,000 12,037,000 14,453,000 7,980,000 2,628,000 4,606,000 57,845,000
Depreciation and amortization
4,942,000 4,403,000 1,639,000 3,846,000 3,003,000 1,146,000 106,000 19,085,000

Income (loss) from operations
$ 37,596,000 $ 20,956,000 $ 10,522,000 $ 10,550,000 $ 14,155,000 $ 1,032,000 $ (17,027,000 ) $ 77,784,000

Operating margin percentage
29.2 % 33.9 % 14.6 % 10.1 % 28.8 % 4.5 % N/A 17.8 %

~~-21-~~-20-

Nine months ending September 30, 2004

Lender
Services

Data
Services
Dealer
Services
Employer
Services
Multifamily
Services
Invest/Litigation
Support Services
Corporate
Total

Service revenue
$ 103,480,000 $ 56,794,000 $ 53,022,000 $ 84,664,000 $ 41,838,000 $ 18,687,000 $ (1,959,000 ) $ 356,526,000
Reimbursed government fee revenue
—   25,753,000 —   7,816,000 —   —   —   33,569,000

Total revenue
103,480,000 82,547,000 53,022,000 92,480,000 41,838,000 18,687,000 (1,959,000 ) 390,095,000
Cost of service revenue
29,963,000 14,063,000 24,357,000 31,830,000 4,779,000 9,868,000 (1,959,000 ) 112,901,000
Government fees paid
—   25,753,000 —   7,816,000 —   —   —   33,569,000

Total cost of service
29,963,000 39,816,000 24,357,000 39,646,000 4,779,000 9,868,000 (1,959,000 ) 146,470,000
Gross margin
73,517,000 42,731,000 28,665,000 52,834,000 37,059,000 8,819,000 —   243,625,000
Salaries and benefits
32,607,000 8,618,000 8,449,000 28,819,000 15,509,000 5,100,000 6,774,000 105,876,000
Facilities and telecommunications
5,095,000 1,621,000 1,467,000 4,334,000 2,038,000 629,000 489,000 15,673,000
Other operating expenses
(519,000 ) 20,069,000 10,905,000 9,649,000 6,815,000 1,679,000 321,000 48,919,000
Depreciation and amortization
5,322,000 3,882,000 1,179,000 3,194,000 2,715,000 790,000 52,000 17,134,000

Income (loss) from operations
$ 31,012,000 $ 8,541,000 $ 6,665,000 $ 6,838,000 $ 9,982,000 $ 621,000 $ (7,636,000 ) $ 56,023,000

Operating margin percentage
30.0 % 15.0 % 12.6 % 8.1 % 23.9 % 3.3 % N/A 15.7 %

~~-22-~~


*(in thousands, except percentages)*
Three Months Ended March 31, 2006	Lender Services			Data Services			Dealer Services			Employer Services			Multifamily Services			Invest/Litigation Support Services			Corporate			Total
Service revenue	$	45,302		$	35,881		$	29,629		$	39,662		$	16,693		$	15,046		$	(994	)	$	181,219
Reimbursed government fee revenue		—			11,156			—			2,680			—			—			(707	)		13,129

Total revenue		45,302			47,037			29,629			42,342			16,693			15,046			(1,701	)		194,348
Cost of service revenue		15,051			10,674			15,726			11,399			1,567			3,075			(903	)		56,589
Government fees paid		—			11,156			—			2,680			—			—			(707	)		13,129

Total cost of service		15,051			21,830			15,726			14,079			1,567			3,075			(1,610	)		69,718
Gross margin		30,251			25,207			13,903			28,263			15,126			11,971			(91	)		124,630
Salaries and benefits		12,696			5,766			4,374			15,991			6,874			5,886			7,047			58,634
Facilities and telecommunications		1,853			713			379			1,838			897			423			948			7,051
Other operating expenses		463			6,083			4,534			6,484			3,014			1,842			131			22,551
Depreciation and amortization		1,758			3,010			688			1,612			1,137			751			254			9,210

Income (loss) from operations	$	13,481		$	9,635		$	3,928		$	2,338		$	3,204		$	3,069		$	(8,471	)	$	27,184


Operating margin percentage		29.8	%		26.9	%		13.3	%		5.9	%		19.2	%		20.4	%		N/A			15.0	%

Three Months Ended March 31, 2005	Lender Services			Data Services			Dealer Services			Employer Services			Multifamily Services			Invest/Litigation Support Services			Corporate			Total
Service revenue	$	39,203		$	18,896		$	19,493		$	29,888		$	14,501		$	7,006		$	(882	)	$	128,105
Reimbursed government fee revenue		—			10,232			—			2,540			—			—			(556	)		12,216

Total revenue		39,203			29,128			19,493			32,428			14,501			7,006			(1,438	)		140,321
Cost of service revenue		12,584			2,421			9,226			10,291			1,430			3,092			(882	)		38,162
Government fees paid		—			10,232			—			2,540			—			—			(556	)		12,216

Total cost of service		12,584			12,653			9,226			12,831			1,430			3,092			(1,438	)		50,378
Gross margin		26,619			16,475			10,267			19,597			13,071			3,914			—			89,943
Salaries and benefits		11,765			3,686			2,757			10,933			5,013			2,388			2,733			39,275
Facilities and telecommunications		1,559			567			149			1,429			848			238			204			4,994
Other operating expenses		124			4,475			3,563			3,819			2,542			718			86			15,327
Depreciation and amortization		1,390			1,462			402			1,072			1,013			385			31			5,755

Income (loss) from operations	$	11,781		$	6,285		$	3,396		$	2,344		$	3,655		$	185		$	(3,054	)	$	24,592


Operating margin percentage		30.1	%		33.3	%		17.4	%		7.8	%		25.2	%		2.6	%		N/A			19.2	%

Lender Services Segment

Three Months Ended ~~September 30, 2005~~March 31, 2006 Compared to Three Months Ended ~~September 30, 2004~~March 31, 2005

Total service revenue was ~~$43.9~~$45.3 million for the three months ended ~~September 30, 2005,~~March 31, 2006, an increase of ~~$10.0~~$6.1 million compared to service revenue of ~~$33.9~~$39.2 million in the same period of ~~2004.~~2005. The acquisition of a mortgage credit reporting ~~business~~businesses during the first ~~quarter~~and fourth quarters of 2005 accounted for ~~$5.0 million of~~ the ~~increase and an increase in transaction volume accounted for the additional growth in service revenue.~~

increase.

Cost of service revenue was ~~$14.2~~$15.1 million for the three months ended ~~September 30, 2005,~~March 31, 2006, an increase of ~~$4.2~~$2.5 million compared to cost of service revenue of ~~$10.0~~$12.6 million in the same period of ~~2004.~~2005. The acquisition of a mortgage credit reporting ~~business~~businesses during the first ~~quarter~~and fourth quarters of 2005 accounted for ~~$2.0 million~~substantially all of the increase, and an increase in transactions and the addition of a surcharge by the three credit bureaus related to free credit reports to consumers pursuant to the FACT Act were the primary reasons for the additional increase in the cost of service revenue.

The gross margin percentage remained constant at approximately 67% in 2006 when compared to 2005.

Salaries and benefits increased by ~~$1.7~~$.9 million. Salaries and benefits were ~~28.5%~~28.0% of service revenue in the ~~third~~first quarter of ~~2005~~2006 compared to ~~31.9%~~30.0% in the same period of ~~2004.~~2005. Salaries and benefits expense increased ~~$1.2 million~~ due to the ~~acquisition,~~acquisitions, and the percentage decrease is primarily due to the operational efficiencies, ~~obtained on~~consolidation of the ~~increased transaction volume~~acquired businesses, and ~~related revenues.~~

a decrease in benefit costs.

Facilities and telecommunication expenses increased by ~~$.4~~$.3 million. Facilities and telecommunication expenses were ~~4.4%~~4.1% of service revenue in the ~~third~~first quarter of 2006 and 4.0% in the

-21-

same period of 2005. Facilities and telecommunication expenses increased due to the absence in 2006 of credits from telecom vendors that were received during the same period in 2005, and ~~4.6% in~~due to the ~~third quarter of 2004.~~acquisitions. The percentage ~~decrease~~increase is primarily due to the ~~increase~~absence of the telecom credits in ~~revenues.~~

2006.

Other operating expenses ~~decreased~~increased by ~~$.1~~$.3 million. Other operating expenses were ~~1.3%~~1.0% of service revenue in the ~~third~~first quarter of ~~2005~~2006 and ~~2.1%~~0.3% in the ~~third quarter~~same period of ~~2004.~~2005. The ~~decrease~~change in 2006 is primarily due to ~~non-recurring professional fees incurred during~~ the ~~third quarter of 2004.~~

acquisitions.

Depreciation and amortization increased by ~~$.1~~$.4 million due to an increase in amortization of intangible assets as a result of the ~~acquisition.~~

acquisitions. Depreciation and amortization were 3.9% of service revenue as of March 2006 compared to 3.5% in the same period in 2005.

The operating margin percentage ~~increased~~decreased from ~~26.9%~~30.1% to ~~29.5%~~29.8% primarily due to the ~~2004 period having certain non-recurring professional fees not incurred in 2005, and due to operational efficiencies achieved in 2005 based on~~impact of the ~~growth in transactions and related increase in revenue.~~

two acquisitions which have lower operating margins.

Income from operations was ~~$13.0~~$13.5 million for the ~~third quarter of 2005~~three months ended March 2006 compared to ~~$9.1~~$11.8 million ~~in the third quarter~~as of ~~2004.~~March 31, 2005. Operating income from existing businesses increased by ~~$3.4~~$.6 million.

Data Services Segment

Three Months Ended ~~September 30, 2005~~March 31, 2006 Compared to Three Months Ended ~~September 30, 2004~~March 31, 2005

Total service revenue was ~~$22.1~~$35.9 million for the three months ended ~~September 30, 2005,~~March 31, 2006, an increase of ~~$5.4~~$17.0 million compared to service revenue of ~~$16.7~~$18.9 million in the same period of ~~2004. Acquisitions~~2005. The acquisition of a lead generation business in fourth quarter 2005 accounted for ~~$2.7~~$13.2 million of the revenue growth.

Cost of service revenue was $10.7 million for the three months ended March 31, 2006, an increase of $8.3 million compared to cost of service revenue of $2.4 million in the same period of 2005. The acquisition during the fourth quarter of 2005 accounted for substantially all of the increase in the cost of service revenue.

Salaries and benefits increased by ~~$1.2~~$2.1 million. Salaries and benefits were ~~17.7%~~16.1% of service revenue in the ~~third~~first quarter of ~~2005~~2006 compared to ~~16.4%~~19.5% in the same period of ~~2004.~~2005. The increase in expense is ~~based on~~due to additional employees brought in through acquisitions.

The percentage decrease is due to operational efficiencies achieved on the higher revenue during the first quarter of 2006.

Facilities and telecommunication expenses were comparable to the same period in ~~2004.~~2005. Facilities and telecommunication expenses were ~~2.9%~~2.0% of service revenue in the ~~third~~first quarter of ~~2005~~2006 and ~~3.2%~~3.0% in the ~~third~~first quarter of ~~2004.~~2005. The percentage decrease is primarily due to the costs remaining ~~constant.~~

constant compared to increased revenues.

Other operating expenses increased by ~~$1.2~~$1.6 million. Other operating expenses were ~~23.8%~~17.0% of service revenue in the ~~third~~first quarter of ~~2005~~2006 and ~~24.2%~~23.7% in the ~~third~~first quarter of ~~2004.~~2005. The increase is largely attributable to increased allocations from the Lender Services segment, marketing expenses, consulting fees and membership costs that are all correlated to increased revenues.

The decrease in the percentage is due to operational efficiencies achieved on the higher revenue during the first quarter of 2006.

Depreciation and amortization increased by ~~$.2~~$1.5 million due to an increase in amortization of intangible assets as a result of the acquisitions.

The operating margin percentage ~~increased~~decreased from ~~30.6%~~33.3% to ~~32.6%~~26.9%. The decrease in the operating margin is primarily due to ~~operational efficiencies achieved~~a change in ~~2005 based on~~ the ~~growth~~revenue mix of businesses in ~~transactions and related increase~~the first quarter 2006 as compared to the same period in ~~revenue.~~2005.

-22-

Income from operations was ~~$7.2~~$9.6 million for the ~~third~~first quarter of ~~2005~~2006 compared to ~~$5.1~~$6.3 million in the ~~third~~first quarter of ~~2004.~~

2005. Substantially all of the increase is related to the 2005 acquisition.

Dealer Services Segment

Three Months Ended ~~September 30, 2005~~March 31, 2006 Compared to Three Months Ended ~~September 30, 2004~~March 31, 2005

Total service revenue was ~~$29.2~~$29.6 million for the three months ended ~~September 30, 2005,~~March 31, 2006, an increase of ~~$10.8~~$10.1 million compared to service revenue of ~~$18.4~~$19.5 million in the same period of ~~2004.~~2005. The acquisition of aan automotive lead generation business during the ~~third~~second quarter of 2005 accounted for ~~$7.7~~$7.5 million of the increase and an increase in transactions accounted for the additional growth in service revenue.

Cost of service revenue was ~~$15.6~~$15.7 million for the three months ended ~~September 30, 2005,~~March 31, 2006, an increase of ~~$7.0~~$6.5 million compared to cost of service revenue of ~~$8.6~~$9.2 million in the same period of ~~2004.~~2005. The acquisition of aan automotive lead generation business during the ~~third~~second quarter of 2005 accounted for ~~$4.8~~$4.4 million of the increase, and an increase in transactions ~~and the addition of a surcharge by the three credit bureaus related to free credit reports to consumers pursuant to the FACT Act were the primary reasons~~accounted for the additional increase in the cost of service revenue.

Salaries and benefits increased by ~~$1.3~~$1.6 million. Salaries and benefits were ~~14.4%~~14.8% of service revenue in the ~~third~~first quarter of ~~2005~~2006 compared to ~~16.0%~~14.1% in the same period of ~~2004.~~2005. The increase in salaries and benefits expense

~~-23-~~

~~is due to the acquisition, and the percentage decrease~~ is primarily due to ~~operational efficiencies based on~~ the ~~increase in revenue.~~

acquisition.

Facilities and telecommunication expenses ~~decreased~~increased by ~~$.1~~$.2 million. Facilities and telecommunication expenses were ~~1.4%~~1.3% of service revenue in the ~~third~~first quarter of ~~2005~~2006 and ~~3.1%~~0.8% in the ~~third~~first quarter of ~~2004.~~2005. The ~~percentage decrease~~increase is primarily due to ~~expense reductions related to~~ the ~~relocation of certain facilities and based on the increase in revenues.~~

acquisition.

Other operating expenses increased by ~~$.7~~$1.0 million. Other operating expenses were ~~14.8%~~15.3% of service revenue in the ~~third~~first quarter of 2005 and ~~20.0%~~18.3% in the ~~third quarter~~same period of ~~2004.~~2005. The increase in other operating expenses is primarily due to the ~~acquisition.~~

acquisition, and the percentage decrease is due to operational efficiencies realized on the increase in revenues.

Depreciation and amortization increased by ~~$.2~~$.3 million due to an increase in amortization of intangible assets as a result of the acquisition.

The operating margin percentage ~~increased~~decreased from ~~11.6%~~17.4% to ~~13.6%~~13.3% primarily due to ~~operational efficiencies achieved~~the impact of the acquisition in ~~2005 based on the growth in transactions and related increase in revenue.~~

2005.

Income from operations was ~~$4.0~~$3.9 million for the ~~third quarter of 2005~~three months ended March 2006 compared to ~~$2.1~~$3.4 million for the same period in ~~the third quarter of 2004.~~2005. Operating income from existing businesses increased by ~~$3.1~~$.7 million.

Employer Services Segment

Three Months Ended ~~September 30, 2005~~March 31, 2006 Compared to Three Months Ended ~~September 30, 2004~~March 31, 2005

Total service revenue was ~~$37.7~~$39.7 million for the three months ended ~~September 30, 2005,~~March 31, 2006, an increase of ~~$5.7~~$9.8 million compared to service revenue of ~~$32.0~~$29.9 million in the same period of ~~2004.~~2005. The increase was primarily driven by ~~organic growth of 14.8% in the background screening business and~~ the addition of ~~$4.0~~$9.3 million of revenue from acquisitions.

Salaries and benefits increased by ~~$2.7~~$5.1 million. Salaries and benefits were ~~36.0%~~40.3% of service revenue in the ~~third~~first quarter of ~~2005~~2006 compared to ~~34.0%~~36.6% in the same period of ~~2004.~~2005. The number of employees has increased due to acquisitions and the growth of this segment in comparison to the same period in ~~2004.~~2005. Approximately $.5 million of the increase in expense is related to the share based compensation expense recorded for this segment in the first quarter 2006.

-23-

Facilities and telecommunication expenses increased by $.4 million. Facilities and telecommunication expenses were ~~comparable to the same period in 2004. Facilities and telecommunication expenses were 4.0%~~4.6% of service revenue in the ~~third~~first quarter of ~~2005~~2006 and ~~4.5%~~4.8% in the ~~third~~first quarter of ~~2004. The percentage decrease is primarily due to the increase in revenues.~~

2005.

Other operating expenses increased by ~~$2.2~~$2.7 million. Other operating expenses were ~~14.7%~~16.3% of service revenue in the ~~third~~first quarter of ~~2005~~2006 and ~~10.4%~~12.8% for the same period of ~~2004. Efforts~~2005. The increase in other operating expenses is due to ~~execute~~costs incurred in integrating and consolidating operations, product and geographic expansion and cross ~~sell, consolidation and integration strategies increased travel, telecommunication, lease equipment and outside labor expenses.~~

selling initiatives.

Depreciation and amortization increased by ~~$.3~~$.5 million ~~mostly~~primarily due to the addition of intangible assets related to the acquisitions.

The operating margin percentage decreased from ~~12.0%~~7.8% to ~~9.4%~~5.9% primarily due to a greater increase in operating expense quarter over quarter versus the increase in revenue.

Income from operations was ~~$3.6 million for~~comparable to the ~~third quarter of 2005 compared to $3.8 million~~same period in ~~the third quarter of 2004.~~2005.

~~-24-~~

Multifamily Services Segment

Three Months Ended ~~September 30, 2005~~March 31, 2006 Compared to Three Months Ended ~~September 30, 2004~~March 31, 2005

Total service revenue was ~~$17.5~~$16.7 million for the three months ended ~~September 30, 2005,~~March 31, 2006, an increase of ~~$1.8~~$2.2 million compared to service revenue of ~~$15.7~~$14.5 million in the same period of ~~2004.~~2005. The ~~majority of the~~ increase is derived from organic growth of ~~10.0%~~7.3% and ~~one recent acquisition~~two acquisitions in the ~~third quarter.~~second half of 2005. The organic growth is driven by ~~cross sell opportunities~~expanded market share and ~~the~~an increase in ~~criminal products.~~

products and services.

Salaries and benefits increased by ~~$.7~~$1.9 million. Salaries and benefits were ~~34.6%~~41.2% of service revenue for the ~~third~~first quarter of ~~2005~~2006 compared to ~~33.8%~~34.6% of service revenue in the same period of ~~2004.~~2005. This is ~~reflective~~primarily due to an increase in employees as a result of ~~the increased~~acquisitions and product expansion, and share based compensation ~~packages in the form of increased bonus and commission plans.~~

expense.

Facilities and telecommunication expenses ~~were~~are comparable to the same period ~~in 2004.~~of 2005. Facilities and telecommunication expenses were ~~4.6%~~5.4% of service revenue in the ~~third~~first quarter of ~~2005~~2006 and ~~5.0%~~5.8% in the ~~third~~first quarter of ~~2004. The decrease is primarily due to expenses being constant.~~

2005.

Other operating expenses increased by ~~$.6~~$.5 million and were ~~17.3%~~18.1% of service revenue in the ~~third~~first quarter of ~~2005~~2006 compared to ~~15.4%~~17.5% in the same period of ~~2004.~~2005. This increase was primarily due to an increase in professional fees and ~~branding expenses.~~

leased equipment related to the growth of the segment and increased regulatory costs.

Depreciation and amortization is comparable to the same period of ~~2004.~~2005. Depreciation and amortization was ~~5.8%~~6.8% of service revenue in the ~~third~~first quarter of ~~2005~~2006 compared to ~~6.8%~~7.0% in the same period of ~~2004. This decrease, as a percent~~2005. Amortization of ~~service revenue, is primarily~~intangibles increased due to ~~costs remaining stable.~~

acquisitions, offset by a decrease in depreciation from fully depreciated fixed assets.

The operating margin percentage decreased from ~~28.6%~~25.2% to ~~27.5%~~19.2% due to ~~some one-time charges related to legal fees and branding expenses~~costs incurred in ~~the third quarter of 2005.~~

connection with product expansion, primarily property management software.

Income from operations was ~~$4.8~~$3.2 million in the ~~third~~first quarter of ~~2005~~2006 compared to income from operations of ~~$4.5~~$3.7 million in the same period of ~~2004.~~2005.

-24-

Investigative and Litigation Services Segment

Three Months Ended ~~September 30, 2005~~March 31, 2006 Compared to Three Months Ended ~~September 30, 2004~~March 31, 2005

Total service revenue was ~~$8.2~~$15.0 million for the three months ended ~~September 30, 2005,~~March 31, 2006, an increase of ~~$1.4~~$8.0 million compared to service revenue of ~~$6.8~~$7.0 million in the same period of ~~2004.~~2005. The increase is predominantly driven by the three 2005 acquisitions in this segment.

Salaries and benefits increased by ~~$.8~~$3.5 million. Salaries and benefits were ~~33.0%~~39.1% of service revenue in the ~~third~~first quarter of ~~2005~~2006 compared to ~~28.9%~~34.1% in the same period of ~~2004.~~2005. The increases are mainly due to the ~~acquisitions.~~

acquisitions and the related increase in employees.

Facilities and telecommunication expenses ~~were comparable to the same period in 2004.~~increased by $.2 million. Facilities and telecommunication expenses were ~~3.6%~~2.8% of service revenue in the first quarter of 2006 and 3.4% in the first quarter of 2005. The increase in expense is predominantly driven by the three 2005 acquisitions in this segment. The decrease, as a percentage of sales, is due to operational efficiencies realized on increased revenues.

Other operating expenses increased by $1.1 million. Other operating expenses were 12.2% of service revenue in the first quarter of 2006 and 10.2% for the same period of 2005. The increase is predominantly driven by the three 2005 acquisitions in this segment.

Depreciation and amortization increased by $.4 million. The increase is due to the increase in acquisition related intangibles.

The operating margin percentage increased from 2.6% to 20.4%. The increase in margin is primarily due to the acquisition, in the third quarter of 2005, ~~and 3.9% in the third quarter~~ of ~~2004.~~

~~Other operating expenses increased by $.5 million. Other operating expenses were 12.7% of service revenue in the third quarter of 2005 and 8.2% for the same period of 2004.~~

~~Depreciation and amortization is comparable~~an investigative business that concentrates on higher margin electronic discovery services as opposed to ~~the same period in 2004.~~surveillance services.

~~The operating margin percentage decreased from 9.0% to 4.3%.~~

~~-25-~~

Income from operations was ~~$.4~~$3.1 million for the ~~third~~first quarter of ~~2005~~2006 compared to ~~$.6~~$.2 million compared to income from operations in the period of ~~2004.~~

2005. The increase in operating income is primarily due to the acquisition of an electronic discovery business in third quarter.

Corporate

Three Months Ended ~~September 30, 2005~~March 31, 2006 Compared to Three Months Ended ~~September 30, 2004~~March 31, 2005

Corporate costs and expenses represent primarily compensation and benefits for senior management, administrative staff, technology personnel and their related expenses in addition to an administrative fee paid to First American. Additional costs were incurred for the increased level of professional fees for audit related services, Sarbanes Oxley compliance, and increased staffing in the technology and legal departments to support corporate growth. The corporate expenses were ~~$4.7~~$8.5 million in the ~~third~~first quarter of ~~2005~~2006 compared to expenses of ~~$3.0~~$3.1 million in the same period of ~~2004. Corporate branding costs~~2005. Approximately $4.3 million is due to an increase in salaries and benefits, of ~~$.3~~which, approximately $1.5 million ~~were incurred~~is share based compensation expense recorded in 2006 related to the ~~third quarter.~~

adoption of SFAS 123R.

Consolidated Results

Three Months Ended ~~September 30, 2005~~March 31, 2006 Compared to Three Months Ended ~~September 30, 2004~~March 31, 2005

Consolidated service revenue for the three months ended ~~September 30, 2005~~March 31, 2006 was ~~$157.8~~$181.2 million, an increase of ~~$34.9~~$53.1 million compared to service revenue of ~~$122.9~~$128.1 million in the same period in ~~2004.~~2005. Acquisitions accounted for ~~$21.2~~$45.3 million of the increase.

Salaries and benefits were ~~29.6%~~32.4% of service revenue for the three months ended ~~September 30, 2005~~March 31, 2006 and ~~30.1% compared to~~30.7% for the same period in ~~2004.~~2005. The increase is related to additional employees added through acquisitions and company growth. In addition, approximately $2.9 million in expense was recorded for share based compensation in first quarter 2006.

-25-

Facilities and telecommunication increased by ~~$.9~~$2.1 million compared to the same period in ~~2004.~~2005. Facilities and telecommunication expenses were 3.9% of service revenue in the ~~third~~first quarter of ~~2005~~2006 and ~~4.3% in the third quarter of 2004.~~2005. The ~~percentage decrease~~additional expense is ~~primarily~~ due to acquisitions and the ~~increase in revenues.~~

new corporate facilities.

Other operating expenses increased by $7.2 million compared to the same period in 2005. Other operating expenses were ~~12.8%~~12.4% of service revenue for the three months ended ~~September 30, 2005~~March 31, 2006 and ~~12.3%~~12.0% compared to the same period for ~~2004.~~2005. The increase is primarily related to increased marketing fees related to revenue and an increase in professional fees in the ~~third~~first quarter of ~~2005~~2006 related to temporary labor, legal fees and ~~Sarbanes Oxley compliance fees.~~

costs related to regulatory compliance.

Depreciation and amortization increased by ~~$.8~~$3.5 million due to an overall increase in amortization of intangible assets as a result of acquisitions and asset additions related to ~~database assets.~~

the new corporate facilities.

The consolidated operating margin was ~~17.8%~~15.0% for the three months ended ~~September 30, 2005~~March 31, 2006, compared to ~~18.2%~~19.2% for the same period in ~~2004.~~2005. The ~~increase~~decrease is due to the change in the mix of margins related to the acquired businesses, ~~and~~the additional share based compensation expense, the additional facilities expense, offset by efficiencies realized from consolidating operations and leveraging vendor relationships.

Income from operations was ~~$28.1~~$27.2 million for the three months ended ~~September 30, 2005~~March 31, 2006 compared to ~~$22.3~~$24.6 million for the same period in ~~2004.~~2005. The increase of ~~$5.8~~$2.6 million is comprised of an increase in operating income of ~~$3.8~~$1.7 million in Lender Services, ~~$2.1~~$3.4 million in Data Services, ~~$1.8~~$.5 million in Dealer Services and ~~$.3~~$2.9 million in ~~Multifamily~~Investigative and Litigation Support Services offset by decreases in operating income ~~of $.2~~$.5 million at ~~Employer Services and $.2 million at Investigative and Litigation~~Multifamily Services and an increase of corporate expenses of ~~$1.8~~$5.4 million.

~~-26-~~

~~Lender Services Segment~~

~~Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004~~

Total service revenue was $129.0 million for the nine months ended September 30, 2005, an increase of $25.5 million compared to service revenue of $103.5 million in the same period of 2004. The acquisition of a mortgage credit reporting business during the first quarter of 2005 accounted for $10.3 million of the increase, and an increase in transactions accounted for the additional growth in service revenue.

Cost of service revenue was $41.8 million for the nine months ended September 30, 2005, an increase of $11.8 million compared to cost of service revenue of $30.0 million in the same period of 2004. The acquisition of a mortgage credit reporting business during the first quarter of 2005 accounted for $4.2 million of the increase, and an increase in transactions and the addition of a surcharge by the three credit bureaus related to free credit reports to consumers pursuant to the FACT Act were the primary reasons for the additional increase in the cost of service revenue.

Salaries and benefits increased by $5.2 million. Salaries and benefits were 29.3% of service revenue in September 2005 compared to 31.5% in the same period of 2004. Salaries and benefits expense increased $2.4 million due to the acquisition, and the percentage decrease is primarily due to operational efficiencies based on the increased transaction volume and related increase in revenue.

Facilities and telecommunication expenses increased by $.2 million. Facilities and telecommunication expenses were 4.1% of service revenue in September 2005 compared to 4.9% in the same period of 2004. The percentage decrease is primarily due to the increase in revenues.

Other operating expenses increased by $2.1 million. Other operating expenses were 1.2% of service revenue for the nine months ended September 2005. The change is primarily due to the acquisition which increased other operating expenses by $1.5 million and due to an increase of $.6 million in an allocation from First American prior to the consummation of the CIG merger.

Depreciation and amortization decreased by $.4 million due primarily to the decision to lease rather than purchase most equipment since the third quarter of 2001, as partially offset by an increase in amortization of intangible assets as a result of the acquisition.

The operating margin percentage decreased from 30.0% to 29.2% primarily due to the impact of the acquisition which decreased operating margins to a greater extent than the operational efficiencies gained from the higher revenue within the existing business.

Income from operations was $37.6 million for the nine months ended September 2005 compared to $31.0 million in the same period of 2004. Operating income from existing businesses increased by $5.7 million.

~~Data Services Segment~~

~~Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004~~

Total service revenue was $61.9 million for the nine months ended September 30, 2005, an increase of $5.1 million compared to service revenue of $56.8 million in the same period of 2004. Two acquisitions in this segment were the primary reason for the revenue growth, along with strong organic growth in the consumer location and subprime credit businesses.

Salaries and benefits increased by $2.5 million. Salaries and benefits were 18.1% of service revenue for the nine months ended September 30, 2005 compared to 15.2% in the same period of 2004. The percentage increase is primarily due to the acquisitions.

~~-27-~~

~~Facilities and telecommunication expenses increased by $.2 million. Facilities and telecommunication expenses were 3.0% of service revenue in 2005 compared to 2.9% in the same period of 2004.~~

Other operating expenses decreased by $5.5 million. Other operating expenses were 23.6% of service revenue in 2005 and 35.3% compared to the same period at 2004. The decrease is primarily due to a $2.1 million year- to-date reduction in advertising costs related to its credit monitoring membership product in 2005 and a non-recurring expense of $5.1 incurred during the second quarter of 2004 based on payment of $3.0 million to settle a lawsuit and a $2.1 million write-off of the carrying value of the related limited liability company’s stock, offset by increases in operating cost related to increased revenues and acquisitions.

~~Depreciation and amortization increased by $.5 million due to an increase in amortization of intangible assets as a result of the acquisitions and additions to the databases.~~

The operating margin percentage increased from 15.0% to 33.9% primarily due to operating efficiencies at all the businesses and also the acquisitions, which generate higher operating margin levels than the existing companies. In addition, there was $5.1 million of non-recurring expenses in 2004 for the membership business.

~~Income from operations was $21.0 million for the third quarter of 2005 compared to $8.5 million in the third quarter of 2004.~~

~~Dealer Services Segment~~

~~Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004~~

Total service revenue was $72.3 million for the nine months ended September 30, 2005, an increase of $19.3 million compared to service revenue of $53.0 million in the same period of 2004. The acquisition of a lead generation business during the second quarter of 2005 accounted for $10.6 million of the increase, and an increase in transactions accounted for the additional growth in service revenue.

Cost of service revenue was $36.8 million for the nine months ended September 30, 2005, an increase of $12.4 million compared to cost of service revenue of $24.4 million in the same period of 2004. The acquisition of a lead generation business during the second quarter of 2005 accounted for $6.3 million of the increase, and an increase in transactions and the addition of a surcharge by the three credit bureaus related to free credit reports to consumers pursuant to the FACT Act were the primary reasons for the additional increase in the cost of service revenue.

Salaries and benefits increased by $2.0 million. Salaries and benefits were 14.4% of service revenue in 2005 compared to 15.9% in the same period of 2004. Salaries and benefits expense increased $2.4 million due to the acquisition, and the percentage decrease is primarily due to operational efficiencies based on the increase in revenue.

Facilities and telecommunication expenses decreased by $.6 million. Facilities and telecommunication expenses were 1.2% of service revenue in 2005 compared to 2.8% in the same period of 2004. The percentage decrease is primarily due to expense reductions related to the relocation of certain facilities and based on the increase in revenues.

Other operating expenses increased by $1.1 million. Other operating expenses were 16.7% of service revenue in 2005 compared to 20.6% in the same period of 2004. The increase in 2005 is primarily due to the acquisition.

~~Depreciation and amortization increased by $.5 million due primarily to an increase in amortization of intangible assets as a result of the acquisition.~~

~~-28-~~

~~The operating margin percentage increased from 12.6% to 14.6% primarily due to operational efficiencies achieved in 2005 based on the growth in transactions and related increase in revenue.~~

Income from operations was $10.5 million for the nine months ended September 2005 compared to $6.7 million in the same period of 2004. Operating income from existing businesses increased by $3.8 million.

~~Employer Services Segment~~

~~Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004~~

Total service revenue was $104.5 million for the nine months ended September 30, 2005, an increase of $19.8 million compared to service revenue of $84.7 million in the same period of 2004. The increase is primarily due to acquisitions of the tax incentive and background screening companies in this segment. Acquisitions accounted for $16.4 million of the revenue growth on a year-to-date basis.

Salaries and benefits increased by $8.4 million. Salaries and benefits were 35.6% of service revenue in 2005 compared to 34.0% in the same period of 2004. The increase is primarily due to the increase of employees due to the acquisitions.

Facilities and telecommunication expenses increased by $.3 million. Facilities and telecommunication expenses were 4.4% of service revenue in 2005 compared to 5.1% in the same period of 2004. The percentage decrease is primarily due to expense reductions related to the relocation of certain facilities and based on the increase in revenues.

Other operating expenses increased by $4.8 million. Other operating expenses were 13.8% of service revenue in 2005 and 11.4% for the same period of 2004. The increase is due to increased travel, leased equipment expense, and the duplication of staff and temporary employee costs required during the transition to lower cost facilities.

~~Depreciation and amortization increased by $.7 million due to amortization of customer lists and non-compete agreements at the newly acquired entities.~~

The operating margin percentage of service revenue increased from 8.1% to 10.1% primarily due to the higher operating margins in the acquired businesses and negotiated discounts to reduce expense through consolidation and increased volumes.

Income from operations was $10.6 million for the nine months ended 2005 compared to $6.8 million for the same period in 2004. This increase is due to the addition of profitable acquisition companies and solid organic revenue growth in the background screening group.

~~Multifamily Services Segment~~

~~Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004~~

Total service revenue was $49.1 million for the nine months ended September 30, 2005, an increase of $7.3 million compared to service revenue of $41.8 million in the same period of 2004. Revenue increased by $6.5 million at businesses owned in the third quarter of 2004. The growth rate of 15.6%, excluding acquisitions, is due to expanded market share and an increase in products and services.

~~-29-~~

Salaries and benefits increased by $1.2 million. Salaries and benefits were 33.9% of service revenue in 2005 compared to 27.3% of service revenue in the same period of 2004. This increase reflects the increased compensation packages and increased personnel from acquisitions.

~~Facilities and telecommunication expenses increased by $.4 million. Facilities and telecommunication expenses were 5.0% of service revenue in 2005 compared to 4.9% in the same period of 2004.~~

~~Other operating expenses increased by $1.2 million and were 16.2% of service revenue in 2005 compared to 16.3% in the same period of 2004.~~

~~Depreciation and amortization increased by $.3 million. Depreciation and amortization was 6.1% of service revenue in 2005 compared to 6.5% in the same period of 2004.~~

~~The operating margin percentage of service revenue increased from 23.9% to 28.8% primarily as a result of efficiencies realized from consolidating operations and leveraging vendor relationships.~~

Income from operations was $14.2 million for the nine months ended September 30, 2005 compared to income from operations of $10.0 million in the same period of 2004. The increase was a direct result of organic revenue growth and an increase in higher margin revenue products.

~~Investigative and Litigation Services Segment~~

~~Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004~~

Total service revenue was $23.1 million as of September 30, 2005, an increase of $4.4 million compared to service revenue of $18.7 million in the same period of 2004. The increase is due to acquisition.

Salaries and benefits increased by $2.7 million. Salaries and benefits were 33.9% of service revenue in 2005 compared to 27.3% in the same period of 2004. The increases are primarily due to the increase in employees related to the acquisitions.

~~Facilities and telecommunication expenses increased by $.2 million. Facilities and telecommunication expenses were 3.5% of service revenue in 2005 compared to 3.4% in 2004.~~

~~Other operating expenses increased by $.9 million. Other operating expenses were 11.4% of service revenue in 2005 and 9.0% for the same period of 2004.~~

~~Depreciation and amortization increased by $.4 million, mainly due to the amortization of customer lists.~~

~~The operating margin percentage increased from 3.3% to 4.5% mainly due to increased revenues with higher gross margins compared to the same period in 2004.~~

~~Income from operations was $1.0 million for the nine months ended September 30, 2005 compared to $.6 million in the same period of 2004.~~

~~Corporate~~

~~Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004~~

Corporate costs and expenses represent primarily compensation and benefits for senior management, administrative staff, technology personnel and their related expenses in addition to an administrative fee paid to First American. Additional costs were incurred for the increased level of professional fees for audit related services, Sarbanes Oxley compliance and increased staffing in the technology and legal departments to support corporate growth. The corporate expenses were $17.0 million in the nine months ended September 30, 2005 compared to expenses of $7.6 million in the same period of 2004. The current year increase was impacted by the following one-time expenses; (a) $3.2 million related to CIG acquisition costs; (b) $2.0 million related to relocation expenses; and (c) $.6 million related to launching the Company’s branding initiative.

~~-30-~~

~~Consolidated Results~~

~~Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004~~

Consolidated service revenue for the Nine Months Ended September 30, 2005 was $437.0 million, an increase of $80.5 million compared to service revenue of $356.5 in the same period in 2004. Acquisitions accounted for $51.7 million of the increase.

~~Salaries and benefits were 29.8% of service revenue for the nine months ended September 30, 2005 and 29.7% compared to the same period in 2004.~~

Facilities and telecommunication expenses increased by $3.3 million. Facilities and telecommunication expenses were 4.3% of service revenue year to date September 2005 compared to 4.4% in the same period of 2004.

Other operating expenses were 13.2% of service revenue for the nine months ended September 30, 2005 and 13.7% compared to the same period for 2004. The decrease is primarily due to increased revenue levels greater than operating expense levels.

~~Depreciation and amortization increased by $2.0 million due to an overall increase in amortization of intangible assets as a result of acquisitions and additions to database assets.~~

The consolidated operating margin was 17.8% for the nine months ended September 30, 2005 compared to 15.7% for the same period in 2004. The increase is due to the change in the mix of operating margins related to the acquired businesses, and efficiencies realized from consolidating operations and leveraging vendor relationships and internal databases, along with the offset of the 2004 non-recurring expense of $5.1 million related to the membership services and the 2005 non-recurring expenses of $6.0 million related to acquisition costs, relocations, consolidations and branding.

Income from operations was $77.8 million for the nine months ended September 30, 2005 compared to $56.0 million for the same period in 2004. The increase of $21.8 million is comprised of an increase in operating income across the segments that is comprised of $6.6 million in Lender Services, $12.4 million in Data Services, $3.9 million in Dealer Services, $3.7 million in Employer Services, $4.2 million in Multifamily service, $.4 million in Investigative and Litigation Support Services and an increase of corporate expenses of $9.4 million.

Liquidity and Capital Resources

The Company’s primary source of liquidity is cash flow from operations and amounts available under credit lines the Company has established with a ~~bank syndication.~~bank. As of ~~September 30, 2005,~~March 31, 2006, cash and cash equivalents were ~~$17.4~~$24.8 million.

Net cash provided by operating activities was $21.4 million compared to cash provided by operating activities of $6.6 million for the three months ended March 31, 2006 and 2005, respectively.

Cash provided by operating activities ~~was $41.1 million and $29.3 million for the nine months ended September 30, 2005 and 2004, respectively.~~

~~Cash provided from operating activities~~ increased ~~$11.8~~by $14.8 million from the ~~nine months ended September 30,~~first quarter of 2005 ~~compared~~ to the ~~same period in 2004,~~first quarter of 2006 while net income was ~~$42.7~~$12.7 million ~~for~~in the ~~nine months ended September 30, 2005~~first quarter of 2006 and ~~$32.8~~$14.0 million for the same period in ~~2004.~~2005. The increase in cash provided by operating activities was primarily ~~comprised of~~due to the shared based compensation recorded in 2006, an increase in ~~net income of $9.9 million,~~tax liabilities, an increase in ~~current~~accrued compensation and ~~deferred income tax of $28.8 million,~~other liabilities, and an increase in depreciation and amortization, offset by ~~a decrease~~payments made for accrued liabilities, and an increase in ~~goodwill and other assets of $26.1 million.~~accounts receivable.

~~-31-~~

Cash used in investing activities was ~~$33.9~~$13.5 million and ~~$53.8~~$1.4 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2006 and 2005, ~~and 2004,~~ respectively. ~~For~~In the ~~nine months ended September 30, 2005,~~first quarter of 2006, net cash in the amount of ~~$31.0~~$7.9 million was used for acquisitions compared to $2.5 million in 2005. Purchases of property and ~~$50.0~~equipment were $6.0 million in the first quarter of 2006 compared to $3.4 million in the same period of ~~2004. Purchases of property and equipment were $10.7~~2005.

Cash used in financing activities was $11.4 million for the ~~nine~~three months ended ~~September 30, 2005~~March 31, 2006, compared to ~~$5.8~~$3.2 million for the three months ended March 31, 2005. In the first quarter of 2006, proceeds from existing credit facilities were $5.6 million compared to $11.5 million in 2005. Repayment of debt was $17.7 million in the first quarter of 2006 and $9.9 million in the same period of ~~2004.~~

Cash provided by financing activities was $.2 million for the nine months ended September 30, 2005 compared to cash provided by financing of $23.0 million for the nine months ended September 30, 2004. For the nine months ended September 30, 2005, proceeds from existing credit facilities with a bank syndication were $114.0 million and $57.0 million in the same period of 2004. Repayment of debt was $95.2 million for the nine months ended September 30, 2005 and $18.3 million in the same period of 2004. Proceeds from Class A shares issued in connection with the stock option plan and employee stock purchase plan were $3.7 million and $3.5 million for the nine months ended September 30, 2005 and 2004, respectively. The CIG business made a cash distribution to First American of $22.0 million prior to acquisition during 2005.

~~At September 30, 2005 the Company had unused lines of credit of $150.5 million.~~

First Advantage filed a new Registration Statement with the Securities and Exchange Commission for the issuance of up to ~~4,000,000~~5,000,000 shares of our Class A common stock, par value $.001 per share, from time to time as full or partial consideration for the acquisition of businesses, assets or securities

-26-

of other business entities. The Registration Statement was declared effective on ~~July 14, 2003.~~January 9, 2006. A total of ~~2,786,762 of the 4,000,000~~356,305 shares were issued for acquisitions as of ~~September 30, 2005.~~

March 31, 2006.

First Advantage filed a Registration Statement with the Securities and Exchange Commission for the issuance of up to 2,000,000 shares of our Class A common stock, par value $.001 per share, from time to time for general corporate purposes. The Registration Statement was declared effective on January 3, 2005. No shares have been issued as of ~~September 30, 2005.~~March 31, 2006.

On September 29, 2005, the Company executed a revolving credit agreement, with a bank syndication (the “Credit Agreement”). Borrowings available under the Credit Agreement total up to $225 million. The Credit Agreement includes a $10 million sub-facility for the issuance of letters of credit and up to a $5 million swing loan facility. The credit facility maturity date is September 28, 2010.

~~At September 30, 2005, the Company was in compliance with the financial covenants of its loan agreement.~~

~~-32-~~

In ~~2005,~~2006, First Advantage seeks to acquire other businesses as part of its growth strategy. The Company will continue to evaluate acquisitions in order to achieve economies of scale, expand market share and enter new markets. The extent of future acquisitions, however, is dependent upon the availability of capital and liquidity to fund such acquisitions.

While uncertainties within the Company’s industry exist, management is not aware of any trends or events likely to have a material adverse effect on liquidity or the accompanying financial statements. The Company believes that, based on current levels of operations and anticipated growth, the Company’s cash flow from operations, together with available sources of liquidity, will be sufficient to fund operations, ~~fund~~ anticipated capital expenditures, make required payments of principal and interest on debt, and satisfy other long-term contractual commitments. However, any material adverse change in our operating results from our business plan, or acceleration of existing debt obligations or in the amount of investment in acquisitions, technology or products could require the Company to seek other funding alternatives including raising additional capital.

The following is a schedule of long-term contractual commitments, as of ~~September 30, 2005~~March 31, 2006, over the periods in which they are expected to be paid.


	2005		2006		2007		2008		2009		Thereafter		Total
In thousands															2006		2007		2008		2009		2010		Thereafter		Total
Advertising commitments	$	230,000	$	525,000	$	—	$	—	$	—	$	—	$	755,000	$	300	$	—	$	—	$	—	$	—	$	—	$	300
Minimum contract purchase commitments		568,000		1,587,000		1,029,000		1,040,000		290,000		—		4,514,000		2,274		2,494		2,259		195		195		—		7,417
Operating leases		4,346,000		16,025,000		13,182,000		10,316,000		8,479,000		26,812,000		79,160,000		14,872		16,441		13,026		10,208		7,784		25,074		87,405
Long-term debt and capital leases		5,631,000		30,189,000		9,787,000		6,764,000		20,000		74,502,000		126,893,000
Interest payments related to long-term debt (1)		1,568,000		5,504,000		4,437,000		4,132,000		3,900,000		2,925,000		22,466,000
Debt and capital leases																21,607		18,844		15,207		6,461		147,360		—		209,479
Interest payments related to debt (1)																9,053		10,872		9,927		9,165		6,568		—		45,585

Total	$	12,343,000	$	53,830,000	$	28,435,000	$	22,252,000	$	12,689,000	$	104,239,000	$	233,788,000	$	48,106	$	48,651	$	40,419	$	26,029	$	161,907	$	25,074	$	350,186

(1)	Estimated interest payments are calculated assuming current interest rates over minimum maturity periods specified in debt agreements.

~~-33-~~-27-

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s risk since filing its Form 10-K for the year ended December 31, ~~2004.~~2005.

~~-34-~~-28-

Item 4.

Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, have concluded that, as of the end of the fiscal quarter covered by this report on Form 10-Q, the Company’s disclosure controls and procedures were effective to provide reasonable assurances that information required to be disclosed in the reports filed or submitted under such Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There was no change in the Company’s internal control over financial reporting during the quarter ended ~~September 30, 2005~~March 31, 2006 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

First Advantage’s subsidiaries are involved in litigation from time to time in the ordinary course of their businesses. ~~We do~~The Company does not believe that the outcome of any pending or threatened litigation involving these entities will have a material adverse effect on our financial position, operating results or ~~operating results.~~

cash flows.

A subsidiary of the Company is a defendant in a class action lawsuit that is pending in federal court in New York. The plaintiffs allege that our subsidiary, directly and through its agents, violated the Fair Credit Reporting Act, New York’s Fair Credit Reporting Act and New York’s Deceptive Practices Act by failing to use reasonable procedures to ensure the maximum possible accuracy when issuing tenant reports. The action seeks injunctive and declaratory relief, compensatory, punitive and statutory damages, plus attorneys’ fees and costs.

The Company does not believe that the ultimate resolution of this action will have a material adverse affect on its financial condition, results of operations or cash flows.

Two subsidiaries are defendants in separate class action lawsuits that are pending in state court in California. The plaintiffs in both cases allege that our subsidiaries, directly and through their agents, violated the California Consumer Credit Reporting Agencies Act and California Business and Professions Code by failing to use reasonable procedures to ensure the maximum possible accuracy when issuing tenant reports. The actions seek injunctive relief, an accounting, restitution, statutory damages, interest, punitive damages and attorneys’ fees and costs. The Company does not believe that the ultimate resolution of these actions will have a material adverse affect on its financial condition, results of operations or cash flows.

Item 1A.

Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s Form 10-K for Fiscal Year Ending December 31, 2005.

A subsidiary of the Company is involved in a class action lawsuit that is pending in state court in California. The plaintiff in this case alleges that our subsidiary violated the California Consumer Credit Reporting Agencies Act by failing to use reasonable

~~-35-~~-29-

procedures to ensure the maximum possible accuracy when issuing a background report and, in particular, by failing to provide a written disclaimer on the background report regarding its accuracy. The action seeks statutory damages, actual damages, and attorney’s fees.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

~~In connection~~On March 23, 2006, the Company issued 1,650,455 shares of its Class B common stock to FADV Holdings LLC, a subsidiary of First American. The issuance of the Class B common stock was in accordance with the ~~September 14, 2005 acquisition~~Master Transfer agreement with First American for the purchase of its Credit Information Group ~~(CIG)~~(“CIG”), which included the purchase of First American’s minority interest in DealerTrack Holdings, Inc. (“DealerTrack”). The ~~First American Corporation,~~Master Transfer agreement required the Company ~~amended its Certificate of Incorporation. Prior to the amendment, the Company was authorized~~ to issue ~~up to 75,000,000 shares of Class A common stock, 25,000,000~~additional shares of Class B common stock to First American in the event that DealerTrack consummated an initial public offering of its stock before the second anniversary of the closing of the CIG acquisition and ~~1,000,000 shares~~the value of ~~preferred stock~~the minority interest in DealerTrack exceeded $50 million. The ~~amendment authorized~~initial public offering was completed by DealerTrack on December 16, 2005. The Master Transfer agreement required the Company to issue upthe number of shares equal to ~~125,000,000 shares~~the quotient of ~~Class A common stock,~~(x) 50% of the amount by which ~~is entitled to one vote~~the value of the DealerTrack interest exceeds $50 million (based on the average closing price per share ~~75,000,000~~of DealerTrack’s stock over the 60 business day period beginning on the fifth business day after the completion of its initial public offering), divided by (y) $20.50.

In issuing these shares, of Class B common stock, which is entitled to ten votes per share, and up to 1,000,000 shares of preferred stock. On September 14, 2005, FADV Holdings LLC, a wholly-owned subsidiary of The First American Corporation (“First American”) received Class B shares representing approximately 80%the Company relied on exemptions from registration under Section 4(2) of the ~~total issued~~Securities Act of 1933 and ~~outstanding common stock~~Rule 506 promulgated pursuant to the Securities Act of ~~the Company on such date.~~1933.

Item 3.

Defaults ~~upon~~Upon Senior Securities

None

Item 4.

Submission of Matters to a Vote of Security Holders

On September 13, 2005, the Company held its annual shareholders meeting at which four matters were submitted to its shareholders for approval. Proposal one, approval of the acquisition of CIG, was approved by 3,025,310 shares of Class A common stock (without giving effect to common stock held by First American, and its affiliates, Don Robert or Company’s management) which constituted a majority of Class A shares voting by proxy or in person, and 19,089,552 shares of all Company common stock outstanding, which constituted a majority of all common stock voting by proxy or in person. Proposal two, approval of the amendment to the Company’s certificate of incorporation, was approved by 4,902,299 shares of Class A common, which constituted a majority of Class A shares issued and outstanding, of which 4,865,343 were comprised of a majority of Class A shares issued and outstanding (without giving effect to common stock held by First American, its affiliates, Don Robert or Company’s management), and 16,027,286 shares of Class B common stock, which constituted 100 percent of Class B shares issued and outstanding. The total number of common shares voting in favor of proposal two was 20,929,585, which constituted a majority of all common shares issued and outstanding. Proposal three, election of the directors nominated to serve for the ensuing year, was approved by a plurality of shareholders, and a tabulation of the results of voting with respect to each nominee is listed in the table below. Proposal four, approval of the amendment to the 2003 incentive plan was approved by 18,893,444 shares of Company common stockholders, voting together as one class, which constituted a majority of all common stock voting by proxy or in person.None

~~-36-~~

   Shares Voted
Name of Nominee
   Eligible
for Voting
   Voted
   YES
   Withhold
Parker Kennedy
   168,149,018    167,575,691    167,491,785    83,906
John Long
   168,149,018    167,575,691    167,563,586    12,105
J. David Chatham
   168,149,018    167,575,691    167,491,765    83,926
Barry Connelly
   168,149,018    167,575,691    167,491,765    83,926
Lawrence Lenihan
   168,149,018    167,575,691    167,522,782    52,909
Donald Nickelson
   168,149,018    167,575,691    167,563,646    12,045
Donald Robert
   168,149,018    167,575,691    166,407,072    1,168,619
Adelaide Sink
   168,149,018    167,575,691    167,563,666    12,025
David Walker
   168,149,018    167,575,691    167,422,493    153,198

Item 5.

Other Information

~~None.~~None

Item 6.

Exhibits

(a)

Exhibits


~~2.1~~		Amended and Restated Master Transfer Agreement among The First American Corporation, First American Real Estate Services, Inc., First American Real Estate Solutions, LLC, FADV Holdings LLC, and First Advantage Corporation, dated as of June 22, 2005

~~2.2~~		~~Contribution Agreement among The First American Corporation, First American Real Estate Services, Inc., FADV Holdings LLC, and First Advantage Corporation, dated as of September 14, 2005~~

~~2.3~~		~~Contribution Agreement among First American Real Estate Solutions, LLC, FADV Holdings LLC, and First Advantage Corporation, dated as of September 14, 2005~~

~~3.1~~		~~Certificate of Amendment to the First Amended and Restated Certificate of Incorporation of First Advantage Corporation~~

10.1		~~Amended and Restated Services~~Amendment to Stockholders’ Agreement ~~between The First American Corporation and First Advantage Corporation, dated as of September 14, 2005~~

~~10.2~~		~~Outsourcing Agreement between First American Real Estate Solutions, LLC and First Advantage Corporation, dated as of September 14, 2005~~

~~10.3~~		~~First Advantage 2003 Incentive Compensation Plan, Amended and Restated as of September 14, 2005~~

~~-37-~~


~~10.4~~		~~Subordinated Promissory Note, made September 14, 2005, by First Advantage Corporation to the order of The First American Corporation~~

~~10.5~~		~~Office Lease by and between First American Title Insurance Company and First Advantage Corporation, dated as of September 14, 2005~~

~~10.6~~		Credit Agreement, dated as of September 28, 2005, among First Advantage Corporation as the Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender And L/C Issuer, LaSalle Bank National Association, as Syndication Agent, Wachovia Bank, National Association and Suntrust Bank, as Co-Documentation Agents and the Other Lenders Party Hereto

~~10.7~~		~~Pledge Agreement, dated as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent~~

~~10.8~~		~~Security Agreement, dated as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent.~~

~~10.9~~		~~Subsidiary Guaranty Agreement as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent.~~

~~10.10~~		~~Note, dated September 28, 2005, made by First Advantage in favor of LaSalle Bank National Association~~

~~10.11~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of Wachovia Bank, National Association~~

~~10.12~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of Suntrust Bank~~

~~10.13~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of U.S. Bank National Association~~

~~10.14~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of Commerzbank AG, New York and Grand Cayman Branches~~

~~10.15~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor Regions Bank~~

~~-38-~~


31.1		Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

-30-



	31.2	Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1	Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2	Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~99.1~~	~~Reimbursement Agreement entered into October 11. 2005 between The First American Corporation and First Advantage Corporation~~

~~99.2~~	~~Amendment to Registration Agreement, dated November 1, 2005 between First Advantage Corporation and Experian Information Solutions, Inc.~~

~~-39-~~-31-

SIGNATURES

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.

FIRST ADVANTAGE CORPORATION

(Registrant)



Date: ~~November 10, 2005~~May 9, 2006	By:	~~/s/~~ /s/ JOHN LONG
			John Long
			Chief Executive Officer

Date: ~~November 10, 2005~~May 9, 2006	By:	~~/s/~~ /s/ JOHN LAMSON
			John Lamson
			Chief Financial Officer

EXHIBIT INDEX


Exhibit No.		Description
~~2.1~~		Amended and Restated Master Transfer Agreement among The First American Corporation, First American Real Estate Services, Inc., First American Real Estate Solutions, LLC, FADV Holdings LLC, and First Advantage Corporation, dated as of June 22, 2005

~~2.2~~		~~Contribution Agreement among The First American Corporation, First American Real Estate Services, Inc., FADV Holdings LLC, and First Advantage Corporation, dated as of September 14, 2005~~

~~2.3~~		~~Contribution Agreement among First American Real Estate Solutions, LLC, FADV Holdings LLC, and First Advantage Corporation, dated as of September 14, 2005~~

~~3.1~~		~~Certificate of Amendment to the First Amended and Restated Certificate of Incorporation of First Advantage Corporation~~

10.1		~~Amended and Restated Services~~Amendment to Stockholders’ Agreement ~~between The First American Corporation and First Advantage Corporation, dated as of September 14, 2005~~

~~10.2~~		~~Outsourcing Agreement between First American Real Estate Solutions, LLC and First Advantage Corporation, dated as of September 14, 2005~~

~~10.3~~		~~First Advantage 2003 Incentive Compensation Plan, Amended and Restated as of September 14, 2005~~
~~10.4~~		~~Subordinated Promissory Note, made September 14, 2005, by First Advantage Corporation to the order of The First American Corporation~~

~~10.5~~		~~Office Lease by and between First American Title Insurance Company and First Advantage Corporation, dated as of September 14, 2005~~

~~10.6~~		Credit Agreement, dated as of September 28, 2005, among First Advantage Corporation as the Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender And L/C Issuer, LaSalle Bank National Association, as Syndication Agent, Wachovia Bank, National Association and Suntrust Bank, as Co-Documentation Agents and the Other Lenders Party Hereto


~~Exhibit No.~~		~~Description~~

~~10.7~~		~~Pledge Agreement, dated as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent~~

~~10.8~~		~~Security Agreement, dated as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent.~~

~~10.9~~		~~Subsidiary Guaranty Agreement as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent.~~

~~10.10~~		~~Note, dated September 28, 2005, made by First Advantage in favor of LaSalle Bank National Association~~

~~10.11~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of Wachovia Bank, National Association~~

~~10.12~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of Suntrust Bank~~

~~10.13~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of U.S. Bank National Association~~

~~10.14~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of Commerzbank AG, New York and Grand Cayman Branches~~

~~10.15~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of Regions Bank~~

~~10.16~~		~~Note, dated September 28, 2005, made by First Advantage Corporation in favor of Bank of America N.A.~~

31.1		Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~99.1~~		~~Reimbursement Agreement entered into October 11. 2005 between The First American Corporation and First Advantage Corporation~~

~~99.2~~		~~Amendment to Registration Agreement, dated November 1, 2005 between First Advantage Corporation and Experian Information Solutions, Inc.~~


	September 30, 2005		December 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	17,438,000	$	9,996,000
Accounts receivable (less allowance for doubtful accounts of $4,203,000 and $3,444,000 in 2005 and 2004, respectively)		97,462,000		67,981,000
Notes receivable		—		4,000,000
Due from affiliates		—		553,000
Prepaid expenses and other current assets		6,770,000		3,217,000

Total current assets		121,670,000		85,747,000
Property and equipment, net		49,947,000		44,966,000
Goodwill		437,442,000		380,596,000
Intangible assets, net		54,187,000		43,596,000
Database development costs, net		10,039,000		9,688,000
Investment in equity investee		36,086,000		34,854,000
Deferred income tax asset		17,369,000		—
Other assets		4,808,000		3,657,000

Total assets	$	731,548,000	$	603,104,000

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	10,675,000	$	14,726,000
Accrued compensation		24,232,000		19,918,000
Accrued liabilities		28,578,000		19,482,000
Deferred income		6,125,000		4,558,000
Due to affiliates		3,835,000		—
Income taxes payable		473,000		4,381,000
Current portion of long-term debt and capital leases		31,685,000		24,326,000

Total current liabilities		105,603,000		87,391,000
Long-term debt and capital leases, net of current portion		95,208,000		86,480,000
Deferred income tax liability		—		8,454,000
Other liabilities		2,523,000		861,000

Total liabilities		203,334,000		183,186,000

Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value; 1,000,000 shares authorized, no shares issued or outstanding		—		—
Class A common stock, $.001 par value; 125,000,000 and 75,000,000 shares authorized; 8,223,667 and 7,226,801 shares issued and outstanding as of September 30, 2005 and December 31, 2004, respectively		8,000		7,000
Class B common stock, $.001 par value; 75,000,000 shares authorized; 46,076,066 and 42,856,553 shares issued and outstanding as of September 30, 2005 and December 31, 2004, respectively		46,000		43,000
Additional paid-in capital		386,043,000		298,243,000
Retained earnings		141,730,000		121,367,000
Accumulated other comprehensive income		387,000		258,000

Total stockholders’ equity		528,214,000		419,918,000

Total liabilities and stockholders’ equity	$	731,548,000	$	603,104,000


Cash	$	30,960,000
Notes		16,905,000
Stock (729,557 Class A shares)		16,200,000
Stock (2,243,903 Class B shares)		46,555,000

Purchase price	$	110,620,000


	Balance at December 31, 2004		Acquisitions		Adjustments to net assets acquired		Recognition of pre- acquisition tax loss carryforwards			Balance at September 30, 2005
Lender Services	$	27,710,000	$	12,210,000	$	—	$	—		$	39,920,000
Data Services		116,013,000		—		211,000		(16,911,000	)		99,313,000
Dealer Services		34,727,000		24,043,000		—		—			58,770,000
Employer Services		123,834,000		43,553,000		355,000		(12,514,000	)		155,228,000
Multifamily Services		44,740,000		4,531,000		2,371,000		(3,909,000	)		47,733,000
Investigative and Litigation Support Services		33,572,000		2,831,000		75,000		—			36,478,000
											—

Consolidated	$	380,596,000	$	87,168,000	$	3,012,000	$	(33,334,000	)	$	437,442,000


	September 30, 2005			December 31, 2004
Goodwill	$	437,442,000		$	380,596,000

Intangible assets:
Customer lists	$	56,615,000		$	44,841,000
Noncompete agreements		5,295,000			3,356,000
Other		2,113,000			913,000

		64,023,000			49,110,000
Less accumulated amortization		(9,836,000	)		(5,514,000	)

Intangible assets, net	$	54,187,000		$	43,596,000


2005	$	2,028,000
2006		7,998,000
2007		7,461,000
2008		6,450,000
2009		5,849,000
Thereafter		24,401,000

	$	54,187,000


Acquisition notes:
Weighted average interest rate of 4.75% with maturities through 2008	$	41,907,000
Bank notes:
$225 million Secured Credit Facility, interest at 30-day LIBOR plus 1.25% (5.11% at September 30, 2005), matures September 2010		74,500,000
Promissory Note with First American:
$10 million revolving loan, interest at 30-day LIBOR plus 1.75% (5.61% at September 30, 2005), matures July 2006		10,000,000
Capital leases and other debt:
Various interest rates with maturities through 2006		486,000

Total long-term debt and capital leases		126,893,000
Less current portion of long-term debt and capital leases		31,685,000

Long-term debt and capital leases, net of current portion	$	95,208,000


Quarter ending September 30, 2005	Lender Services			Data Services			Dealer Services			Employer Services			Multifamily Services			Invest/Litigation Support Services			Corporate			Total
Service revenue	$	43,907,000		$	22,100,000		$	29,219,000		$	37,673,000		$	17,544,000		$	8,237,000		$	(934,000	)	$	157,746,000
Reimbursed government fee revenue		—			10,061,000			—			2,731,000			—			—			(592,000	)		12,200,000

Total revenue		43,907,000			32,161,000			29,219,000			40,404,000			17,544,000			8,237,000			(1,526,000	)		169,946,000
Cost of service revenue		14,200,000			3,624,000			15,635,000			12,132,000			1,788,000			3,443,000			(941,000	)		49,881,000
Government fees paid		—			10,061,000			—			2,731,000			—			—			(592,000	)		12,200,000

Total cost of service		14,200,000			13,685,000			15,635,000			14,863,000			1,788,000			3,443,000			(1,533,000	)		62,081,000
Gross margin		29,707,000			18,476,000			13,584,000			25,541,000			15,756,000			4,794,000			7,000			107,865,000
Salaries and benefits		12,500,000			3,922,000			4,222,000			13,559,000			6,064,000			2,715,000			3,664,000			46,646,000
Facilities and telecommunications		1,916,000			632,000			422,000			1,514,000			808,000			296,000			617,000			6,205,000
Other operating expenses		560,000			5,251,000			4,335,000			5,537,000			3,037,000			1,045,000			428,000			20,193,000
Depreciation and amortization		1,760,000			1,465,000			641,000			1,371,000			1,023,000			385,000			40,000			6,685,000

Income (loss) from operations	$	12,971,000		$	7,206,000		$	3,964,000		$	3,560,000		$	4,824,000		$	353,000		$	(4,742,000	)	$	28,136,000

Operating margin percentage		29.5	%		32.6	%		13.6	%		9.4	%		27.5	%		4.3	%		N/A			17.8	%

Quarter ending September 30, 2004	Lender Services			Data Services			Dealer Services			Employer Services			Multifamily Services			Invest/Litigation Support Services			Corporate			Total
Service revenue	$	33,870,000		$	16,678,000		$	18,355,000		$	31,952,000		$	15,711,000		$	6,770,000		$	(471,000	)	$	122,865,000
Reimbursed government fee revenue		—			8,427,000			—			2,781,000			—			—			—			11,208,000

Total revenue		33,870,000			25,105,000			18,355,000			34,733,000			15,711,000			6,770,000			(471,000	)		134,073,000
Cost of service revenue		10,020,000			2,957,000			8,652,000			11,396,000			1,624,000			3,041,000			(471,000	)		37,219,000
Government fees paid		—			8,427,000			—			2,781,000			—			—			—			11,208,000

Total cost of service		10,020,000			11,384,000			8,652,000			14,177,000			1,624,000			3,041,000			(471,000	)		48,427,000
Gross margin		23,850,000			13,721,000			9,703,000			20,556,000			14,087,000			3,729,000			—			85,646,000
Salaries and benefits		10,802,000			2,735,000			2,932,000			10,879,000			5,318,000			1,956,000			2,396,000			37,018,000
Facilities and telecommunications		1,561,000			538,000			562,000			1,446,000			784,000			262,000			180,000			5,333,000
Other operating expenses		705,000			4,039,000			3,680,000			3,329,000			2,423,000			556,000			383,000			15,115,000
Depreciation and amortization		1,657,000			1,307,000			404,000			1,080,000			1,064,000			343,000			23,000			5,878,000

Income (loss) from operations	$	9,125,000		$	5,102,000		$	2,125,000		$	3,822,000		$	4,498,000		$	612,000		$	(2,982,000	)	$	22,302,000

Operating margin percentage		26.9	%		30.6	%		11.6	%		12.0	%		28.6	%		9.0	%		N/A			18.2	%

Nine months ending September 30, 2005	Lender Services			Data Services			Dealer Services			Employer Services			Multifamily Services			Invest/Litigation Support Services			Corporate			Total
Service revenue	$	128,963,000		$	61,860,000		$	72,252,000		$	104,451,000		$	49,134,000		$	23,142,000		$	(2,780,000	)	$	437,022,000
Reimbursed government fee revenue		—			30,223,000			—			8,191,000			—			—			(1,745,000	)		36,669,000

Total revenue		128,963,000			92,083,000			72,252,000			112,642,000			49,134,000			23,142,000			(4,525,000	)		473,691,000
Cost of service revenue		41,773,000			8,928,000			36,754,000			33,808,000			4,862,000			9,689,000			(2,788,000	)		133,026,000
Government fees paid		—			30,223,000			—			8,191,000			—			—			(1,745,000	)		36,669,000

Total cost of service		41,773,000			39,151,000			36,754,000			41,999,000			4,862,000			9,689,000			(4,533,000	)		169,695,000
Gross margin		87,190,000			52,932,000			35,498,000			70,643,000			44,272,000			13,453,000			8,000			303,996,000
Salaries and benefits		37,764,000			11,161,000			10,435,000			37,175,000			16,662,000			7,846,000			9,265,000			130,308,000
Facilities and telecommunications		5,320,000			1,839,000			865,000			4,619,000			2,472,000			801,000			3,058,000			18,974,000
Other operating expenses		1,568,000			14,573,000			12,037,000			14,453,000			7,980,000			2,628,000			4,606,000			57,845,000
Depreciation and amortization		4,942,000			4,403,000			1,639,000			3,846,000			3,003,000			1,146,000			106,000			19,085,000

Income (loss) from operations	$	37,596,000		$	20,956,000		$	10,522,000		$	10,550,000		$	14,155,000		$	1,032,000		$	(17,027,000	)	$	77,784,000

Operating margin percentage		29.2	%		33.9	%		14.6	%		10.1	%		28.8	%		4.5	%		N/A			17.8	%


Nine months ending September 30, 2004	Lender Services			Data Services			Dealer Services			Employer Services			Multifamily Services			Invest/Litigation Support Services			Corporate			Total
Service revenue	$	103,480,000		$	56,794,000		$	53,022,000		$	84,664,000		$	41,838,000		$	18,687,000		$	(1,959,000	)	$	356,526,000
Reimbursed government fee revenue		—			25,753,000			—			7,816,000			—			—			—			33,569,000

Total revenue		103,480,000			82,547,000			53,022,000			92,480,000			41,838,000			18,687,000			(1,959,000	)		390,095,000
Cost of service revenue		29,963,000			14,063,000			24,357,000			31,830,000			4,779,000			9,868,000			(1,959,000	)		112,901,000
Government fees paid		—			25,753,000			—			7,816,000			—			—			—			33,569,000

Total cost of service		29,963,000			39,816,000			24,357,000			39,646,000			4,779,000			9,868,000			(1,959,000	)		146,470,000
Gross margin		73,517,000			42,731,000			28,665,000			52,834,000			37,059,000			8,819,000			—			243,625,000
Salaries and benefits		32,607,000			8,618,000			8,449,000			28,819,000			15,509,000			5,100,000			6,774,000			105,876,000
Facilities and telecommunications		5,095,000			1,621,000			1,467,000			4,334,000			2,038,000			629,000			489,000			15,673,000
Other operating expenses		(519,000	)		20,069,000			10,905,000			9,649,000			6,815,000			1,679,000			321,000			48,919,000
Depreciation and amortization		5,322,000			3,882,000			1,179,000			3,194,000			2,715,000			790,000			52,000			17,134,000

Income (loss) from operations	$	31,012,000		$	8,541,000		$	6,665,000		$	6,838,000		$	9,982,000		$	621,000		$	(7,636,000	)	$	56,023,000

Operating margin percentage		30.0	%		15.0	%		12.6	%		8.1	%		23.9	%		3.3	%		N/A			15.7	%


	Shares Voted
Name of Nominee	Eligible for Voting	Voted	YES	Withhold
Parker Kennedy	168,149,018	167,575,691	167,491,785	83,906
John Long	168,149,018	167,575,691	167,563,586	12,105
J. David Chatham	168,149,018	167,575,691	167,491,765	83,926
Barry Connelly	168,149,018	167,575,691	167,491,765	83,926
Lawrence Lenihan	168,149,018	167,575,691	167,522,782	52,909
Donald Nickelson	168,149,018	167,575,691	167,563,646	12,045
Donald Robert	168,149,018	167,575,691	166,407,072	1,168,619
Adelaide Sink	168,149,018	167,575,691	167,563,666	12,025
David Walker	168,149,018	167,575,691	167,422,493	153,198