Exhibit 99.1
Contact: Thomas A. Klemens Sr. Executive Vice President & Chief Financial Officer (714) 800-4401 | NEWS | FOR IMMEDIATE RELEASE |
THE FIRST AMERICAN CORPORATION REPORTS
RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2004
SANTA ANA, Calif., Feb. 16, 2005 – The First American Corporation (NYSE: FAF), the nation’s largest data provider, today announced results for the fourth quarter and year ended Dec. 31, 2004:
For the Three Months Ended December 31 | For the Twelve Months Ended December 31 | |||||||||||
2004 (A) | 2003 | 2004 | 2003 | |||||||||
Total revenues | $ | 1.80 billion | $ | 1.61 billion | $ | 6.72 billion | $ | 6.21 billion | ||||
Income before income taxes and minority interests | $ | 169.0 million | $ | 174.7 million | $ | 701.3 million | $ | 838.7 million | ||||
Net income | $ | 86.1 million | $ | 94.1 million | $ | 364.8 million | $ | 451.0 million | ||||
Net income per diluted share | $ | .93 | $ | 1.07 | $ | 4.00 | $ | 5.22 |
(A) Includes a pretax charge of $13.3 million, $8.6 million or 9 cents per diluted share on an after-tax basis, for certain litigation matters, including $10.0 million for the matter previously disclosed by the company on Jan. 26, 2005.
Summary of Operations
“We achieved strong results during 2004, despite a 25 percent drop-off in total mortgage applications,” stated Parker S. Kennedy, chairman and chief executive officer of The First American Corporation. “With a slowdown in refinance transactions, the residential resale and new home sale markets remained at record levels throughout the year. Improved operating efficiencies, coupled with market share improvement in all of the company’s business segments, enhanced the company’s overall performance. In the fourth quarter, new order activity in the company’s direct title operations increased 26 percent over the comparable period in the prior year. This surge of activity will bode well for our first quarter 2005 results.”
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First American Reports Results for the Fourth Quarter and Full Year 2004
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Quarterly Financial Highlights
Financial Services Group:
• | Revenues for the fourth quarter 2004 were $1.40 billion, an increase of 15.4 percent when compared with $1.21 billion for the fourth quarter of 2003. |
• | Pretax income was $109.2 million, a decrease of 0.1 percent when compared with $109.3 million in the prior year quarter. |
• | Pretax margins decreased to 7.8 percent compared with 9.0 percent for the fourth quarter 2003. |
Information Technology Group:
• | Revenues for the fourth quarter 2004 were $404.3 million, an increase of 2.4 percent compared with $394.7 million for the prior year quarter. |
• | Pretax income was $96.7 million, an increase of 6.5 percent when compared with $90.8 million in the prior year quarter. |
• | Pretax margins improved to 23.9 percent compared with 23.0 percent for the fourth quarter 2003. |
2005 Strategic Focus and Outlook
Kennedy added: “We are very proud of the strong, successful, diversified data-based businesses we have built, and we will continue to pursue our key initiatives to maintain strong profits despite a weaker mortgage application market. These initiatives, which differentiate First American from the other information providers and create opportunities for margin expansion, include First American’s bundling alternatives of multiple products and services to the mortgage industry,FAST technology to enhance production efficiencies and streamline information, and strategic acquisitions to expand data capabilities and to increase market share.
“The results of our initiatives, which include innovative products and new customers, will continue to yield results for many more years to come. We are committed to delivering value to our shareholders through the implementation of our long-term strategies.”
Teleconference/Webcast
First American’s fourth-quarter and year-end results will be discussed in more detail on Wednesday, Feb. 16, 2005, at 10 a.m. EST, via teleconference. The dial-in number is (888) 955-3516 and the pass code is FIRST AMERICAN. The live audio webcast of the call will be available on First American’s Web site atwww.firstam.com/investor. An audio replay
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First American Reports Results for the Fourth Quarter and Full Year 2004
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of the conference call will be available through Feb. 23, 2005, by dialing (203) 369-0018. An audio archive of the call will also be available for replay on First American’s Web site.
About First American
The First American Corporation is a Fortune 500 company that traces its history to 1889. As the nation’s largest data provider, the company supplies businesses and consumers with information resources in connection with the major economic events of people’s lives, such as getting a job; renting an apartment; buying a car, house, boat or airplane; securing a mortgage; opening or buying a business; and planning for retirement. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within six primary business segments, including: Title Insurance and Services, Specialty Insurance, Mortgage Information, Property Information, Credit Information and Screening Information. With revenues of $6.72 billion in 2004, First American has 30,000 employees in approximately 1,800 offices throughout the United States and abroad. More information about the company and an archive of its press releases can be found atwww.firstam.com.
Forward Looking Statements
Certain statements made in this press release, including those related to 2005 operating results and key initiatives, are forward looking. 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: interest rate fluctuations; changes in the performance of the real estate markets; limitations on access to public records and other data; general volatility in the capital markets; changes in applicable government regulations; consolidation among the company’s significant customers and competitors; the company’s continued ability to identify businesses to be acquired; changes in the company’s ability to integrate businesses which it acquires; and other factors described in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2003, as filed with the Securities and Exchange Commission. 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.
(Additional Financial Data Follows)
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First American Reports Results for the Fourth Quarter and Full Year 2004
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Summary of Earnings
(in thousands, except per share amounts)
Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||
Total revenues | $ | 1,803,017 | $ | 1,612,066 | $ | 6,722,326 | $ | 6,213,714 | ||||
Income before income taxes and minority interests | $ | 168,958 | $ | 174,717 | $ | 701,284 | $ | 838,722 | ||||
Income taxes | $ | 64,000 | $ | 60,800 | $ | 251,500 | $ | 292,000 | ||||
Minority interests | $ | 18,856 | $ | 19,798 | $ | 84,985 | $ | 95,700 | ||||
Net income | $ | 86,102 | $ | 94,119 | $ | 364,799 | $ | 451,022 | ||||
Net income per share: | ||||||||||||
Basic | $ | .96 | $ | 1.20 | $ | 4.22 | $ | 5.89 | ||||
Diluted | $ | .93 | $ | 1.07 | $ | 4.00 | $ | 5.22 | ||||
Weighted average shares outstanding: | ||||||||||||
Basic | 89,733 | 78,288 | 86,430 | 76,632 | ||||||||
Diluted | 93,306 | 89,690 | 91,895 | 87,765 |
Summary Balance Sheet Information
(in thousands, except per share amounts)
December 31 | December 31 | |||||
2004 | 2003 | |||||
Total stockholders’ equity | $ | 2,479,264 | $ | 1,879,520 | ||
Book value per share | $ | 27.53 | $ | 23.84 |
Summary Title Insurance Order Counts
From Direct Operations
Three Months Ended December 31 | ||||
2004 | 2003 | |||
Title orders opened: | ||||
October | 208,000 | 182,600 | ||
November | 212,700 | 142,500 | ||
December | 187,100 | 158,700 | ||
Fourth quarter total | 607,800 | 483,800 | ||
Title orders closed: | ||||
October | 156,200 | 162,000 | ||
November | 163,200 | 128,800 | ||
December | 166,300 | 152,100 | ||
Fourth quarter total | 485,700 | 442,900 | ||
(Additional Financial Data Follows)
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First American Reports Results for the Fourth Quarter and Full Year 2004
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Selected Financial Data
(unaudited, in thousands)
Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
RESULTS OF OPERATIONS | |||||||||||||
Revenues | |||||||||||||
Operating revenues | $ | 1,759,228 | $ | 1,563,410 | $ | 6,570,746 | $ | 6,032,643 | |||||
Investment and other income | 43,111 | 32,832 | 141,796 | 145,354 | |||||||||
Net realized investment gains | 678 | 15,824 | 9,784 | 35,717 | |||||||||
1,803,017 | 1,612,066 | 6,722,326 | 6,213,714 | ||||||||||
Expenses | |||||||||||||
Salaries and other personnel costs | 557,524 | 462,415 | 2,111,215 | 1,799,553 | |||||||||
Premiums retained by agents | 528,050 | 477,107 | 1,869,536 | 1,729,104 | |||||||||
Other operating expenses | 392,966 | 350,156 | 1,464,937 | 1,319,875 | |||||||||
Provision for title losses and other claims | 94,536 | 88,298 | 349,618 | 324,404 | |||||||||
Depreciation and amortization | 35,301 | 34,720 | 128,978 | 114,424 | |||||||||
Premium taxes | 13,981 | 14,721 | 52,935 | 51,535 | |||||||||
Interest | 11,701 | 9,932 | 43,823 | 36,097 | |||||||||
1,634,059 | 1,437,349 | 6,021,042 | 5,374,992 | ||||||||||
Income before income taxes and minority interests | $ | 168,958 | $ | 174,717 | $ | 701,284 | $ | 838,722 | |||||
OPERATING REVENUES | |||||||||||||
Financial Services | |||||||||||||
Title Insurance and Services: | |||||||||||||
Direct operations | $ | 665,726 | $ | 543,791 | $ | 2,486,380 | $ | 2,264,925 | |||||
Agency operations | 638,552 | 590,673 | 2,299,656 | 2,138,059 | |||||||||
1,304,278 | 1,134,464 | 4,786,036 | 4,402,984 | ||||||||||
Specialty Insurance | 60,384 | 55,074 | 220,340 | 207,287 | |||||||||
1,364,662 | 1,189,538 | 5,006,376 | 4,610,271 | ||||||||||
Information Technology | |||||||||||||
Mortgage Information | 159,280 | 182,847 | 653,562 | 642,684 | |||||||||
Property Information | 110,033 | 88,017 | 401,716 | 366,271 | |||||||||
Credit Information | 57,126 | 53,143 | 242,812 | 246,987 | |||||||||
Screening Information | 68,127 | 49,865 | 266,280 | 166,430 | |||||||||
394,566 | 373,872 | 1,564,370 | 1,422,372 | ||||||||||
Total operating revenues | $ | 1,759,228 | $ | 1,563,410 | $ | 6,570,746 | $ | 6,032,643 | |||||
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS | |||||||||||||
Financial Services | |||||||||||||
Title Insurance and Services | $ | 100,194 | $ | 101,947 | $ | 422,777 | $ | 504,629 | |||||
Specialty Insurance | 8,988 | 7,304 | 41,419 | 30,125 | |||||||||
109,182 | 109,251 | 464,196 | 534,754 | ||||||||||
Information Technology | |||||||||||||
Mortgage Information | 43,839 | 65,325 | 174,868 | 238,508 | |||||||||
Property Information | 35,678 | 22,530 | 126,460 | 105,339 | |||||||||
Credit Information | 12,421 | 4,726 | 54,613 | 64,291 | |||||||||
Screening Information | 4,777 | (1,753 | ) | 18,593 | 4,505 | ||||||||
96,715 | 90,828 | 374,534 | 412,643 | ||||||||||
Total before corporate expenses and minority interest | 205,897 | 200,079 | 838,730 | 947,397 | |||||||||
Corporate expense | 36,939 | 25,362 | 137,446 | 108,675 | |||||||||
Income before income taxes and minority interests | $ | 168,958 | $ | 174,717 | $ | 701,284 | $ | 838,722 | |||||
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First American Reports Results for the Fourth Quarter and Full Year 2004
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Segment Margins
(unaudited)
(in thousands, except percentages)
Three Months Ended December 31 | |||||||||||||||||||
Total revenues | Pretax (A) | Margins | |||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||
Financial Services | |||||||||||||||||||
Title Insurance and Services | $ | 1,332,769 | $ | 1,156,260 | $ | 100,194 | $ | 101,947 | 7.5 | % | 8.8 | % | |||||||
Specialty Insurance | 64,152 | 58,667 | 8,988 | 7,304 | 14.0 | % | 12.4 | % | |||||||||||
$ | 1,396,921 | $ | 1,214,927 | $ | 109,182 | $ | 109,251 | 7.8 | % | 9.0 | % | ||||||||
Information Technology | |||||||||||||||||||
Mortgage Information | $ | 159,566 | $ | 199,327 | $ | 43,839 | $ | 65,325 | 27.5 | % | 32.8 | % | |||||||
Property Information | 116,968 | 92,552 | 35,678 | 22,530 | 30.5 | % | 24.3 | % | |||||||||||
Credit Information | 59,378 | 52,893 | 12,421 | 4,726 | 20.9 | % | 8.9 | % | |||||||||||
Screening Information | 68,392 | 49,900 | 4,777 | (1,753 | ) | 7.0 | % | -3.5 | % | ||||||||||
$ | 404,304 | $ | 394,672 | $ | 96,715 | $ | 90,828 | 23.9 | % | 23.0 | % | ||||||||
Twelve Months Ended December 31 | |||||||||||||||||||
Total revenues | Pretax (A) | Margins | |||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||
Financial Services | |||||||||||||||||||
Title Insurance and Services | $ | 4,875,524 | $ | 4,494,883 | $ | 422,777 | $ | 504,629 | 8.7 | % | 11.2 | % | |||||||
Specialty Insurance | 234,708 | 219,837 | 41,419 | 30,125 | 17.6 | % | 13.7 | % | |||||||||||
$ | 5,110,232 | $ | 4,714,720 | $ | 464,196 | $ | 534,754 | 9.1 | % | 11.3 | % | ||||||||
Information Technology | |||||||||||||||||||
Mortgage Information | $ | 660,780 | $ | 668,765 | $ | 174,868 | $ | 238,508 | 26.5 | % | 35.7 | % | |||||||
Property Information | 427,234 | 390,151 | 126,460 | 105,339 | 29.6 | % | 27.0 | % | |||||||||||
Credit Information | 252,087 | 267,074 | 54,613 | 64,291 | 21.7 | % | 24.1 | % | |||||||||||
Screening Information | 266,687 | 166,536 | 18,593 | 4,505 | 7.0 | % | 2.7 | % | |||||||||||
$ | 1,606,788 | $ | 1,492,526 | $ | 374,534 | $ | 412,643 | 23.3 | % | 27.6 | % | ||||||||
(A) - Income before income tax, minority interest and corporate expenses
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