THE FIRST AMERICAN CORPORATION REPORTS
OPERATING RESULTS FOR THIRD QUARTER 2001
SANTA ANA, Calif., Oct. 25, 2001 - The First American Corporation (NYSE: FAF),
the nation's leading, diversified provider of business information and related
products and services, today announced operating results for the third quarter
and nine months ended Sept. 30, 2001.
Operating net income for the third quarter of 2001 increased 86 percent to
$45.5 million, or 60 cents per diluted share, when compared with operating net
income of $24.4 million, or 37 cents per diluted share, for the same quarter of
2000. Current quarter results exclude certain onetime charges (net of investment
gains) of $7.4 million relating principally to the strengthening of loss
reserves at one of the company's subsidiary title insurance underwriters, which
was purchased in 1998. These items totaled $3.8 million on an after-tax basis,
or 5 cents per diluted share. Reported net income for the third quarter of 2001
was $41.7 million, or 55 cents per diluted share. Revenues for the third quarter
of 2001 were $983.0 million, a 31 percent increase when compared with revenues
of $750.3 million for the same period last year.
Operating net income for the nine-month period of 2001 increased 139
percent to $120.5 million, or $1.66 per diluted share, when compared with $50.4
million, or 77 cents per diluted share, in the nine-month period of 2000. The
current nine-month results exclude the onetime items noted above and a $3.6
million pretax charge, or 2 cents per diluted share, in the first quarter of
2001 relating to the company's exit of the lender-placed homeowner's insurance
business, which was part of the National Information Group acquisition completed
in May 1999. Reported net income for the nine-month period of 2001 was $115.0
million, or $1.59 cents per diluted share. Revenues for the nine-month period of
2001 totaled $2.68 billion, an increase of 24 percent when compared with
revenues of $2.17 billion for the same period in 2000.
Lower mortgage interest rates in 2001 have led to robust home sales and
continued strong refinance activity, which have provided revenue and profit
increases versus comparable periods of the prior year.
"Despite record order volumes in our real estate-related businesses, we
have remained focused on operating efficiencies and bottom-line improvements,"
said Parker S. Kennedy, president of The First
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American Corporation. "We continue to concentrate on technology solutions that
enhance the delivery of our real estate-related products and services and
improve labor efficiencies. We also are very excited about the potential growth
in our consumer information services segment as we build our automotive and
pre-employment screening suites of products and services.
"The refinancing activity we have seen in the last two weeks is
unprecedented, as mortgage interest rates have continued to decline. More than
70 percent of our new orders now relate to refinancings. This surge in activity
bodes well for our fourth-quarter outlook."
The First American Corporation, based in Santa Ana, Calif., is the nation's
leading, diversified provider of business information and related products and
services. The corporation's three primary business segments include: title
information and services; real estate information and services, which includes
mortgage information services and database information and services; and
consumer information and services, which provides automotive, subprime and
direct-to-consumer credit reporting; direct-to-consumer public records
reporting; resident screening; pre-employment screening; automobile title
administration; property and automotive insurance tracking services; property
and casualty insurance; home warranties; investment advisory; and trust and
banking services. Information about the company and an archive of its press
releases can be found on the Internet at www.firstam.com.
Certain statements made in this press release, including those relating to
potential growth within the company's consumer information and services
segment and the company's fourth quarter outlook, are forward-looking.
Risks and uncertainties exist which 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; general volatility in the
capital markets; changes in applicable government regulations;
consolidation among the company's significant customers and competitors;
legal proceedings commenced by the California attorney general and related
litigation; 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, 2000, 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.
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The First American Corporation
Summary of Earnings
For the Three Months Ended For the Nine Months Ended
September 30 September 30
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2001 2000 2001 2000
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Revenues $983,008,000 $750,260,000 $2,677,791,000 $2,172,359,000
Income before income taxes and minority interests $ 83,355,000 $ 48,757,000 $ 228,885,000 $ 100,988,000
Income taxes $ 30,500,000 $ 19,000,000 $ 83,200,000 $ 39,200,000
Minority interests $ 11,160,000 $ 5,358,000 $ 30,697,000 $ 11,355,000
Net income $ 41,695,000 $ 24,399,000 $ 114,988,000 $ 50,433,000
Net income per share:
Basic $0.61 $0.38 $1.75 $0.79
Diluted $0.55 $0.37 $1.59 $0.77
Weighted average shares outstanding:
Basic 67,844,000 63,526,000 65,877,000 63,689,000
Diluted 78,872,000 66,088,000 74,529,000 65,700,000
The First American Corporation
Summary Balance Sheet Information
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September 30, 2001 December 30, 2000
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Total equity $1,062,620,000 $870,237,000
Book value $15.56 $13.62
Selected Financial Data
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30 September 30
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2001 2000 2001 2000
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RESULTS OF OPERATIONS
Revenues
Operating revenues $ 952,776,000 $ 730,490,000 $2,610,969,000 $ 2,126,571,000
Investment and other income 30,232,000 19,770,000 66,822,000 45,788,000
--------------- --------------- ---------------- -----------------
983,008,000 750,260,000 2,677,791,000 2,172,359,000
--------------- -------------- --------------- -----------------
Expenses
Salaries and other personnel costs 331,727,000 260,250,000 917,942,000 773,513,000
Premiums retained by agents 255,384,000 192,803,000 661,206,000 585,398,000
Other operating expenses 216,854,000 176,845,000 622,373,000 511,994,000
Provision for title losses and other claims 52,661,000 36,764,000 129,676,000 104,327,000
Depreciation and amortization 27,820,000 22,790,000 77,925,000 61,112,000
Premium taxes 6,758,000 5,396,000 17,470,000 16,318,000
Interest 8,449,000 6,655,000 22,314,000 18,709,000
--------------- --------------- ---------------- -----------------
899,653,000 701,503,000 2,448,906,000 2,071,371,000
--------------- --------------- ---------------- -----------------
Income before income taxes and
minority interests $ 83,355,000 $ 48,757,000 $ 228,885,000 $ 100,988,000
=============== =============== ================ =================
OPERATING REVENUES
Title Insurance:
Direct operations $ 375,342,000 $ 280,152,000 $1,050,715,000 $ 799,585,000
Agency operations 317,893,000 241,846,000 819,330,000 727,673,000
--------------- --------------- ---------------- -----------------
693,235,000 521,998,000 1,870,045,000 1,527,258,000
Real Estate Information 181,042,000 141,501,000 527,736,000 408,151,000
Consumer Information 78,499,000 66,991,000 213,188,000 191,162,000
--------------- --------------- ---------------- -----------------
Total operating revenues $ 952,776,000 $ 730,490,000 $2,610,969,000 $ 2,126,571,000
=============== =============== ================ =================
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS
Title Insurance $ 38,004,000 30,543,000 $ 120,185,000 $ 73,752,000
Real Estate Information 50,112,000 19,915,000 126,298,000 36,030,000
Consumer Information 10,742,000 10,347,000 24,278,000 28,876,000
-------------- --------------- ---------------- -------------------
Total before corporate expenses and
minority interests 98,858,000 60,805,000 270,761,000 138,658,000
Corporate expenses 15,503,000 12,048,000 41,876,000 37,670,000
-------------- --------------- ---------------- -------------------
Income before income taxes and
minority interests $ 83,355,000 $ 48,757,000 $ 228,885,000 $ 100,988,000
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TITLE INSURANCE ORDER COUNTS
FROM DIRECT OPERATIONS
Title orders opened 453,900 312,000 1,351,300 951,500
Title orders closed 354,200 246,500 984,300 737,700