THE FIRST AMERICAN CORPORATION REPORTS
OPERATING RESULTS FOR THE FIRST QUARTER 2002
-Segment Data Expanded to Highlight Diversification-
SANTA ANA, Calif., April 25, 2002 - The First American Corporation (NYSE: FAF),
the nation's leading, diversified provider of business information and related
products and services, announced today operating results for the first quarter
ended March 31, 2002.
Net income for the first quarter 2002 was $44.1 million, the highest first
quarter net income in the company's history, or 57 cents per diluted share. This
represents a 114 percent increase when compared with 2001 first quarter net
income of $20.6 million, or 30 cents per diluted share, which excludes a
previously announced one-time item. Revenues for the first three months of 2002
totaled $1.04 billion, also a first-quarter record, representing an increase of
36 percent when compared with 2001 first quarter revenues of $766.7 million.
"We are extremely pleased with our first quarter results," stated Parker S.
Kennedy, president of The First American Corporation. "While processing and
closing near record order counts, we were able to exercise solid expense
controls and significantly improve our margins when compared with the first
quarter of 2001.
"Refinance-related orders in our real estate-oriented businesses have
declined but are still above normal levels. Orders relating to new home sales
and resale activity remain at seasonally high levels, and new title order counts
for the first quarter of 2002 were at record first-quarter levels."
In order to provide expanded financial information that more accurately
reflects the diversity of First American, beginning in the first quarter of
2002, the company established seven reporting segments. These reporting segments
fall within two primary business groups, Financial Services and Information
Technology. The Financial Services Group includes Title Insurance and Services,
Specialty Insurance, and Trust and Other Services; and the Information
Technology Group includes Mortgage Information, Property Information, Credit
Information and Screening Information. The company's previous reporting segments
included Title Insurance, Real Estate Information and Consumer Information. A
five-year historical summary of the new reporting segments is included as part
of this release.
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The First American Corporation Reports Operating Results for the First
Quarter 2002
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"This expanded information reveals the character and quality of our
earnings and helps differentiate First American from other title insurance
companies," Kennedy added. "The new segments will enable investors to value
First American business by business and should unlock shareholder value and
deliver a higher earnings multiple.
"In the future, First American will stand out as an information technology
company leveraging its databases and technology to deliver information and other
products and services to a wide array of customers. As a result of technology
solutions, title insurance, the company's primary business, will in time produce
increased margins closer to our information technology businesses and First
American will enjoy a higher valuation in the years to come."
About The First American Corporation
The First American Corporation is a Fortune 500 company that traces its
history to 1889. As the nation's leading, diversified provider of business
information, the company supplies businesses and consumers with the information
resources that affect 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 seven primary
business segments including: Title Insurance and Services, Specialty Insurance,
Trust and Other Services, Mortgage Information, Property Information, Credit
Information and Screening Information. With revenues of $3.75 billion in 2001,
First American has more than 22,500 employees in approximately 1,300 offices
throughout the United States and abroad. More information about the company and
an archive of its press releases can be found at www.firstam.com.
Certain statements made in this press release, including those
relating to the effects of new segment reporting and technology
solutions 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, 2001, 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 Reports Operating Results for the First
Quarter 2002
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Summary of Earnings
For the Three Months Ended
March 31
-----------------------------------
2002 2001
-----------------------------------
Revenues $1,042,981,000 $ 766,741,000
Income before income taxes and minority
interests $ 88,559,000 $ 39,198,000
Income taxes $ 31,000,000 $ 13,500,000
Minority interests $ 13,484,000 $ 6,922,000
Net income $ 44,075,000 $ 18,776,000
Net income per share:
Basic $0.63 $0.29
Diluted $0.57 $0.27
Weighted average shares outstanding:
Basic 69,995,000 64,165,000
Diluted 80,985,000 68,797,000
Summary Title Insurance Order Counts
From Direct Operations
For the Three Months Ended
March 31
-----------------------------------
2002 2001
-----------------------------------
Title orders opened:
January 162,400 127,500
February 149,000 139,100
March 159,200 168,100
------------ ------------
Total 470,600 434,700
============ ============
Title orders closed:
January 138,200 72,900
February 119,700 84,000
March 135,100 113,200
------------ ------------
Total 393,000 270,100
============= ============
Summary Balance Sheet Information
March 31 December 31
-----------------------------------
2002 2001
-----------------------------------
Total stockholders' equity $1,188,554,000 $1,104,452,000
Book value per share $16.67 $16.08
(Additional Financial Data Follows)
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The First American Corporation Reports Operating Results for the First
Quarter 2002
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Selected Financial Data
(Unaudited)
For the Three Months Ended
March 31
--------------------------------
2002 2001
---------------------------------
RESULTS OF OPERATIONS
Revenues
Operating revenues $ 1,024,119,000 $ 750,184,000
Investment and other income 18,862,000 16,557,000
--------------- ---------------
1,042,981,000 766,741,000
--------------- ---------------
Expenses
Salaries and other personnel costs 345,325,000 274,819,000
Premiums retained by agents 284,294,000 189,407,000
Other operating expenses 238,137,000 191,088,000
Provision for policy losses and
other claims 47,099,000 36,490,000
Depreciation and amortization 24,148,000 24,433,000
Premium taxes 7,199,000 5,008,000
Interest 8,220,000 6,298,000
--------------- ---------------
954,422,000 727,543,000
--------------- ---------------
Income before income taxes and minority
interests $ 88,559,000 $ 39,198,000
=============== ===============
OPERATING REVENUES
Financial Services
Title Insurance and Services:
Direct operations $ 387,174,000 $ 289,270,000
Agency operations 356,797,000 234,254,000
-------------- ---------------
743,971,000 523,524,000
Specialty Insurance 29,312,000 26,755,000
Trust and Other Services 11,156,000 8,994,000
-------------- ---------------
784,439,000 559,273,000
-------------- ---------------
Information Technology
Mortgage Information 108,130,000 85,641,000
Property Information 55,110,000 50,501,000
Credit Information 52,999,000 44,509,000
Screening Information 23,441,000 10,260,000
--------------- ---------------
239,680,000 190,911,000
--------------- ---------------
Total operating revenues $ 1,024,119,000 $ 750,184,000
=============== ===============
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS
Financial Services
Title Insurance and Services $ 39,652,000 $ 18,866,000
Specialty Insurance 5,682,000 (488,000)
Trust and Other Services 4,225,000 2,147,000
--------------- ---------------
49,559,000 20,525,000
--------------- ---------------
Information Technology
Mortgage Information 34,833,000 20,996,000
Property Information 8,317,000 3,252,000
Credit Information 12,653,000 6,261,000
Screening Information 782,000 (165,000)
--------------- ---------------
56,585,000 30,344,000
--------------- ---------------
Total before corporate expenses
106,144,000 50,869,000
Corporate expenses 17,585,000 11,671,000
--------------- ---------------
Income before income taxes and minority
interests $ 88,559,000 $ 39,198,000
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The First American Corporation Reports Operating Results for the First
Quarter 2002
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Five Year Historical Summary
Segment Information
(in thousands)
Year Ended December 31
2001 2000 1999 1998 1997
------------- ------------- ------------- ------------- ------------
Operating revenues
Financial Services
Title Insurance and Services $ 2,648,993 $ 2,067,048 $ 2,153,878 $ 2,063,217 $ 1,461,967
Specialty Insurance 112,054 115,171 91,555 79,443 66,860
Trust and Other Services 39,882 33,635 29,022 24,751 20,007
----------- ------------- ------------- ------------- ------------
2,800,929 2,215,854 2,274,455 2,167,411 1,548,834
------------ ------------- ------------- ------------- ------------
Information Technology
Mortgage Information 407,008 307,826 323,985 360,428 252,235
Property Information 210,975 161,040 151,270 152,595 21,054
Credit Information 194,981 154,341 156,415 164,646 95,386
Screening Information 49,093 38,467 30,071 22,027 15,396
----------- ------------- ------------- ------------- ------------
862,057 661,674 661,741 699,696 384,071
------------ ------------- ------------- ------------- ------------
Total $ 3,662,986 $ 2,877,528 $ 2,936,196 $ 2,867,107 $ 1,932,905
============ ============= ============= ============= ============
Income before income taxes, minority
interests and corporate expenses
Financial Services
Title Insurance and Services $ 173,655 $ 88,091 $ 128,630 $ 231,071 $ 81,907
Specialty Insurance 11,929 17,048 16,933 9,423 11,104
Trust and Other Services 12,270 10,350 9,545 7,156 4,062
------------ ------------- ------------- ------------- ------------
197,854 115,489 155,108 247,650 97,073
------------ ------------- ------------- ------------- ------------
Information Technology
Mortgage Information 145,989 50,310 62,459 97,246 38,529
Property Information 19,083 1,800 (3,141) (843) (2,326)
Credit Information 30,062 15,278 8,460 25,018 11,088
Screening Information (286) 1,009 (650) 1,264 284
------------ ------------- ------------- ------------- ------------
194,848 68,397 67,128 122,685 47,575
------------ ------------- ------------- ------------- ------------
Total $ 392,702 $ 183,886 $ 222,236 $ 370,335 $ 144,648
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