NEWS
FOR IMMEDIATE
RELEASE
THE FIRST AMERICAN CORPORATION REPORTS
RECORD RESULTS FOR THE FIRST QUARTER 2003
SANTA ANA, Calif., April 23, 2003 - The First American Corporation (NYSE: FAF),
the nation's leading diversified provider of business information and related
products and services, today announced record results for the first quarter
ended March 31, 2003:
For the Three Months Ended
March 31
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2003 (A) 2002
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Total revenues $ 1.34 billion $ 1.04 billion
Income before income taxes and minority interests $163.5 million $88.6 million
Net income $ 87.6 million $44.1 million
Net income per diluted share $1.05 $.57
(A) Includes a pretax gain on the merger of the company's Credit Online business with DealerTrack Holdings, Inc. of
$13.1 million, $8.0 million on an after-tax basis, or 9 cents per diluted share.
Summary of Operations
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"The first three months of 2003 marked another strong quarter for the
company," stated Parker S. Kennedy, president of The First American Corporation.
"Elevated levels of mortgage applications in the fourth quarter of 2002 produced
strong order closings, which contributed to a record-breaking first quarter in
the real estate-related segments of our Financial Services and Information
Technology groups."
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First American Reports Record Results for the First Quarter 2003
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Page 2
Quarterly Financial Highlights
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Financial Services Group:
o Record revenues for the first quarter 2003 were $1.0 billion, an
increase of 26 percent when compared with $793.8 million for the first
quarter of 2002.
o Pretax income was a record $95.0 million, an increase of 92 percent
when compared with $49.6 million in the prior year quarter.
o Pretax margins improved to 9.5 percent compared with 6.2 percent for
the first quarter 2002.
Information Technology Group (A):
o Record revenues for the first quarter 2003 were $339.0 million, an
increase of 37 percent compared with $247.4 million for the first
quarter of 2002.
o Pretax income was a record $96.4 million, an increase of 70 percent
when compared with $56.6 million in the prior year quarter.
o Pretax margins improved to 28.4 percent compared with 22.9 percent for
the first quarter 2002.
(A) Includes a pretax gain in the current quarter on the merger of the company's
Credit Online business with DealerTrack Holdings, Inc. of $13.1 million, $8.0
million on an after-tax basis, or 9 cents per diluted share.
2003 Strategic Focus and Outlook
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Kennedy continued: "The month of March provided all-time-record opened
order counts in our real estate-related businesses, which bodes well for the
company's second quarter results. The company's businesses that are less
dependant on the real estate cycle, which include auto credit, consumer credit,
homeowner's and home warranty insurance, and screening information, are
benefiting from the company's growth strategy to build products, services and
systems, and are performing well. We are excited about the merger with US
SEARCH.com, which is expected to close in the second quarter 2003. The new
public entity, which will be named First Advantage Corporation, will provide
significant opportunities in the rapidly expanding screening services industry."
First American Reports Record Results for the First Quarter 2003
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Page 3
Teleconference/Webcast
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First American's first quarter results will be discussed in more detail on
Wednesday, April 23, 2003, at 11 a.m. EDT, via teleconference. The dial-in
number is (800) 779-5182 and the pass code is FIRST AMERICAN. The live audio
webcast of the call will be available on First American's Web Site at
www.firstam.com/investor. An audio replay of the conference call will be
available through April 27, 2003, by dialing (402) 220-3575. An audio archive of
the call will also be available for replay on First American's Web site.
About First American
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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 $4.70 billion in 2002,
First American has nearly 25,000 employees in approximately 1,400 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.
Forward Looking Statements
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Certain statements made in this press release, including those relating
to second quarter results and opportunities in the screening services
industry 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; 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,
2002,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 Record Results for the First Quarter 2003
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Page 4
Summary of Earnings
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(in thousands, except per share amounts)
For the Three Months Ended
March 31
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2003 2002
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Total revenues $1,341,975 $1,042,202
Income before income taxes and minority interests $ 163,493 $ 88,559
Income taxes $ 56,000 $ 31,000
Minority interests $ 19,913 $ 13,484
Net income $ 87,580 $ 44,075
Net income per share:
Basic $1.18 $0.63
Diluted $1.05 $0.57
Weighted average shares outstanding:
Basic 74,159 69,995
Diluted 85,098 80,985
Cash Provided by Operating Activities
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(in thousands)
For the Three Months Ended
March 31
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2003 2002
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Cash provided by operating activities $ 82,840 $ 55,533
Summary Balance Sheet Information
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(in thousands, except per share amounts)
March 31 December 31
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2003 2002
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Total stockholders' equity $1,489,588 $1,364,589
Book value per share $19.62 $18.53
Summary Title Insurance Order Counts
From Direct Operations
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For the Three Months Ended
March 31
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2003 2002
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Title orders opened:
January 203,500 162,400
February 189,000 149,000
March 238,600 159,200
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First quarter total 631,100 470,600
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Title orders closed:
January 153,100 138,200
February 141,700 119,700
March 160,900 135,100
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First quarter total 455,700 393,000
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(Additional Financial Data Follows)
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First American Reports Record Results for the First Quarter 2003
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Page 5
Selected Financial Data
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(in thousands)
For the Three Months Ended
March 31
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2003 2002
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RESULTS OF OPERATIONS
Revenues
Operating revenues $ 1,304,863 $ 1,023,340
Investment and other income 24,567 18,803
Net realized investment gains 12,545 59
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1,341,975 1,042,202
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Expenses
Salaries and other personnel costs 407,217 345,325
Premiums retained by agents 365,709 284,294
Other operating expenses 293,387 237,358
Provision for title losses and other claims 67,239 47,099
Depreciation and amortization 26,015 24,148
Premium taxes 10,456 7,199
Interest 8,459 8,220
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1,178,482 953,643
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Income before income taxes and minority interests $ 163,493 $ 88,559
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OPERATING REVENUES
Financial Services
Title Insurance and Services:
Direct operations $ 484,308 $ 387,174
Agency operations 448,996 356,797
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933,304 743,971
Specialty Insurance 46,144 29,312
Trust and Other Services 9,905 11,156
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989,353 784,439
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Information Technology
Mortgage Information 139,108 108,130
Property Information 82,280 55,110
Credit Information 62,528 52,999
Screening Information 31,594 22,662
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315,510 238,901
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$ 1,304,863 $ 1,023,340
Total operating revenues
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INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS
Financial Services
Title Insurance and Services $ 86,766 $ 39,652
Specialty Insurance 5,839 5,682
Trust and Other Services 2,441 4,225
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95,046 49,559
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Information Technology
Mortgage Information 45,797 31,505
Property Information 23,443 11,645
Credit Information 26,607 12,653
Screening Information 515 782
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96,362 56,585
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Total before corporate expenses and
minority interest 191,408 106,144
Corporate expenses 27,915 17,585
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Income before income taxes and minority interests $ 163,493 $ 88,559
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First American Reports Record Results for the First Quarter 2003
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Page 6
Segment Margins
For the Three Months Ended March 31
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(in thousands, except percentages)
Total revenues Pretax (A) Margins
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2003 2002 2003 2002 2003 2002
------------ ------------ ------------ ------------ ---------- ----------
Financial Services
Title Insurance and Services: $ 944,391 $ 751,141 $ 86,766 $ 39,652 9.2% 5.3%
Specialty Insurance 48,584 31,567 5,839 5,682 12.0% 18.0%
Trust and Other Services 9,851 11,136 2,441 4,225 24.8% 37.9%
------------ ------------ ------------ ------------ ----------- ----------
$ 1,002,826 $ 793,844 $ 95,046 $ 49,559 9.5% 6.2%
============ ============ ============ ============ =========== ==========
Information Technology
Mortgage Information $ 141,877 $ 109,552 $ 45,797 $ 31,505 32.3% 28.8%
Property Information 87,441 58,473 23,443 11,645 26.8% 19.9%
Credit Information 78,046 56,632 26,607 12,653 34.1% 22.3%
Screening Information 31,618 22,754 515 782 1.6% 3.4%
----------- ------------ ------------ ------------ ------------ ----------
$ 338,982 $ 247,411 $ 96,362 $ 56,585 28.4% 22.9%
============ ============ ============ ============ ============ ==========
(A) - Income before income tax, minority interest and corporate expenses
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