EXHIBIT 99.1
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THE FIRST AMERICAN CORPORATION REPORTS
RECORD-BREAKING QUARTERLY RESULTS
--Second Quarter Revenues, Net Income and EPS
Highest in Company's 114-Year History--
SANTA ANA, Calif., July 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-breaking results for the second
quarter ended June 30, 2003:
Three Months Ended Six Months Ended
June 30 June 30
--------------- ---------------- ---------------- -----------------
2003 2002 (A) 2003 (A) 2002
--------------- ---------------- ---------------- -----------------
Total revenues $ 1.54 billion $ 1.09 billion $ 2.88 billion $ 2.13 billion
Income before income taxes
and minority interests $239.8 million $ 80.1 million $ 403.2 million $ 168.6 million
Net income $127.5 million $ 40.1 million $ 215.1 million $ 84.2 million
Net income per diluted share $1.47 $0.51 $2.53 $1.07
(A) Includes a $13.6 million pretax investment loss relating to the write down
of WorldCom Bonds, $8.1 million on an after-tax basis, or 10 cents per diluted
share.
Summary of Operations
"We achieved a company milestone with our phenomenal second quarter
results," stated Parker S. Kennedy, president of The First American Corporation.
"Our 2003 second quarter revenues, net income and earnings per share were the
highest quarterly results in the company's 114-year history, far exceeding our
record-breaking 2003 first quarter. Second quarter earnings benefited
significantly by production efficiencies in our Title segment resulting from our
FAST technology and related infrastructure cost-cutting initiatives, which
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First American Reports Record-Breaking Quarterly Results
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helped increase profit margins. Also contributing to the company's second
quarter performance were record transaction volumes for new home sales, resales
and refinancings."
Quarterly Financial Highlights
Financial Services Group:
- Record revenues for the second quarter 2003 were $1.17 billion, an
increase of 36 percent when compared with $855.9 million for the
second quarter of 2002.
- Pretax income was a record $151.3 million, an increase of 149 percent
when compared with $60.9 million in the prior year quarter.
- Pretax margins improved to 13.0 percent compared with 7.1 percent for
the second quarter 2002.
Information Technology Group:
- Record revenues for the second quarter 2003 were $375.2 million, an
increase of 51 percent compared with $248.6 million for the second
quarter of 2002.
- Pretax income was a record $116.2 million, an increase of 116 percent
when compared with $53.8 million in the prior year quarter.
- Pretax margins improved to 31.0 percent compared with 21.6 percent for
the second quarter 2002.
2003 Strategic Focus and Outlook
Kennedy continued: "The second quarter also produced record mortgage
applications, which should result in increased title order closings in the third
quarter and strong results in the mortgage-related businesses of our Information
Technology group. While interest rates have gradually increased in the last
month from their historic lows, transaction volumes continue to be above normal
levels of activity as mortgage rates remain very affordable."
"First American's counter-cyclical businesses, such as the foreclosure and
subprime credit businesses in the Mortgage Information and Credit Information
segments, should benefit from the higher interest rate environment. The
company's non-real estate businesses, such as auto credit and screening
information, are less sensitive to interest rate changes and should continue to
perform well if interest rates climb. The merger of First American's Screening
Information business segment with US SEARCH.com Inc. closed in the second
quarter, resulting in the formation of First Advantage Corporation (NASDAQ:
FADV). We are very excited about the benefits and opportunities this new public
company will provide First American as the screening services industry continues
to expand."
First American Reports Record-Breaking Quarterly Results
Page 3
Teleconference/Webcast
First American's second quarter results will be discussed in more detail on
Wednesday, July 23, 2003, at 10 a.m. EDT, via teleconference. The dial-in number
is (800) 779-3135 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 July 28, 2003, by dialing (402) 530-7966. 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 leading diversified provider of business
information, 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 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
Certain statements made in this press release, including those relating to
title closings in the third quarter, results in mortgage-related
businesses, benefits to foreclosure and subprime credit businesses and the
performance of the company's non-real estate businesses 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; 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-Breaking Quarterly Results
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Summary of Earnings
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
----------------------------- --------------------------------
2003 2002 2003 2002
----------------------------- --------------------------------
Total revenues $1,542,931 $1,091,530 $2,884,906 $2,133,732
Income before income taxes and minority interests $ 239,753 $ 80,054 $ 403,246 $ 168,613
Income taxes $ 83,100 $ 26,300 $ 139,100 $ 57,300
Minority interests $ 29,177 $ 13,633 $ 49,090 $ 27,117
Net income $ 127,476 $ 40,121 $ 215,056 $ 84,196
Net income per share:
Basic $1.67 $0.56 $2.86 $1.19
Diluted $1.47 $0.51 $2.53 $1.07
Weighted average shares outstanding:
Basic 76,420 71,454 75,289 70,725
Diluted 87,915 82,672 86,506 81,829
Cash Provided by Operating Activities
(in thousands)
Three Months Ended Six Months Ended
June 30 June 30
----------------------------- --------------------------------
2003 2002 2003 2002
----------------------------- --------------------------------
Cash provided by operating activities $ 279,372 $140,407 $ 362,212 $195,940
Summary Balance Sheet Information
(in thousands, except per share amounts)
June 30 December 31
-------------------------------
2003 2002
-------------------------------
Total stockholders' equity $1,642,672 $1,364,589
Book value per share $21.20 $18.53
Summary Title Insurance Order Counts
From Direct Operations
Three Months Ended
June 30
-------------------------------
2003 2002
-------------------------------
Title orders opened:
April 228,700 159,900
May 253,100 162,400
June 288,200 155,200
----------------- ---------------
Second quarter total 770,000 477,500
================= ===============
Title orders closed:
April 178,200 136,400
May 174,700 130,000
June 180,200 115,100
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Second quarter total 533,100 381,500
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(Additional Financial Data Follows)
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Select Financial Data
(in thousands)
Three Months Ended Six Months Ended
June 30 June 30
------------------------------------- --------------------------------------
2003 2002 2003 2002
------------------------------------- --------------------------------------
RESULTS OF OPERATIONS
Revenues
Operating revenues $ 1,513,554 $ 1,084,581 $ 2,818,417 $ 2,107,921
Investment and other income 27,790 19,576 52,357 38,379
Net realized investment gains (losses) 1,587 (12,627) 14,132 (12,568)
----------------- ----------------- ------------------ ----------------
1,542,931 1,091,530 2,884,906 2,133,732
----------------- ----------------- ------------------ ----------------
Expenses
Salaries and other personnel costs 439,769 363,918 846,986 709,243
Premiums retained by agents 408,784 308,839 774,493 593,133
Other operating expenses 327,804 243,829 621,191 481,187
Provision for title losses and other claims 79,403 52,697 146,642 99,796
Depreciation and amortization 26,555 25,084 52,570 49,232
Premium taxes 12,010 8,393 22,466 15,592
Interest 8,853 8,716 17,312 16,936
----------------- ----------------- ------------------ ----------------
1,303,178 1,011,476 2,481,660 1,965,119
----------------- ----------------- ------------------ ----------------
Income before income taxes and minority interests $ 239,753 $ 80,054 $ 403,246 $ 168,613
================= ================= ================== ================
OPERATING REVENUES
Financial Services
Title Insurance and Services:
Direct operations $ 581,965 $ 419,603 $ 1,066,273 $ 806,777
Agency operations 508,758 378,622 957,754 735,419
----------------- ----------------- ------------------ -----------------
1,090,723 798,225 2,024,027 1,542,196
Specialty Insurance 50,889 33,580 97,033 62,892
Trust and Other Services 10,202 11,538 20,107 22,694
----------------- ----------------- ------------------ -----------------
1,151,814 843,343 2,141,167 1,627,782
----------------- ----------------- ------------------ -----------------
Information Technology
Mortgage Information 157,256 108,530 296,364 216,660
Property Information 98,022 57,453 180,302 112,563
Credit Information 69,116 50,548 131,644 103,547
Screening Information 37,346 24,707 68,940 47,369
----------------- ----------------- ------------------ ----------------
361,740 241,238 677,250 480,139
----------------- ----------------- ------------------ ----------------
Total operating revenues $ 1,513,554 $ 1,084,581 $ 2,818,417 $ 2,107,921
================= ================= ================== ================
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS
Financial Services
Title Insurance and Services $ 140,035 $ 50,110 $ 226,801 $ 89,762
Specialty Insurance 8,241 6,159 14,080 11,841
Trust and Other Services 3,002 4,587 5,443 8,812
----------------- ----------------- ------------------ -----------------
151,278 60,856 246,324 110,415
----------------- ----------------- ------------------ -----------------
Information Technology
Mortgage Information 62,653 29,551 108,450 61,057
Property Information 32,390 15,021 55,833 26,665
Credit Information 17,971 7,231 44,578 19,884
Screening Information 3,218 1,966 3,733 2,748
----------------- ----------------- ------------------ -----------------
116,232 53,769 212,594 110,354
----------------- ----------------- ------------------ -----------------
Total before corporate expenses and
minority interest 267,510 114,625 458,918 220,769
Corporate expense 27,757 34,571 55,672 52,156
----------------- ----------------- ------------------ ----------------
Income before income taxes and minority interests $ 239,753 $ 80,054 $ 403,246 $ 168,613
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First American Reports Record-Breaking Quarterly Results
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Segment Margins
(in thousands, except percentages)
Three Months Ended June 30
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Total revenues Pretax (A) Margins
------------------------------- ------------------------------- ------------------------
2003 2002 2003 2002 2003 2002
------------- -------------- -------------- ------------- ---------- ----------
Financial Services
Title Insurance and Services $ 1,100,929 $ 808,092 $ 140,035 $ 50,110 12.7% 6.2%
Specialty Insurance 54,062 36,120 8,241 6,159 15.2% 17.1%
Trust and Other Services 10,257 11,650 3,002 4,587 29.3% 39.4%
------------- -------------- -------------- ------------- ---------- ----------
$ 1,165,248 $ 855,862 $ 151,278 $ 60,856 13.0% 7.1%
============= ============== ============== ============= ========== ==========
Information Technology
Mortgage Information $ 160,937 $ 109,497 $ 62,653 $ 29,551 38.9% 27.0%
Property Information 105,157 62,283 32,390 15,021 30.8% 24.1%
Credit Information 71,781 52,122 17,971 7,231 25.0% 13.9%
Screening Information 37,374 24,700 3,218 1,966 8.6% 8.0%
------------- -------------- -------------- ------------- ---------- ----------
$ 375,249 $ 248,602 $ 116,232 $ 53,769 31.0% 21.6%
============= ============== ============== ============= ========== ==========
Six Months Ended June 30
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Total revenues Pretax (A) Margins
------------------------------- ------------------------------- ------------------------
2003 2002 2003 2002 2003 2002
------------- -------------- -------------- ------------- ---------- ----------
Financial Services
Title Insurance and Services $ 2,045,320 $ 1,559,233 $ 226,801 $ 89,762 11.1% 5.8%
Specialty Insurance 102,646 67,687 14,080 11,841 13.7% 17.5%
Trust and Other Services 20,108 22,786 5,443 8,812 27.1% 38.7%
------------- -------------- -------------- ------------- ---------- ----------
$ 2,168,074 $ 1,649,706 $ 246,324 $ 110,415 11.4% 6.7%
============= ============== ============== ============= ========== ==========
Information Technology
Mortgage Information $ 302,814 $ 219,049 $ 108,450 $ 61,057 35.8% 27.9%
Property Information 192,598 120,756 55,833 26,665 29.0% 22.1%
Credit Information 149,827 108,754 44,578 19,884 29.8% 18.3%
Screening Information 68,992 47,454 3,733 2,748 5.4% 5.8%
------------- -------------- -------------- ------------- ---------- ----------
$ 714,231 $ 496,013 $ 212,594 $ 110,354 29.8% 22.2%
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(A) Income before income tax, minority interest and corporate expenses