EXHIBIT 99.1
Contact:
Thomas A. Klemens NEWS FOR
Sr. Executive Vice President & IMMEDIATE
Chief Financial Officer RELEASE
(714) 800-4401
THE FIRST AMERICAN CORPORATION REPORTS
RESULTS FOR THE THIRD QUARTER 2004
SANTA ANA, Calif., Oct. 27, 2004 - The First American Corporation (NYSE: FAF),
the nation's largest data provider, today announced results for the third
quarter ended Sept. 30, 2004:
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------------- -----------------------------------
2004 2003 2004 2003
----------------------------------- -----------------------------------
Total revenues $ 1.72 billion $ 1.72 billion $ 4.92 billion $ 4.60 billion
Income before income taxes
and minority interests $202.0 million $260.8 million $532.3 million $664.0 million
Net income $107.2 million $141.8 million $278.7 million $356.9 million
Net income per diluted share $1.17 $1.62 $3.07 $4.15
Summary of Operations
"The third quarter produced strong results despite a declining volume of
mortgage applications, particularly from refinance activity, when compared with
the record-setting third quarter of 2003," stated Parker S. Kennedy, chairman
and chief executive officer of The First American Corporation. "This decline in
refinance activity was offset, in part, by continued strength in the residential
resale and new home sale markets.
"We experienced strong order counts in the third quarter, and with recent
mortgage interest rates hitting 6-month lows, this trend should have a positive
impact on First American's fourth quarter operating results.
"Key acquisitions during the quarter included Basis100, which made First
American Real Estate Solutions the number one supplier of automated valuation
models; and Matrix Asset Management, which completes First American's full suite
of default outsourcing services."
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First American Reports Results for the Third Quarter 2004
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Quarterly Financial Highlights
Financial Services Group:
o Revenues for the third quarter 2004 were $1.30 billion, a decrease of
2.3 percent when compared with record-setting revenues of $1.33
billion for the third quarter of 2003.
o Pretax income was $131.8 million, a decrease of 26.5 percent when
compared with the record-setting $179.2 million in the prior year
quarter.
o Pretax margins declined to 10.1 percent compared with 13.5 percent for
the third quarter 2003.
Information Technology Group:
o Revenues for the third quarter 2004 were $415.3 million, an increase
of 8.3 percent compared with record-setting revenues of $383.6 million
for the third quarter of 2003.
o Pretax income was $105.3 million, a decrease of 3.6 percent when
compared with the record-setting third quarter 2003 income of $109.2
million.
o Pretax margins declined to 25.4 percent compared with 28.5 percent for
the third quarter 2003.
Strategic Focus and Outlook
Kennedy added: "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."
Teleconference/Webcast
First American's third quarter results will be discussed in more detail
on Wednesday, Oct. 27, 2004, at 10 a.m. EDT, 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 at
www.firstam.com/investor. An audio replay of the conference call will be
available through Nov. 2, 2004, by dialing (402) 220-2070. An audio archive of
the call will also be available for replay on First American's Web site.
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First American Reports Results for the Third Quarter 2004
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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
$6.21 billion in 2003, First American has 29,000 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 at
www.firstam.com.
Forward Looking Statements
Certain statements made in this press release, including those related
to 2004 fourth quarter 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; 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 Third Quarter 2004
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Summary of Earnings
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------ -------------------------------
2004 2003 2004 2003
------------------------------ -------------------------------
Total revenues $1,721,485 $1,716,742 $4,919,309 $4,601,648
Income before income taxes and minority interests $ 202,005 $ 260,759 $ 532,326 $ 664,005
Income taxes $ 70,800 $ 92,100 $ 187,500 $ 231,200
Minority interests $ 23,990 $ 26,812 $ 66,129 $ 75,902
Net income $ 107,215 $ 141,847 $ 278,697 $ 356,903
Net income per share:
Basic $1.21 $1.83 $3.27 $4.69
Diluted $1.17 $1.62 $3.07 $4.15
Weighted average shares outstanding:
Basic 88,595 77,660 85,330 76,080
Diluted 91,594 88,395 91,414 87,155
Summary Balance Sheet Information
(in thousands, except per share amounts)
September 30 December 31
-------------------------------
2004 2003
-------------------------------
Total stockholders' equity $2,381,308 $1,879,520
Book value per share $26.79 $23.84
Summary Title Insurance Order Counts
From Direct Operations
Three Months Ended
September 30
-------------------------------
2004 2003
-------------------------------
Title orders opened:
July 214,500 263,800
August 219,200 188,700
September 217,800 173,600
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Third quarter total 651,500 626,100
============= =============
Title orders closed:
July 164,100 217,900
August 167,700 197,900
September 162,300 173,500
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Third quarter total 494,100 589,300
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(Additional Financial Data Follows)
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First American Reports Results for the Third Quarter 2004
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Selected Financial Data
unaudited, in thousands)
Three Months Ended Nine Months Ended
September September
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2004 2003 2004 2003
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RESULTS OF OPERATIONS
Revenues
Operating revenues $ 1,680,887 $ 1,670,923 $ 4,811,518 $ 4,469,233
Investment and other income 35,541 40,058 98,685 112,522
Net realized investment gains 5,057 5,761 9,106 19,893
---------------- ---------------- --------------- ----------------
1,721,485 1,716,742 4,919,309 4,601,648
---------------- ---------------- --------------- ----------------
Expenses
Salaries and other personnel costs 545,294 490,152 1,553,691 1,337,138
Premiums retained by agents 458,750 477,504 1,341,486 1,251,997
Other operating expenses 358,694 348,528 1,071,971 969,719
Provision for title losses and other claims 97,975 89,464 255,082 236,106
Depreciation and amortization 32,981 27,134 93,677 79,704
Premium taxes 13,324 14,348 38,954 36,814
Interest 12,462 8,853 32,122 26,165
---------------- ---------------- --------------- ----------------
1,519,480 1,455,983 4,386,983 3,937,643
---------------- ---------------- --------------- ----------------
Income before income taxes and minority interests $ 202,005 $ 260,759 $ 532,326 $ 664,005
================ ================ =============== ================
OPERATING REVENUES
Financial Services
Title Insurance and Services:
Direct operations $ 645,203 $ 654,861 $ 1,820,654 $ 1,721,134
Agency operations 569,956 589,632 1,661,104 1,547,386
---------------- ---------------- --------------- ----------------
1,215,159 1,244,493 3,481,758 3,268,520
Specialty Insurance 61,617 55,180 159,956 152,213
---------------- ---------------- --------------- ----------------
1,276,776 1,299,673 3,641,714 3,420,733
---------------- ---------------- --------------- ----------------
Information Technology
Mortgage Information 171,698 163,473 494,282 459,837
Property Information 100,181 97,952 291,683 278,254
Credit Information 60,322 62,200 185,686 193,844
Screening Information 71,910 47,625 198,153 116,565
---------------- ---------------- --------------- ----------------
404,111 371,250 1,169,804 1,048,500
---------------- ---------------- --------------- ----------------
Total operating revenues $ 1,680,887 $ 1,670,923 $ 4,811,518 $ 4,469,233
================ ================ =============== ================
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS
Financial Services
Title Insurance and Services $ 123,509 $ 170,438 $ 322,583 $ 402,682
Specialty Insurance 8,334 8,741 32,431 22,821
---------------- ---------------- --------------- ----------------
131,843 179,179 355,014 425,503
---------------- ---------------- --------------- ----------------
Information Technology
Mortgage Information 52,690 64,733 131,029 173,183
Property Information 30,309 26,976 90,782 82,809
Credit Information 15,172 14,987 42,192 59,565
Screening Information 7,177 2,525 13,816 6,258
---------------- ---------------- --------------- ----------------
105,348 109,221 277,819 321,815
---------------- ---------------- --------------- ----------------
Total before corporate expenses and
minority interest 237,191 288,400 632,833 747,318
Corporate expense 35,186 27,641 100,507 83,313
---------------- ---------------- --------------- ----------------
Income before income taxes and minority interests $ 202,005 $ 260,759 $ 532,326 $ 664,005
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First American Reports Results for the Third Quarter 2004
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Segment Margins
(unaudited)
(in thousands, except percentages)
Three Months Ended September 30
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Total revenues Pretax (A) Margins
---------------------------------- ----------------------------- -----------------------------
2004 2003 2004 2003 2004 2003
---------------- ---------------- ------------- ------------- ------------- --------------
Financial Services
Title Insurance and Services $ 1,237,763 $ 1,273,195 $ 123,509 $ 170,438 10.0% 13.4%
Specialty Insurance 64,838 58,524 8,334 8,741 12.9% 14.9%
---------------- ---------------- ------------- ------------- ------------- --------------
$ 1,302,601 $ 1,331,719 $ 131,843 $ 179,179 10.1% 13.5%
================ ================ ============= ============= ============== ==============
Information Technology
Mortgage Information $ 174,508 $ 166,624 $ 52,690 $ 64,733 30.2% 38.8%
Property Information 106,396 105,001 30,309 26,976 28.5% 25.7%
Credit Information 62,450 64,354 15,172 14,987 24.3% 23.3%
Screening Information 71,936 47,644 7,177 2,525 10.0% 5.3%
---------------- ---------------- ------------- ------------- ------------- --------------
$ 415,290 $ 383,623 $ 105,348 $ 109,221 25.4% 28.5%
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Nine Months Ended September 30
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Total revenues Pretax (A) Margins
---------------------------------- ----------------------------- -----------------------------
2004 2003 2004 2003 2004 2003
---------------- ---------------- ------------- ------------- ------------- --------------
Financial Services
Title Insurance and Services $ 3,542,755 $ 3,338,623 $ 322,583 $ 402,682 9.1% 12.1%
Specialty Insurance 170,556 161,170 32,431 22,821 19.0% 14.2%
---------------- ---------------- ------------- ------------- ------------- --------------
$ 3,713,311 $ 3,499,793 $ 355,014 $ 425,503 9.6% 12.2%
================ ================ ============= ============= ============== ==============
Information Technology
Mortgage Information $ 501,214 $ 469,438 $ 131,029 $ 173,183 26.1% 36.9%
Property Information 310,266 297,599 90,782 82,809 29.3% 27.8%
Credit Information 192,709 214,181 42,192 59,565 21.9% 27.8%
Screening Information 198,295 116,636 13,816 6,258 7.0% 5.4%
---------------- ---------------- ------------- ------------- ------------- --------------
$ 1,202,484 $ 1,097,854 $ 277,819 $ 321,815 23.1% 29.3%
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(A) - Income before income tax, minority interest and corporate expenses
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