1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
------------
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number 1-12688
STEWART INFORMATION SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 74-1677330
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1980 POST OAK BLVD., HOUSTON, TEXAS 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 625-8100
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1 PAR VALUE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 1, 1998, 6,389,846 shares of Common Stock, $1 par value,
and 525,006 shares of Class B Common Stock, $1 par value, were outstanding. The
aggregate market value as of such date of the Common Stock (based upon the
closing sales price of the Common Stock as reported by the NYSE on February 27,
1998 of Stewart Information Services Corporation held by non-affiliates of the
Registrant was approximately $200,513,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Stewart Information Services Corporation Annual Report
to Stockholders for the year ended December 31, 1997 are incorporated by
reference in Parts I and II of this document.
Portions of the definitive proxy statement (the "Proxy Statement"),
relating to the annual meeting of the Registrant's stockholders to be held April
24, 1998, are incorporated by reference in Parts III and IV of this document.
- --------------------------------------------------------------------------------
2
FORM 10-K
ANNUAL REPORT
YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
PART I
ITEM
NO. PAGE
--- ----
1. Business ................................................................. 1
2. Properties ............................................................... 3
3. Legal Proceedings ........................................................ 4
4. Submission of Matters to a Vote of Security Holders ...................... 4
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters .... 5
6. Selected Financial Data .................................................. 6
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations ............................................................. 6
8. Financial Statements and Supplementary Data .............................. 6
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ............................................................. 6
PART III
10. Directors and Executive Officers of the Registrant ....................... 7
11. Executive Compensation ................................................... 7
12. Security Ownership of Certain Beneficial Owners and Management ........... 7
13. Certain Relationships and Related Transactions ........................... 7
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ......... 8
Signatures .............................................................. 9
i
3
P A R T I
ITEM 1. BUSINESS
Stewart's primary business is title insurance. Stewart issues policies through
more than 3,800 issuing locations on homes and other real property located in
all 50 states, the District of Columbia and several foreign countries. Stewart
also sells computer-related services and information, as well as mapping
products and geographic information systems, to government and private entities,
both domestic and foreign.
Examination and closing. The purpose of a title examination is to ascertain the
ownership of the property being transferred, what debts are owed on it and what
the title policy coverage will be. This involves searching for and examining
documents such as deeds, mortgages, wills, divorce decrees, court judgments,
liens, paving assessments and tax records.
At the closing or "settlement", the seller executes a deed to the new owner. The
buyer signs new mortgage documents. Closing funds are then disbursed to the
seller, the prior mortgage company, real estate brokers, the title company and
others. The documents are then recorded in the public records. A title policy is
generally issued to both the lender and new owner.
Title policies. Lenders in the USA generally require title insurance as a
condition to making a loan on real estate, including securitized lending. This
is to assure lenders of the priority of their lien position. The purchasers of
the property want the assurance given in their policy against claims that may
arise against their ownership. The face amount of the policy is normally the
purchase price or the amount of the related loan.
Title insurance is substantially different from other types of insurance. Fire,
auto, health and life insurance protect against losses and events in the future.
In contrast, title insurance seeks to eliminate most risks through the
examination and settlement process.
Losses. Losses on policies occur because of a title defect not discovered during
the examination and settlement process. Other reasons for losses include
forgeries, misrepresentations, unrecorded construction liens, the failure to pay
off existing liens, mishandling of settlement funds, issuance by agents of
unauthorized coverages and other legal issues.
Some claimants seek damages in excess of policy limits. Such claims are based on
various legal theories usually alleging misrepresentation by an issuing office.
Although the Company vigorously defends against spurious claims, it has from
time to time incurred a loss in excess of policy limits.
Experience shows that most claims against policies and claim payments are made
in the first six years after the policy has been issued, although claims may be
made many years later. By their nature, claims are often complex, vary greatly
in dollar amounts and are affected by economic and market conditions and the
legal environment existing at the time of settlement of the claims.
Factors affecting revenues. Title revenues are closely related to the level of
activity in the real estate market and the prices at which real estate sales are
made. Real estate sales are directly affected by the availability and cost of
money to finance purchases. Other factors include demand by buyers, consumer
confidence and family incomes. These factors may override the seasonal nature of
the title business. Generally, the third quarter is the most active in terms of
real estate sales and the first quarter is the least active.
-1-
4
Selected information for the national real estate industry follows (1997 amounts
are preliminary):
- -----------------------------------------------------------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------------------------------
Housing starts - millions ............... 1.48 1.47 1.35
Housing resales - millions .............. 4.22 4.09 3.80
Housing resales - median sales price in $
thousands ............................. 124.1 118.1 112.9
Customers. The primary sources of title business are attorneys, builders,
developers, lenders and real estate brokers. No one customer was responsible for
as much as five percent of Stewart's title revenues in any of the last three
years. Titles insured included residential and commercial properties,
undeveloped acreage, farms and ranches.
Service, location, financial strength, size and related factors affect customer
acceptance. Increasing market share is accomplished primarily by providing
superior service. The parties to a closing are concerned with personal schedules
and the interest and other costs associated with the delays in the settlement.
The rates charged to customers are regulated to varying degrees by different
states.
Market share. Estimating a title insurer's market share is difficult. Stewart
believes it is the leading title insurer in Texas and in a number of cities
across the USA. Based on unconsolidated statutory net premiums written for 1996
(1997 amounts are not available), Stewart Title Guaranty Company ("Guaranty") is
the fourth largest title insurer in America.
Competitors include (names are abbreviated) Chicago Title, Commonwealth,
Fidelity, First American, Lawyers Title and Old Republic (Commonwealth and
Lawyers Title merged in January 1998). As do most title insurers, Stewart also
competes with abstractors, attorneys who issue title opinions and attorney-owned
title insurance bar funds. A number of home builders, financial institutions,
real estate brokers and others own or control title insurance agents, some of
which issue policies underwritten by Guaranty. This "controlled" business also
provides competition for Stewart's agents.
Offices. The number of locations issuing Stewart policies was 3,798 at December
31, 1997, compared to 3,763 a year earlier and 3,549 two years earlier. Of these
totals, 3,517, 3,488 and 3,302 were independent agents at December 31, 1997,
1996, and 1995, respectively.
Title revenues by state. The approximate amounts and percentages of Stewart's
consolidated title revenues (excluding other revenues) by state for the last
three years were:
AMOUNTS
($ MILLIONS) PERCENTAGES
========================== ==========================
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
California ....... 123 119 97 19 20 20
Texas ............ 116 111 93 18 18 19
New York ......... 51 50 35 8 8 7
Florida .......... 47 40 29 7 7 6
Colorado ......... 20 18 16 3 3 3
Nevada ........... 19 18 14 3 3 3
Arizona .......... 19 17 14 3 3 3
All others ....... 262 236 198 39 38 39
---- ---- ---- ---- ---- ----
657 609 496 100 100 100
==== ==== ==== ==== ==== ====
-2-
5
Regulations. Title insurance companies are subject to extensive state
regulations covering rates, agent licensing, policy forms, trade practices,
reserve requirements, investments and the flow of funds between an insurer and
its parent or its subsidiaries and any similar related party transaction.
Kickbacks and similar practices are prohibited by certain state and federal
laws.
Employees. Stewart and its subsidiaries employed approximately 4,569 persons at
December 31, 1997.
ITEM 2. PROPERTIES
The Registrant and its wholly-owned subsidiary, Stewart Title Guaranty
Company and its subsidiaries ("Guaranty"), own or lease the following
properties:
The following table sets forth information about the Registrant's other
principal properties:
Location Type Use Size Acquired In
- ------------------------ ---------------------- ------------------- -------------- -----------
Houston, Texas Leased office building Executive office of 218,318 sq. ft. (1)
the Registrant and
Guaranty
Corpus Christi, Texas Leased office building Office of Guaranty 27,000 sq. ft (2)
Houston, Texas Leased office building Office of Guaranty 26,420 sq. ft (3)
Dallas, Texas Leased office building Office of Guaranty 25,117 sq. ft (4)
Austin, Texas Leased office building Office of Guaranty 24,773 sq. ft. (5)
Los Angeles, California Leased office building Office of Guaranty 22,466 sq. ft. (2)
San Diego, California Leased office building Office of Guaranty 20,020 sq. ft. (4)
Riverside, California Leased office building Office of Guaranty 20,968 sq. ft. (2)
Fresno, California Leased office building Office of Guaranty 13,204 sq. ft. (2)
San Antonio, Texas Owned office building Office of Guaranty 26,769 sq. ft. 1980 & 1982
Galveston, Texas Owned office building Office of Guaranty 50,000 sq. ft. 1905
Phoenix, Arizona Owned office building Office of Guaranty 24,459 sq. ft. 1981
Phoenix, Arizona Owned office building Office of Guaranty 17,500 sq. ft. 1985
Tucson, Arizona Owned office building Office of Guaranty 24,000 sq. ft. 1974
(1) This lease terminates in 2004.
(2) These leases terminate in 1998.
(3) These leases terminate in 2002.
(4) These leases terminate in 2000.
(5) This lease terminates in 2001.
The Registrant leases offices at approximately 287 locations. The
average term for all such leases is approximately six years. The leases expire
from 1998 to 2006. The Registrant believes it will not have any difficulty
obtaining renewals of leases as they expire or, alternatively, leasing
comparable property. The aggregate annual rental expense under all leases was
approximately $20,520,000.
All buildings and equipment owned or leased by the Registrant are
considered by the Registrant to be well maintained, adequately insured and
generally sufficient for the Registrant's purposes. Substantially all of the
Registrant's owned real property above is subject to mortgages.
-3-
6
ITEM 3. LEGAL PROCEEDINGS
The Registrant is a party to routine lawsuits incidental to its
business most of which involve disputed policy claims. In many of these suits,
the plaintiff seeks exemplary or treble damages in excess of policy limits based
on the alleged malfeasance of an issuing agent of the Registrant. The Registrant
does not expect that any of these proceedings will have a material adverse
effect on its financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
-4-
7
P A R T II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table sets forth the high and low sales prices of the
Common Stock for each fiscal period indicated, as reported by NYSE, and the
amount of cash dividends paid per share.
HIGH LOW DIVIDENDS
---- --- ---------
1997:
First quarter ................................. 21.13 19.88 .06
Second quarter ................................ 21.00 18.75 .06
Third quarter ................................. 26.44 20.50 .07
Fourth quarter ................................ 29.25 25.00 .07
1996:
First quarter ................................. 21.38 19.63 .06
Second quarter ................................ 21.25 19.63 .06
Third quarter ................................. 21.00 20.00 .06
Fourth quarter ................................ 22.63 20.25 .06
The Company has paid regular quarterly cash dividends on its Common
Stock since 1972. The Company's Certificate of Incorporation provides that no
cash dividends may be paid on the Class B Common Stock.
While it is the current intention of the Board of Directors to continue
to pay quarterly cash dividends on its Common Stock, the payment of future
dividends necessarily will depend on the earnings and financial needs of the
Company, as well as applicable legal restrictions.
The number of shareholders of record as of December 31, 1997 was 2,220.
-5-
8
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data have been included on Page 18 of the
Registrant's Annual Report to Stockholders for the year ended December 31, 1997,
and such information is incorporated herein by reference. See Exhibit 13 hereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is set forth on Pages 19 through
21 of the Registrant's Annual Report to Stockholders for the year ended December
31, 1997, and such information is incorporated herein by reference. See Exhibit
13 hereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
1997 Annual Report
to Stockholders
Page No.
--------
Independent Auditors' Report ................................... 21
Consolidated Statements of Earnings and Retained Earnings for the
Years Ended December 31, 1997, 1996 and 1995 .................... 22
Consolidated Balance Sheets as of December 31, 1997 and 1996 .... 23
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 ................................ 24
Notes to Consolidated Financial Statements ...................... 25
See Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
-6-
9
P A R T III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 24,1998, under the captions "Election of Directors" and
"Executive Compensation", and such information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 24, 1998, under the caption "Executive Compensation", and such
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 24, 1998, under the caption "Security Ownership of Certain
Beneficial Owners and Management", and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 24, 1998, under the caption "Executive Compensation", and such
information is incorporated herein by reference.
-7-
10
P A R T IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. and 2. Financial Statements and Financial Statement Schedules
Item 8 of this Report on Form 10-K lists certain consolidated
financial statements of the Registrant and its subsidiaries incorporated by
reference to the Annual Report to Stockholders for the year ended December 31,
1997, which includes a reference to appropriate page numbers in such Annual
Report.
---------
Form 10-K
Page No.
---------
Independent Auditors' Report ........................................ 10
Reports of Independent Auditors ..................................... 11
Schedule II - Financial information of the Registrant (Parent Company) 40
Schedule V - Valuation and Qualifying Accounts ....................... 44
All other schedules are omitted, as the required information is inapplicable or
the information is presented in the consolidated financial statements or related
notes.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended December
31, 1997.
(c) Exhibits
3.1 - Certificate of Incorporation of the Registrant, as amended
April 30, 1993
3.2 - By-Laws of the Registrant
4 - Rights of Common and Class B Common Stockholders
(incorporated by reference to Exhibits 3.1 and 3.2 hereto)
10.1 - Summary of agreements as to payment of bonuses to certain
executive officers
10.2 - Deferred Compensation Agreements dated March 10, 1986,
amended July 24, 1990 and October 30, 1992, between the
Registrant and certain executive officers.
13 - Annual Report to Stockholders for 1997 (the financial text
of the annual report incorporated herein by reference in Item
6 of Part II of this report)
21 - Subsidiaries of the Registrant
23 - Consents of Independent Certified Public Accountants,
including consents to incorporation by reference of their
reports into previously filed Securities Act registration
statements.
27 - Financial Data Schedule
-8-
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
STEWART INFORMATION SERVICES CORPORATION
(Registrant)
By: Carloss Morris
---------------------------------------
Carloss Morris, Co-Chief Executive Officer
and Chairman of the Board of Directors
By: Stewart Morris
---------------------------------------
Stewart Morris, Co-Chief Executive
Officer, President and Director
By: Max Crisp
---------------------------------------
Max Crisp, Vice President-Finance,
Secretary, Treasurer, Director and
Principal Financial and
Accounting Officer
Dated: March 18, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
Max Crisp Director March 18, 1998
- -------------------------------- --------------
(Max Crisp)
E. Douglas Hodo Director March 18, 1998
- -------------------------------- --------------
(E. Douglas Hodo)
C. M. Hudspeth Director March 18, 1998
- -------------------------------- --------------
(C. M. Hudspeth)
Carloss Morris Director March 18, 1998
- -------------------------------- --------------
(Carloss Morris)
Stewart Morris Director March 18, 1998
- -------------------------------- --------------
(Stewart Morris)
-9-
12
Independent Auditors' Report
To the Board of Directors and Stockholders
of Stewart Information Services Corporation:
Under date of February 13, 1998, we reported on the consolidated balance sheets
of Stewart Information Services Corporation and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of earnings and retained
earnings and cash flows for each of the years in the three-year period ended
December 31, 1997, as contained in the 1997 annual report to stockholders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year 1997.
In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related financial statement schedules as listed
in the accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
Houston, Texas
February 13, 1998
-10-
13
REPORT OF INDEPENDENT ACCOUNTANT
Stewart Title Company
El Paso, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office at 500 N. Mesa, Suite 300, El Paso, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company, El
Paso, Texas, as of December 31, 1997 and 1996, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ M. TIMOTHY O'ROARK, C.P.A.
M. TIMOTHY O'ROARK, C.P.A.
El Paso, Texas
February 3, 1998
-11-
14
To the Board of Directors
Stewart Title of California
San Jose, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Stewart Title of
California at December 31, 1996 and 1995 and the related statements of income,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Stewart Title of
California as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 16, 1997
-12-
15
To the Board of Directors
Stewart Title of Monterey County
Monterey, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Stewart Title of Monterey
County at December 31, 1996 and 1995 and the related statements of income,
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Stewart Title of Monterey
County as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 7, 1997
-13-
16
To the Board of Directors
Stewart Title of Fresno County
Fresno, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Stewart Title of
Fresno County at December 31, 1996 and 1995 and the related statements of
income, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Stewart Title of
Fresno County as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 8, 1997
-14-
17
To the Board of Directors
Stewart Tide of Modesto
Modesto, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Stewart Title of
Modesto at December 31, 1996 and 1995, and the related statements of income,
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Stewart Title of
Modesto as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 7, 1997
-15-
18
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Stewart Title Dallas, Inc.
dba: Stewart Title North Texas, Inc.
We have audited the Statement of assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997, prepared from the accounts maintained at your
office at 5728 LBJ freeway, Dallas, Texas.
This financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the assets
and liabilities of such accounts handled by Stewart Title Dallas, Inc. dba:
Stewart Title North Texas, Inc, as of December 31, 1997 in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and are not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ WILKERSON & ARTHUR, P.C.
Wilkerson & Arthur, P.C.
January 28, 1998
-16-
19
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Priority Title Company of Dallas, L.L.C.
We have audited the Statement of assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997, prepared from the accounts maintained at your
office at 5728 LBJ freeway, Dallas, Texas.
This financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation, We believe that our audit provides a reasonable basis
for our opinion,
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Priority Title Company of
Dallas, L.L.C. as of December 31, 1997 in conformity with generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and are not a required part of the basic financial
statement, Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ WILKERSON & ARTHUR, P.C.
Wilkerson & Arthur, P,C.
January 28, 1998
-17-
20
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title - Houston Division
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts of the National Title Services Division of Stewart Title
Guaranty Company as of December 31, 1997, prepared from the accounts maintained
in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. we conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Stewart Title
Guaranty Company as of December 31, 1997, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATZER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 23, 1998
-18-
21
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title - Houston Division
I have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts of the National Title Services Division of Stewart Title Guaranty
Company as of December 31, 1996, prepared from the accounts maintained in your
office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's management. My
responsibility is to express an opinion on this financial statement based on my
audit. I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made my
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by the National Title Services
Division of Stewart Title Guaranty Company as of December 31, 1996, in
conformity with generally accepted accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ GINNY SANDERS MAY, CPA
January 21, 1997
-19-
22
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title - Houston Division
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility Of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Stewart
Title - Houston Division as of December 31, 1997, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 21, 1998
-20-
23
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title - Houston Division
I have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1996, prepared from the accounts maintained in your
office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's management. My
responsibility is to express an opinion on this financial statement based on my
audit. I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made my
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by the Houston Division of
Stewart Title as of December 31, 1996, in conformity with generally accepted
accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ GINNY SANDERS MAY, CPA
January 21, 1997
-21-
24
INDEPENDENT AUDITORS' REPORT
Managers
Priority Title Company of Houston, L.L.C.
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Priority Title
Company of Houston, L.L.C. as of December 31, 1997, in conformity with
generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATZER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 15, 1998
-22-
25
INDEPENDENT AUDITORS' REPORT
Managers
Priority Title Company of Houston, L.L.C.
I have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1996, prepared from the accounts maintained in your
office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's management. My
responsibility is to express an opinion on this financial statement based on my
audit. I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made my
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Priority Title Company of
Houston, L.L.C. as of December 31, 1996, in conformity with generally accepted
accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ GINNY SANDERS MAY, CPA
January 21, 1997
-23-
26
INDEPENDENT AUDITORS' REPORT
Managers
Premier Title Company of Houston, L.L.C.
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. we conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Premier Title
Company of Houston, L.L.C. as of December 31, 1997, in conformity with
generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATZER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 16, 1998
-24-
27
INDEPENDENT AUDITORS' REPORT
Managers
MHI Title Company of Houston, L.L.C.
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by MHI Title
Company of Houston, L.L.C. as of December 31, 1997, in conformity with
generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATZER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 16, 1998
-25-
28
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title Company - Beaumont Division
Beaumont, Texas 77706
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997, prepared from the accounts maintained at your
office at 2390 N. Dowlen Road, Beaumont, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company -
Beaumont Division, as of December 31, 1997, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
Very truly yours,
/s/ EDGAR, KIKER & CROSS, L.L.P.
EDGAR, KIKER & CROSS, L.L.P.
Certified Public Accountants
RTE/rh
-26-
29
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Stewart Title Company
Houston, Texas
I have examined the statements of assets and liabilities of trust (escrow) fund
accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office in San Antonio, Texas.
My examination, which was limited to such accounts, was made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other auditing procedures as I considered
necessary in the circumstances.
In my opinion, the aforementioned statements of assets and liabilities of trust
(escrow) fund accounts (not separately presented herein) present fairly the
assets and liabilities of such accounts handled by the San Antonio Division of
Stewart Title Company, as of December 31, 1997 and 1996, in accordance with
generally accepted accounting principles, applied on a consistent basis.
/s/ JIM S. WALKER
---------------------------
Jim S. Walker
Certified Public Accountant
Beaumont, Texas
January 20, 1998
-27-
30
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Stewart Title Company
Amarillo, Texas District Office
We have audited the accompanying Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained at your office at Amarillo, Texas. This financial statement is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts provides a reasonable basis for our opinion.
In our opinion, the accompanying Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Stewart Title
Company, for the year then ended in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basis
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the audit of the basic Statement of Assets and Liabilities, and is fairly
stated in all material respects in relation to the basic Statement of Assets
and Liabilities, taken as a whole.
/s/ DOSHIER, PICKENS & FRANCIS, P.C.
DOSHIER, PICKENS, & FRANCIS, P.C.
January 16, 1998
-28-
31
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title of Corpus Christi, Inc.
Corpus Christi, Texas
We have audited the Statements of Assets and Liabilities of Trust (Escrow] Fund
Accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office at Corpus Christi, Texas. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit of the financial statements
provides a reasonable basis for our opinion.
In our opinion, the Statements of Assets and Liabilities of Trust [Escrow] Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of Corpus
Christi, Inc., as of December 31, 1997 and 1996, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information contained
in Exhibits C through F, inclusive, and Exhibit H of this report is presented
as additional information and is not a required part of the basic financial
statements. Such Information has been subjected to the audit procedures applied
in the examination of the basic statements of assets and liabilities, and is
fairly stated in all material respects In relation to the basic statements of
assets and liabilities, taken as a whole.
/s/ FANCHER AND COMPANY
FANCHER AND COMPANY
January 22, 1998
-29-
32
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors
Stewart Title of Lubbock, Inc,
7802 Indiana Avenue
Lubbock, Texas 79423
I have audited the accompanying Statement of Assets and Liabilities of Trust
(Escrow) Accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office at 7802 Indiana Avenue, Lubbock, Texas 79423.
These financial statements are the responsibility of the company's management.
My responsibility is to express an opinion of these financial statements based
on my audits. I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audits provides a reasonable basis for my
opinions,
In my opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above present fairly, in all material respects, the assets
and liabilities of such escrow accounts handled by Stewart Title of Lubbock,
Inc., as of December 31, 1997, and 1996 in conformity with generally accepted
accounting principles.
My audits have been made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information contained
in Exhibit C through F, inclusive, and Exhibit H of these reports, is presented
as additional information and is not a required part of the basic financial
statements. Such information has been subjected to the audit procedures applied
in the examination of the basic Statement of Assets and Liabilities, and is
fairly stated in all material respects in relation to the basic statements of
assets and liabilities taken as a whole,
/s/ JESUS YEPEZ CPA
Jesus Yepez
Certified Public Accountant
Lubbock, Texas
January 29, 1998
-30-
33
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors
Stewart Title Guaranty Company
Houston, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office at 2401 Moores Lane, Texarkana, Texas.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinions.
In our opinion, the Statements of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above present fairly, in all material respects, the assets
and liabilities of such accounts handled by Stewart Title of Texarkana as of
December 31, 1997 and 1996, in conformity with generally accepted accounting
principles.
Our audits have been made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information contained
in Exhibits C through F, inclusive, and Exhibit H of these reports are
presented as additional information and are not a required part of the basic
financial statements. Such information has been subjected to the audit
procedures applied in the examinations of the basic statements of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statements of assets and liabilities, taken as a whole.
/s/ WILLIAMS & PEARCY
Williams & Pearcy, P.C.
January 19, 1998
-31-
34
INDEPENDENT AUDITOR'S REPORT
Stewart Title Company of Rockport, Inc.
Rockport, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997 prepared from the accounts maintained at your
office at Rockport, Texas.
The financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the assets
and liabilities of such accounts handled by Stewart Title Company of Rockport,
Inc. as of December 31, 1997, in conformity with generally accepted accounting
principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through H, inclusive and Form T-19, of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ FLUSCHE, VAN BEVEREN, KILGORE, P.C.
FLUSCHE, VAN BEVEREN, KILGORE, P.C.
Corpus Christi, Texas
February 3, 1998
-32-
35
INDEPENDENT AUDITOR'S REPORT
Stewart Title of San Patricio County, Inc.
Portland, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997 prepared from the accounts maintained at your
office at Portland, Texas.
The financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of San
Patricio County, Inc. as of December 31, 1997, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through Exhibit H of this report are presented as additional
information and is not a required part of the basic financial statement. Such
information has been subjected to the audit procedures applied in the
examination of the basic statement of assets and liabilities, and is fairly
stated in all material respects in relation to the basic statement of assets
and liabilities, taken as a whole.
/s/ FLUSCHE, VAN BEVEREN, KILGORE, P.C.
FLUSCHE, VAN BEVEREN, KILGORE, P.C.
Corpus Christi, Texas
February 17, 1998
-33-
36
To: Stewart Title Company - Galveston
Galveston, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Company - Galveston as of December 31, 1997,
prepared from the accounts maintained at your office at Galveston, Texas. This
financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company -
Galveston, as of December 31, 1997, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above,
January 14, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-34-
37
To: Stewart Title of Montgomery County, Inc.
The Woodlands, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title of Montgomery County, Inc. as of December 31,
1997, prepared from the accounts maintained at your office at The Woodlands,
Texas. This financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of Montgomery
County, Inc., as of December 31, 1997, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above.
January 14, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-35-
38
REPORT OF INDEPENDENT ACCOUNTANTS
To: Stewart Title Company Fort Bend
Sugar Land, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Company - Fort Bend as of December 31, 1997 and
1996, prepared from the accounts maintained at your office at Sugar Land,
Texas. Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company - Fort
Bend, as of December 31, 1997 and 1996, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained In
Exhibits C through F, Inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole.
January 19, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-36-
39
To: Stewart Title Austin, Inc.
Austin, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Austin, Inc. as of December 31, 1997, prepared
from the accounts maintained at your office at Austin, Texas, This financial
statement is the responsibility of the company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Austin, Inc.,
as of December 31, 1997, in conformity with generally accepted accounting
principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such Information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above.
January 20, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-37-
40
To: Pacific Title, L.C.
Sugar Land, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Pacific Title, L.C. as of December 31, 1997, prepared from the
accounts maintained at your office at Sugar Land, Texas, This financial
statement is the responsibility of the company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Pacific Title, L.C., as of
December 31, 1997, in conformity with generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above.
January 19, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-38-
41
To: Stewart Title of Eagle Pass, Inc. d/b/a Title Guaranty
Eagle Pass, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title of Eagle Pass, Inc, d/b/a Title Guaranty as of
December 31, 1997, prepared from the accounts maintained at your office at
Eagle Pass, Texas. This financial statement is the responsibility of the
company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of Eagle Pass,
Inc, d/b/a Title Guaranty, as of December 31, 1997, in conformity with
generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above.
January 16, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-39-
42
SCHEDULE II
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
INCOME AND RETAINED EARNINGS INFORMATION
Year Ended December 31,
---------------------------------------
1997 1996 1995
--------- --------- ---------
(In thousands)
Revenues
Investment income ....................................... $ 701 $ 439 $ 224
Other income ............................................ 3 -- 12
--------- --------- ---------
704 439 236
Expenses
Employee costs .......................................... 201 163 211
Other operating expenses ................................ 2,098 1,515 1,634
Depreciation and amortization ........................... 90 100 101
--------- --------- ---------
2,389 1,778 1,946
Loss before taxes and equity in earnings of investees ...... (1,685) (1,339) (1,710)
Income taxes (benefit) ..................................... (502) (458) (592)
Equity in earnings of investees ............................ 16,471 15,318 8,125
--------- --------- ---------
Net income ................................................. 15,288 14,437 7,007
Retained earnings at beginning of year ..................... 131,496 118,547 112,754
Cash dividends on Common Stock ($.26, $.24 and $.21 per
share) ................................................. (1,644) (1,488) (1,214)
Retained earnings at end of year ........................... 145,140 $ 131,496 $ 118,547
======= ========= =========
See accompanying note to financial statements.
(Schedule continued on following page.)
-40-
43
SCHEDULE II
(CONTINUED)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
BALANCE SHEET INFORMATION
December 31,
------------------------
1997 1996
--------- ---------
(In thousands)
Assets
Cash and cash equivalents ................................................. $ 13 $ 100
--------- ---------
Short-term investments .................................................... 9,001 10,620
--------- ---------
Receivables:
Notes, including $7,324 and $6,960 from affiliates ...................... 7,435 7,094
Other, including $7,543 and $3,863 from affiliates ...................... 10,522 6,140
Less allowance for uncollectible amounts ................................ (20) (20)
--------- ---------
17,937 13,214
Furniture and equipment at cost ........................................... 183 167
Less accumulated depreciation ............................................. (95) (85)
--------- ---------
88 82
Title plants, at cost ..................................................... 48 48
Investments in investees .................................................. 182,754 168,243
Other assets .............................................................. 3,482 3,168
--------- ---------
$ 213,323 $ 195,475
========= =========
Liabilities
Payables:
Notes, including $ - and $ - from affiliates ............................ $ 685 580
Accounts payable and accrued liabilities ................................ 3,134 3,905
Contingent liabilities and commitments
Stockholders' equity
Common - $1 par, authorized 15,000,000 issued and outstanding 6,381,046 and
6,216,441 .............................................................. 6,381 6,216
Class B Common - $1 par, authorized 1,500,000 and outstanding 525,006 ..... 525 525
Additional paid-in-capital ................................................ 52,922 50,833
Net unrealized investment gains, net of deferred taxes ................... 4,536 1,920
Retained earnings (1) ..................................................... 145,140 131,496
--------- ---------
Total stockholders' equity ($30.34 and $28.33 per share) ........... 209,504 190,990
--------- ---------
$ 213,323 $ 195,475
========= =========
(1) Includes undistributed earnings of subsidiaries of $142,596 in 1997 and
$130,708 in 1996.
See accompanying note to financial statements.
(Schedule continued on following page.)
-41-
44
SCHEDULE II
(CONTINUED)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
CASH FLOWS INFORMATION
Year Ended December 31,
------------------------------------
1997 1996 1995
-------- -------- --------
(In thousands)
Cash flow from operating activities (Note) ................ $ 38 $ 7,033 $ 1,169
Cash flow from investing activities:
Proceeds from investments sold ......................... 1,619 -- 147
Purchases of investments, excluding mortgage loans ..... -- (6,247) --
Increases in mortgages and other notes receivable ...... (364) (70) (262)
Collections on mortgages and other notes receivable .... 23 227 31
-------- -------- --------
Cash provided (used) by investing activities .............. 1,278 (6,090) (85)
-------- -------- --------
Cash flow from financing activities:
Dividends paid ......................................... (1,644) (1,488) (1,214)
Proceeds of notes payable .............................. 106 610 --
Payments on notes payable .............................. -- (30) --
Proceeds from issuance of stock ........................ 135 11 --
-------- -------- --------
Cash used by financing activities ......................... (1,403) (897) (1,214)
-------- -------- --------
(Decrease) increase in cash and cash equivalents .......... $ (87) $ 46 $ (130)
======== ======== ========
Note: Reconciliation of net income to the above amounts:
Net income ............................................. $ 15,288 $ 14,437 $ 7,007
Add (deduct):
Depreciation and amortization ....................... 90 100 101
Provision for uncollectible amounts - net ........... -- 20 64
Increase in accounts receivable - net ............... (3,267) (3,207) (1,326)
Increase (decrease) in accounts payable and accrued
liabilities - net ................................ 671 264 (2,668)
Equity in net earnings of investees ................. (16,471) (15,318) (8,125)
Dividends received from unconsolidated subsidiaries . 4,583 11,090 5,650
Other - net ......................................... (856) (353) 466
-------- -------- --------
Cash provided by operating activities ..................... $ 38 $ 7,033 $ 1,169
======== ======== ========
Supplemental information:
Income taxes paid .................................... -- -- --
Interest paid ........................................ -- -- --
See accompanying note to financial statements.
(Schedule continued on following page.)
-42-
45
SCHEDULE II
(continued)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
NOTE TO FINANCIAL STATEMENT INFORMATION
The Registrant operates as a holding company transacting substantially all
business through its subsidiaries. The consolidated financial statements for the
Registrant and its subsidiaries are included in Part II, Item 8 of Form 10-K.
The Parent Company financial statements should be read in conjunction with the
aforementioned consolidated financial statements and notes thereto and financial
statement schedules.
Total dividends received from unconsolidated subsidiaries for 1997, 1996
and 1995 were $9,633,000, $8,583,000, and $9,390,000, respectively.
-43-
46
SCHEDULE V
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1997
====================================================================================================================
Col. A Col. B Col. C Col. D Col. E
Additions
====================================================================================================================
Balance Charged Charged to
at to other Balance
beginning cost and accounts -Deductions- at end
Description of period expenses describe described of period
====================================================================================================================
Stewart Information Services
Corporation and subsidiaries:
Year ended December 31, 1995:
Estimated title losses ......... $134,316,436 $29,590,891 - $25,594,793 (A) $138,312,534
Allowance for uncollectible
amounts ....................... 6,123,049 1,333,744 - 957,846 (B) 6,498,947
Year ended December 31, 1996:
Estimated title losses ......... 138,312,534 33,829,851 - 21,810,822 (A) 150,331,563
Allowance for uncollectible
amounts ..................... 6,498,947 1,575,000 - 1,404,356 (B) 6,669,591
Year ended December 31, 1997:
Estimated title losses.......... 150,331,563 29,794,444 - 23,334,625 (A) 156,791,382
Allowance for uncollectible
amounts...................... 6,669,591 1,596,000 - 2,713,742 (B) 5,551,849
Stewart Information Services
Corporation - Parent:
Year ended December 31, 1995:
Allowance for uncollectible $8,198 $64,382 - $72,580 (C) -
amounts
Year ended December 31, 1996:
Allowance for uncollectible - 20,000 - - 20,000
amounts
Year ended December 31, 1997:
Allowance for uncollectible amounts 20,000 - - - 20,000
(A) Represents payments of policy losses and loss adjustment expenses during
the year, less salvage collections.
(B) Represents uncollectible accounts written off.
(C) Represents an adjustment to accounts receivable previously reserved and
current year write-off of uncollected accounts.
-44-
47
INDEX TO EXHIBITS
Exhibit
- -------
3.1 - Certificate of Incorporation of the Registrant, as amended April 30,
1993
3.2 - By-laws of the Registrant
4 - Rights of Common and Class B Common Stockholders (incorporated by
reference to Exhibits 3.1 and 3.2 hereto)
10.1 - Summary of agreements as to payment of bonuses to certain executive
officers
10.2 - Deferred Compensation Agreements dated March 10, 1986, amended July
24, 1990 and October 30, 1992, between the Registrant and certain
executive officers.
13 - Annual Report to Stockholders for 1997 (the financial text of the
annual report incorporated herein by reference in Item 6 of Part II
of this report)
21 - Subsidiaries of the Registrant
23 - Consents of Independent Certified Public Accountants, including
consents of incorporation by reference of their reports to previously
filed Securities Act registration statements.
27 - Financial Data Schedule