<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number 0-3658
-------------------------------------------------------
THE FIRST AMERICAN FINANCIAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Incorporated in California 95-1068610
--------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
114 East Fifth Street, Santa Ana, California 92701-4699
-------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714)558-3211
-------------------------------------------------------------------
(Registrant's telephone number, including area code)
-------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
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 __________
-----------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes ___________ No ___________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
$1 par value - 11,395,950 as of August 7, 1995
<PAGE>
INFORMATION INCLUDED IN REPORT
------------------------------
Part I: Financial Information
Item 1. Financial Statements
A. Condensed Consolidated Statements of Income
B. Condensed Consolidated Balance Sheets
C. Condensed Consolidated Statements of Cash Flows
D. Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II: Other Information
Item 6. Exhibits and Reports on Form 8-K
Items 1-5 have been omitted because they are not applicable with
respect to the current reporting period.
SIGNATURES
Pursuant to the requirements 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.
THE FIRST AMERICAN FINANCIAL CORPORATION
----------------------------------------
(Registrant)
/s/ Thomas Klemens
----------------------------------------
Thomas A. Klemens
Vice President, Chief Financial Officer
(Principal Financial Officer and Duly
Authorized to Sign on Behalf of
Registrant)
Date: August 10, 1995
1
<PAGE>
Part I: Financial Information
---------------------
Item 1. Financial Statements
--------------------
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Statements of Income
-------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30 June 30
-------------------------- ---------------------------
1995 1994 1995 1994
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Operating revenues $286,748,000 $364,131,000 $543,036,000 $732,735,000
Investment and other income 6,492,000 4,880,000 11,358,000 8,712,000
------------ ------------ ------------ ------------
293,240,000 369,011,000 554,394,000 741,447,000
------------ ------------ ------------ ------------
Expenses
Salaries and other personnel costs 103,687,000 109,678,000 203,737,000 219,998,000
Premiums retained by agents 91,252,000 143,780,000 184,647,000 289,692,000
Other operating expenses 63,979,000 59,055,000 123,266,000 117,646,000
Provision for title losses and other
claims 22,419,000 31,935,000 43,725,000 61,598,000
Depreciation and amortization 4,584,000 4,998,000 8,795,000 9,608,000
Interest 1,639,000 1,407,000 3,252,000 2,975,000
Minority interests 563,000 853,000 543,000 1,802,000
------------ ------------ ------------ ------------
288,123,000 351,706,000 567,965,000 703,319,000
------------ ------------ ------------ ------------
Income (loss) before premium and income
taxes 5,117,000 17,305,000 (13,571,000) 38,128,000
Premium taxes 3,280,000 3,871,000 6,101,000 8,196,000
------------ ------------ ------------ ------------
Income (loss) before income taxes 1,837,000 13,434,000 (19,672,000) 29,932,000
Income taxes 700,000 5,800,000 (8,100,000) 12,900,000
------------ ------------ ------------ ------------
Net income (loss) $ 1,137,000 $ 7,634,000 $(11,572,000) $ 17,032,000
============ ============ ============ ============
Net income (loss) per share $ .10 $ .67 $ (1.01) $ 1.49
============ ============ ============ ============
Cash dividends per share $ .15 $ .15 $ .30 $ .30
============ ============ ============ ============
Weighted average number of shares 11,421,000 11,476,000 11,411,000 11,447,000
============ ============ ============ ============
</TABLE>
2
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Balance Sheets
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
---------------- -----------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $115,921,000 $154,234,000
---------------- -----------------
Accounts and accrued income receivable, net 64,401,000 47,103,000
---------------- -----------------
Income tax receivable 14,143,000 7,324,000
---------------- -----------------
Investments:
Deposits with savings and loan associations and
banks 19,831,000 18,538,000
Debt securities 130,551,000 149,190,000
Equity securities 18,214,000 21,813,000
Other long-term investments 25,720,000 25,224,000
---------------- -----------------
194,316,000 214,765,000
---------------- -----------------
Loans receivable, net 43,018,000 40,546,000
---------------- -----------------
Property and equipment, at cost 186,108,000 175,214,000
Less - accumulated depreciation (69,703,000) (64,659,000)
---------------- -----------------
116,405,000 110,555,000
---------------- -----------------
Title plants and other indexes 76,015,000 54,781,000
---------------- -----------------
Assets acquired in connection with claim settlements
(net of valuation reserves of $12,830,000 and
$12,354,000) 25,273,000 27,223,000
---------------- -----------------
Deferred income taxes 37,088,000 43,726,000
---------------- -----------------
Goodwill and other intangibles, net 67,868,000 61,322,000
---------------- -----------------
Deferred policy acquisition costs 25,468,000 26,060,000
---------------- -----------------
Other assets 42,594,000 41,010,000
---------------- -----------------
$822,510,000 $828,649,000
================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 39,864,000 $ 38,695,000
---------------- -----------------
Accounts payable and accrued liabilities 61,229,000 60,806,000
---------------- -----------------
Deferred revenue 110,108,000 117,828,000
---------------- -----------------
Reserve for known and incurred but not reported claims 218,925,000 206,743,000
---------------- -----------------
Notes and contracts payable 87,381,000 89,600,000
---------------- -----------------
Minority interests in consolidated subsidiaries 21,811,000 22,867,000
---------------- -----------------
Stockholders' equity:
Preferred stock, $1 par value
Authorized - 500,000 shares; Outstanding - None
Common stock, $1 par value
Authorized - 24,000,000 shares
Outstanding - 11,403,000 and 11,395,000 shares 11,403,000 11,395,000
Additional paid-in capital 43,740,000 44,013,000
Retained earnings 227,359,000 242,356,000
Net unrealized gain (loss) on securities 690,000 (5,654,000)
---------------- -----------------
283,192,000 292,110,000
---------------- -----------------
$822,510,000 $828,649,000
================ =================
</TABLE>
3
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30
--------------------------------
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (11,572,000) $ 17,032,000
Adjustments to reconcile net income (loss) to cash (used for)
provided by operating activities-
Provision for title losses and other claims 43,725,000 61,598,000
Depreciation and amortization 8,795,000 9,608,000
Minority interests in net income 543,000 1,802,000
Other, net 1,128,000 1,565,000
Changes in assets and liabilities excluding effects of
company acquisitions and noncash transactions-
Claims paid, including assets acquired, net of recoveries (30,643,000) (44,994,000)
Net change in income tax accounts (3,133,000) (16,718,000)
(Increase) decrease in accounts and accrued income
receivable (13,463,000) 9,260,000
Decrease in accounts payable and accrued liabilities (3,862,000) (6,344,000)
(Decrease) increase in deferred revenue (7,796,000) 10,503,000
Other, net 1,097,000 (9,083,000)
------------ ------------
Cash (used for) provided by operating activities (15,181,000) 34,229,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash effect of company acquisitions (31,039,000) (1,031,000)
Net (increase) decrease in deposits with banks (293,000) 4,204,000
Net increase in loans receivable (2,472,000) (7,019,000)
Purchases of debt and equity securities (7,983,000) (57,684,000)
Proceeds from sales of debt and equity securities 32,345,000 20,785,000
Proceeds from maturities of debt securities 7,920,000 26,321,000
Net decrease (increase) in other investments 1,257,000 (497,000)
Capital expenditures (10,256,000) (21,429,000)
Proceeds from sale of property and equipment 117,000 223,000
------------ ------------
Cash used for investing activities (10,404,000) (36,127,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in demand deposits 1,169,000 3,255,000
Repayment of debt (9,079,000) (6,769,000)
Purchase of Company shares (1,393,000) (1,026,000)
Cash dividends (3,425,000) (3,442,000)
------------ ------------
Cash used for financing activities (12,728,000) (7,982,000)
------------ ------------
Net decrease in cash and cash equivalents (38,313,000) (9,880,000)
Cash and cash equivalents - Beginning of year 154,234,000 130,298,000
------------ ------------
- End of second quarter $115,921,000 $120,418,000
============ ============
SUPPLEMENTAL INFORMATION:
Cash paid during the first half for:
Interest $ 3,268,000 $ 2,893,000
Premium taxes $ 7,682,000 $ 10,947,000
Income taxes $ 2,362,000 $ 33,441,000
Noncash investing and financing activities:
Shares issued for stock bonus plan $ 1,128,000 $ 1,910,000
Liabilities incurred in connection with
company acquisitions $ 11,812,000 $ 3,166,000
Net unrealized gain (loss) on securities $ 6,344,000 $ (4,044,000)
Company acquisitions in exchange for common stock $ 2,284,000
Debt incurred in connection with purchase of real property $ 3,750,000
Increase in equity due to reduction of long-term debt of
ESOT $ 1,300,000
</TABLE>
4
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Notes to Condensed Consolidated Financial Statements
----------------------------------------------------
(Unaudited)
Note 1 - Basis of Condensed Consolidated Financial Statements
-------------------------------------------------------------
The condensed consolidated financial information included in this report has
been prepared in conformity with the accounting principles and practices
reflected on the consolidated financial statements included in the annual
report filed with the Commission for the preceding calendar year. All
adjustments are of a normal recurring nature and are, in the opinion of
management, necessary to a fair statement of the consolidated results for the
interim periods. Certain 1994 interim amounts have been reclassified to
conform with the 1995 interim presentation. This report should be read in
conjunction with the Company's 1994 Annual Report to Stockholders and the
Company's Annual Report on Form 10-K for the year ended December 31, 1994.
Note 2 - Acquisitions
---------------------
On January 3, 1995, the Company completed the acquisitions of Credco, Inc., a
national mortgage credit reporting company and Flood Data Services, Inc.
("FDSI"), a nationwide flood certification firm, for a combined purchase price
of $32 million in cash and notes.
These acquisitions have been accounted for by the purchase method of
accounting and, accordingly, the purchase price of each has been allocated to
their respective assets acquired and liabilities assumed based on estimated
fair values at the date of acquisition. The excess purchase price of $5.5
million over the estimated fair value of the net assets of Credco, Inc. has
been recorded as goodwill and is being amortized over a 40-year period. The
primary asset of FDSI is an index of maps and other records with a fair value
of $21.0 million which provides information as to whether or not a property is
in a governmentally delineated Special Flood Hazard Area. Since this properly
maintained index has an indefinite life and will not diminish in value with
the passage of time, no provision will be made for depreciation. Accordingly,
this index has been included with title plants in the Company's Condensed
Consolidated Balance Sheet at June 30, 1995.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
RESULTS OF OPERATIONS
Three and six months ended June 30:
OVERVIEW
Beginning in the second quarter 1994, increased mortgage interest rates caused
a downward trend in new order counts and closings as refinance transactions
came to a virtual halt. Due to seasonal considerations, this condition
intensified at yearend 1994 resulting in a low inventory of new orders going
into the first quarter 1995. As a result, the Company reported a first
quarter 1995 net loss. During the second quarter 1995, marked improvements in
the national real estate market resulted in a return to profitability for the
Company. Order counts rebounded to 236,400 orders opened and 165,800 orders
closed, increases of 24.0% and 22.5%, respectively, when compared to the first
quarter 1995. Particularly encouraging was the volume of orders opened during
the latter part of the current quarter, which together with the recent signs
of economic strength, are strong indicators of increased operating revenues
and pretax profits for the third quarter of the year.
OPERATING REVENUES
Set forth below is a summary of operating revenues for each of the Company's
segments.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------------- ------------------------------------
($000) ($000)
1995 % 1994 % 1995 % 1994 %
----------- ---- ----------- ---- ----------- ---- ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Title Insurance:
Direct operations $ 128,714 45 $ 151,799 42 $ 230,659 42 $ 305,057 42
Agency operations 114,050 40 177,029 48 231,422 43 355,840 48
----------- ---- ----------- ---- ----------- ---- ---------- ----
242,764 85 328,828 90 462,081 85 660,897 90
Real Estate Information 32,875 11 25,639 7 58,980 11 53,102 7
Home Warranty 7,830 3 6,889 2 15,219 3 13,024 2
Trust and Banking 3,279 1 2,775 1 6,756 1 5,712 1
----------- ---- ----------- ---- ----------- ---- ---------- ----
Total $ 286,748 100 $ 364,131 100 $ 543,036 100 $ 732,735 100
=========== ==== =========== ==== =========== ==== ========== ====
</TABLE>
TITLE INSURANCE. Operating revenues from direct operations decreased 15.2%
and 24.4% for the three and six months ended June 30, 1995, respectively, when
compared with the same periods of the prior year. These decreases were
primarily attributable to a reduction in the number of title orders closed by
the Company's direct operations, as well as changes in the average revenues
per order closed. The Company's direct title operations closed 165,800 and
301,100 title orders during the three and six month periods ended June 30,
1995, respectively, representing decreases of 14.5% and 26.0% when compared
with the same periods of the prior year. The average revenues per order
closed were $776 for the current quarter, as compared with $782 for the same
period of the prior year. This decrease was primarily due to a reduction
(primarily in California) in the average value of an insured transaction. The
average revenues per order closed were $766 for the six months ended June 30,
1995, as compared with $750 for the same period of the prior year. This
increase was primarily due to a relatively low average revenues per order
closed in the prior year due to the numerous refinance transactions closed
during the first quarter 1994. Operating revenues from agency operations
decreased 35.6% and 35.0% for the three and six months ended June 30, 1995,
respectively, when compared with the same periods of the prior year. These
decreases were primarily attributable to the same factors affecting direct
operations mentioned above, compounded by the inherent delay in the reporting
of orders closed by agents during the latter part of the current quarter.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (continued)
---------------------------------
REAL ESTATE INFORMATION. Real estate information operating revenues increased
28.2% and 11.1% for the three and six months ended June 30, 1995,
respectively, when compared with the same periods of the prior year. These
increases were primarily due to $13.6 million and $23.2 million of operating
revenues contributed by new acquisitions for the respective periods, offset in
part by the same economic factors affecting title insurance mentioned above.
HOME WARRANTY. Home warranty operating revenues increased 13.7% and 16.9% for
the three and six months ended June 30, 1995, respectively, when compared with
the same periods of the prior year. These increases were primarily due to
improvements in certain of the residential resale markets in which this
business segment operates, an increase in warranty renewals and successful
geographic expansion.
INVESTMENT AND OTHER INCOME
Investment and other income increased $1.6 million and $2.6 million for the
three and six months ended June 30, 1995, respectively, when compared with the
same periods of the prior year. These increases were primarily attributable
to capital gains realized on the sale of certain investments as well as a $0.7
million fire insurance recovery. The increase for the six month period was
also due to $0.4 million of capital losses incurred in the first quarter 1994.
The average investment portfolio balance and interest yields remained
relatively constant for the three and six months ended June 30, 1995, when
compared with the same periods of the prior year.
TOTAL OPERATING EXPENSES
TITLE INSURANCE. Salaries and other personnel costs were $84.8 million and
$166.6 million for the three and six months ended June 30, 1995, respectively,
decreases of 11.6% and 13.6% when compared with the same periods of the prior
year. These decreases were primarily due to personnel reductions that
commenced during the beginning of the second quarter 1994 and continued into
the current year in response to the decrease in order volume.
Agents retained $91.3 million and $184.6 million of title premiums generated
by agency operations for the three and six months ended June 30, 1995,
respectively, which compares with $143.8 million and $289.7 million for the
same periods of the prior year. The percentage of title premiums retained by
agents ranged from 79.8% to 81.4% due to regional variances (i.e., the agency
share varies from region to region and thus the geographical mix of agency
revenues accounts for this variation).
Other operating expenses were $45.4 million and $88.4 million for the three
and six months ended June 30, 1995, respectively, decreases of 4.3% and 6.6%
when compared with the same periods of the prior year. These decreases were
primarily attributable to a decline in incremental costs associated with
processing orders due to the reduction in business activity, partially offset
by general price level increases.
The provision for title losses as a percentage of title insurance operating
revenues was 7.2% for the six months ended June 30, 1995, and 8.1% for the
comparable period of the prior year. This decrease was primarily attributable
to a reduction in the Company's loss experience rate as well as a decrease in
major claims activity.
REAL ESTATE INFORMATION. Personnel and other operating expenses were $29.3
million and $55.3 million for the three and six months ended June 30, 1995,
respectively, increases of 52.6% and 53.2% when compared with the same periods
of the prior year. These increases were primarily due to $8.1 million and
$17.1 million of personnel and other operating expenses for the three and six
months ended June 30, 1995, respectively, attributable to company
acquisitions, increased costs associated with enhancing the Company's software
to better service customers and general price level increases.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (continued)
---------------------------------
HOME WARRANTY. Personnel and other operating expenses were $2.3 and $4.8
million for the three and six months ended June 30, 1995, increases of 16.4%
and 15.7% when compared with the same periods of the prior year. These
increases were primarily attributable to costs incurred servicing the increase
in business volume. The provision for home warranty losses expressed as a
percentage of home warranty operating revenues was 56.0% and 52.6% for the six
months ended June 30, 1995 and 1994, respectively. The increase in loss ratio
was primarily due to an increase in the average number of claims per contract.
PRETAX PROFITS
Set forth below is a summary of pretax profits for each of the Company's
segments.
<TABLE>
<CAPTION>
($000) ($000)
1995 % 1994 % 1995 % 1994 %
-------- --- -------- --- -------- --- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Title Insurance $ 6,524 64 $ 13,376 63 $ (8,037) 247 $ 27,768 59
Real Estate Information 1,524 15 5,412 25 144 (4) 14,980 32
Home Warranty 1,644 16 1,830 9 3,172 (98) 3,229 7
Trust and Banking 539 5 541 3 1,471 (45) 1,218 2
-------- --- -------- --- -------- --- -------- ---
Total before corporate 10,231 100 21,159 100 (3,250) 100 47,195 100
=== === === ===
Corporate 5,114 3,854 10,321 9,067
-------- -------- -------- --------
Total $ 5,117 $ 17,305 $(13,571) $ 38,128
======== ======== ======== ========
</TABLE>
In general, the title insurance business is a lower profit margin business
when compared to the Company's other segments. The lower profit margins
reflect the high fixed cost of producing title evidence whereas the
corresponding revenues are subject to regulatory and competitive pricing
restraints. Due to this relatively high proportion of fixed costs, title
insurance profit margins generally improve as closed order volumes increase.
In addition, title insurance profit margins are affected by the composition
(residential or commercial) and type (resale, refinancing or new construction)
of real estate activity. Profit margins from resale and new construction
transactions are generally higher than from refinancing transactions, and
profit margins from commercial transactions are generally higher than from
residential transactions. Title insurance profit margins are also affected by
the percentage of operating revenues generated by agency operations. Profit
margins from direct operations are generally higher than from agency
operations due primarily to the large portion of the premium that is retained
by the agent.
PREMIUM TAXES
Premium taxes were $6.1 million for the six months ended June 30, 1995, a
decrease of 25.6% when compared with the same period of the prior year. This
decrease corresponded to the relative decrease in title insurance premium
revenues. Premium taxes as a percentage of title insurance operating revenues
remained relatively constant.
INCOME TAXES
The effective income tax rate for the six months ended June 30, 1995, and for
the comparable period of the prior year was 41.2% and 43.1%, respectively.
The decrease in effective rate was primarily attributable to a decrease in
state income taxes resulting from the Company's non-insurance subsidiaries'
decrease in contribution to pretax profits.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (continued)
---------------------------------
NET INCOME
Net income (loss) for the three and six months ended June 30, 1995, was $1.1
million, or $0.10 per share, and $(11.6) million, or $(1.01) per share,
respectively. Net income for the three and six months ended June 30, 1994,
was $7.6 million, or $0.67 per share, and $17.0 million, or $1.49 per share.
LIQUIDITY AND CAPITAL RESOURCES
Total cash and cash equivalents decreased $38.3 million and $9.9 million for
the six months ended June 30, 1995 and 1994, respectively. The decrease for
the current year period was primarily due to cash used for operating
activities, the net cash effect of company acquisitions, capital expenditures
and the repayment of debt, offset in part by the proceeds from the sales of
certain debt and equity securities. The decrease for the prior year period
was primarily attributable to purchases of debt and equity securities, as well
as capital expenditures, offset in part by cash provided by operating
activities, proceeds from sales of debt and equity securities and maturities
of debt securities.
Notes and contracts payable as a percentage of total capitalization increased
marginally to 22.3% at June 30, 1995, from 22.1% at December 31, 1994.
Management believes that all of its anticipated cash requirements for the
immediate future will be met from internally generated funds.
9
<PAGE>
Part II: Other Information
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
(4) Amendment No. 4 dated as of June 1, 1995, to
Amendment and Restatement dated as of April 28,
1993, of Credit Agreement dated as of April 21,
1992.
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarterly
period covered by this report.
10
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
(4) Amendment No. 4 dated as of June 1, 1995, to Amendment
and Restatement dated as of April 28, 1993, of Credit
Agreement dated as of April 21, 1992
(27) Financial Data Schedule
11
<PAGE>
Exhibit (4)
[COMPOSITE CONFORMED COPY]
AMENDMENT NO. 4
AMENDMENT NO. 4 dated as of June 1, 1995 to the AMENDMENT AND
RESTATEMENT dated as of April 28, 1993 of CREDIT AGREEMENT dated as of April
21, 1992 between THE FIRST AMERICAN FINANCIAL CORPORATION (the "Company"), the
-------
lenders party thereto (the "Lenders") and THE CHASE MANHATTAN BANK (NATIONAL
-------
ASSOCIATION), as agent (the "Agent") for the Lenders (such Amendment and
-----
Restatement, as amended by Amendment No. 1 thereto dated as of June 1, 1994,
Amendment No. 2 thereto dated as of November 22, 1994 and Amendment No. 3
thereto dated as of March 31, 1995, being herein called the "Credit
------
Agreement").
-----------
The Company has requested that the Lenders agree to certain
amendments of the Credit Agreement and the Pledge Agreement referred to
therein. The Lenders are willing to do so on the terms and conditions
contained herein.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement
-----------
shall have the same meanings when used herein.
SECTION 2. AMENDMENTS OF CREDIT AGREEMENT AND PLEDGE AGREEMENT.
---------------------------------------------------
Effective as of June 1, 1995 but subject to Section 3 hereof, the Credit
Agreement and the Pledge Agreement are hereby amended as follows:
A. Section 8.08(a) of the Credit Agreement is amended by changing
clause (v) thereof to read as follows:
(v) Interest Rate Protection Agreements (including those required
by Section 8.15 hereof) so long as the aggregate outstanding notional
principal amount of all transactions under such Agreements does not
exceed an amount equal to the sum of the aggregate outstanding principal
amount of the Bank Loans plus the aggregate outstanding unused amount of
the New Revolving Credit Commitments at any time;
B. The definition of "Secured Obligations" in Section 1 of the
Pledge Agreement is amended by substituting the words "to which the Company
and such Lender are parties" for the words "entered into pursuant to the
requirements set forth in Section 8.15 of the Credit Agreement" appearing
therein.
C. Each reference in the Credit Agreement to the Credit Agreement
(including references such as "herein", "hereunder" and the like) or the
Pledge Agreement is amended to refer to the Credit Agreement or the Pledge
Agreement (as the case may be) as heretofore amended and as amended hereby and
each reference in the Pledge Agreement to the Pledge Agreement (including
references such as "herein", "hereunder" and the like) or the Credit Agreement
is amended to refer to the Pledge Agreement or the Credit Agreement (as the
case may be) as heretofore amended and as hereby amended.
D. Except as hereby expressly amended, the Credit Agreement shall
remain in full force and effect.
SECTION 3. EFFECTIVENESS OF AMENDMENTS. The amendments provided
---------------------------
for by Section 2 hereof shall become effective upon the satisfaction of the
following conditions precedent (except, other than in the case of the
condition precedent specified in clause (a) below, to the extent waived by or
with the consent of the Majority Lenders): (a) the execution and delivery by
the Agent of a counterpart of this Amendment and the receipt by the Agent of
counterparts of this Amendment executed and delivered by the Company and the
Lenders; (b) the receipt by the Agent of evidence satisfactory to Milbank,
Tweed, Hadley & McCloy of the due authorization, execution and delivery by the
Company of this Amendment; and (c) the receipt by the Agent of a certificate
of a senior officer of the Company to the effect that no Default under the
Credit Agreement (as amended hereby) has occurred and is continuing. The
Agent will advise the Company and the Lenders when such conditions have been
so satisfied (or waived as aforesaid).
12
<PAGE>
SECTION 4. EXPENSES. The Company hereby confirms its obligations
--------
under Section 11.03(a)(ii) of the Credit Agreement with respect to the
reasonable out-of-pocket costs and expenses of the Agent (including, without
limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley &
McCloy) in connection with the negotiation, preparation, execution and
delivery of this Amendment).
SECTION 5. COUNTERPARTS. This Amendment may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Amendment
by executing any such counterpart.
SECTION 6. NEW YORK LAW. This Amendment shall be governed by and
------------
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By /s/ Parker S. Kennedy
----------------------------------
Title:
By /s/ Thomas A. Klemens
----------------------------------
Title: V.P./C.F.O.
THE CHASE MANHATTAN BANK, N.A.
By /s/ Robert A. Foster
----------------------------------
Title: Vice President
FIRST INTERSTATE
BANK OF CALIFORNIA
By /s/ Marla W. Johnson
----------------------------------
Title: Vice President
IMPERIAL BANK
By /s/ Paul A. Krupela
----------------------------------
Title: Vice President
SANWA BANK CALIFORNIA
By /s/ Art Dunbar
----------------------------------
Title: V.P.
13
<PAGE>
UNION BANK
By /s/ D. S. Lambell
----------------------------------
Title: VP/SCE
NBD BANK
By /s/ Richard J. Johnsen
--------------------------------
Title: Richard J. Johnsen
Vice President
THE CANADA LIFE
ASSURANCE COMPANY
INCE & CO., as Nominee for
The Canada Life Assurance
Company
By /s/ Eugene Bohan
--------------------------------
Title: Eugene Bohan
A Partner
THE CHASE MANHATTAN BANK, N.A.,
as Agent
By /s/ Robert A. Foster
--------------------------------
Title:
14
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<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> APR-01-1995 JAN-01-1995
<PERIOD-END> JUN-30-1995 JUN-30-1995
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<INCOME-PRETAX> 1,837,000 (19,672,000)
<INCOME-TAX> 700,000 (8,100,000)
<INCOME-CONTINUING> 1,137,000 (11,572,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,137,000 (11,572,000)
<EPS-PRIMARY> .10 (1.01)
<EPS-DILUTED> 0 0
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