<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
-----------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to _________________
Commission file number 0-3658
A. Full title of the Plan and the address of the Plan, if different from
that of the issuer named below:
The First American Financial Corporation
401(k) Savings Plan
B. Name of issuer of securities held pursuant to the Plan and the address
of its principal executive office:
The First American Financial Corporation
114 East Fifth Street
Santa Ana, California 92701
Page 1 of 16
<PAGE>
INDEX
- -----
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consent of Independent Accountants 3
Signatures 4
Financial Statements of The First American Financial Corporation 401(k)
Savings Plan
Report of Independent Accountants 6
Statement of Net Assets Available for Plan Benefits,
with Fund Information as of December 31, 1996 7
Statement of Net Assets Available for Plan Benefits,
with Fund Information as of December 31, 1995 8
Statement of Changes in Net Assets Available
for Plan Benefits, with Fund Information for the
year ended December 31, 1996 9
Statement of Changes in Net Assets Available
for Plan Benefits, with Fund Information for the
year ended December 31, 1995 10
Notes to Financial Statements 11
Supplemental Schedules*:
Item 27a - Assets held for Investment Purposes as of
December 31, 1996 15
Item 27d - Schedule of Reportable Transactions for
the year ended December 31, 1996 16
</TABLE>
* Other schedules have been omitted because they are either not applicable or
exempt from reporting requirements of the Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 (ERISA).
Page 2 of 16
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-86398) of The First American Financial Corporation
of our report dated June 24, 1997 appearing in the Annual Report of The First
American Financial Corporation 401(k) Savings Plan on Form 11-K for the year
ended December 31, 1996.
PRICE WATERHOUSE LLP
Costa Mesa, California
June 24, 1997
Page 3 of 16
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Committee administering the Plan has duly caused this annual report to
be signed on its behalf by the undersigned thereunto duly authorized.
The First American Financial Corporation
401(k) Savings Plan
Date: June 24, 1997 /s/ THOMAS A. KLEMENS
-------------------------------------------------
Page 4 of 16
<PAGE>
THE FIRST AMERICAN
FINANCIAL CORPORATION
401(k) SAVINGS PLAN
REPORT AND FINANCIAL STATEMENTS
WITH ADDITIONAL INFORMATION
DECEMBER 31, 1996 AND 1995
Page 5 of 16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
June 24, 1997
To the Participants and
Administrative Committee of
The First American Financial Corporation
401(k) Savings Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
Plan benefits of The First American Financial Corporation 401(k) Savings Plan
(the Plan) at December 31, 1996 and 1995, and the changes in the net assets
available for plan benefits for the years then ended, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The additional information included in Schedules I
and II is presented for purposes of additional analysis and is not a required
part of the financial statements but is additional information required by
ERISA. The Fund Information in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits
is presented for purposes of additional analysis rather than to present the net
assets available for plan benefits and the changes in net assets available for
Plan benefits of each fund. The supplemental schedules and Fund Information
have been subjected to the auditing procedures applied in the audit of the
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
PRICE WATERHOUSE LLP
Costa Mesa, California
Page 6 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------------------------------------------------------
Fund Information
----------------------------------------------------------------------------------------------------
Company International Small Cap Large Cap Money
Stock Stock Stock Stock Bond Market
Fund Fund Fund Fund Fund Fund Total
---------- ------------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 94,290 $ 99,266 $ 101,762 $ 145,892 $ 53,734 $4,013,362 $ 4,508,306
Investments, at fair value:
Investment companies 6,123,513 5,140,392 4,575,169 7,746,802 2,662,794 26,248,670
Receivables:
Participant
contributions 86,447 88,705 90,218 136,009 49,150 69,172 519,701
Employer contributions 2,526 1,623 1,952 2,545 1,167 2,569 12,382
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total assets 6,306,776 5,329,986 4,769,101 8,031,248 2,766,845 4,085,103 31,289,059
---------- ---------- ---------- ---------- ---------- ---------- -----------
Liabilities:
Fees payable 9,008 7,764 6,493 11,076 4,873 9,080 48,294
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total liabilities 9,008 7,764 6,493 11,076 4,873 9,080 48,294
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net assets available for
plan benefits $6,297,768 $5,322,222 $4,762,608 $8,020,172 $2,761,972 $4,076,023 $31,240,765
========== ========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
Page 7 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------------------------------------------------------------------------
Fund Information
---------------------------------------------------------------------------------------------------
Company International Small Cap Large Cap Money
Stock Stock Stock Stock Bond Market
Fund Fund Fund Fund Fund Fund Total
---------- ------------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 2,975 $ 8,192 $ 2,831 $ 3,796 $ 2,758 $2,117,049 $ 2,137,601
Investments, at fair value:
Investment companies 1,944,082 2,370,519 1,902,859 3,165,076 1,467,249 10,849,785
Receivables:
Participant
contributions 62,372 81,691 64,463 106,898 50,852 72,724 439,000
Employer contributions 1,807 1,425 1,389 2,373 1,216 2,822 11,032
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total assets 2,011,236 2,461,827 1,971,542 3,278,143 1,522,075 2,192,595 13,437,418
---------- ---------- ---------- ---------- ---------- ---------- -----------
Liabilities:
Fees payable 5,983 7,717 5,983 10,102 5,300 9,689 44,774
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total liabilities 5,983 7,717 5,983 10,102 5,300 9,689 44,774
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net assets available for
plan benefits $2,005,253 $2,454,110 $1,965,559 $3,268,041 $1,516,775 $2,182,906 $13,392,644
========== ========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
Page 8 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------------------------------------------------------
Fund Information
---------------------------------------------------------------------------------------------------
Company International Small Cap Large Cap Money
Stock Stock Stock Stock Bond Market
Fund Fund Fund Fund Fund Fund Total
---------- ------------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions (deductions) in net
assets available for plan
benefits:
Interest and dividends $ 70,542 $ 244,150 $ 441,136 $ 401,952 $ 126,193 $ 149,442 $ 1,433,415
Net appreciation
(depreciation)
in fair value of
investments 1,854,774 428,526 (203,251) 587,171 (98,091) 2,569,129
Contributions by
participants 2,163,303 2,335,560 2,289,976 3,742,408 1,423,590 2,019,294 13,974,131
Contributions by
employer 230,564 253,747 222,697 369,195 176,150 308,950 1,561,303
Benefit payments to
participants (268,531) (257,934) (216,741) (397,929) (158,503) (248,649) (1,548,287)
Fees and expenses (22,712) (22,698) (19,555) (33,412) (15,465) (27,728) (141,570)
Interfund transfers 264,575 (113,239) 282,787 82,746 (208,677) (308,192) -
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net increase in net
assets available for plan
benefits 4,292,515 2,868,112 2,797,049 4,752,131 1,245,197 1,893,117 17,848,121
Net assets available for plan
benefits, beginning of year 2,005,253 2,454,110 1,965,559 3,268,041 1,516,775 2,182,906 13,392,644
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net assets available for plan
benefits, end of year $6,297,768 $5,322,222 $4,762,608 $8,020,172 $2,761,972 $4,076,023 $31,240,765
========== ========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
Page 9 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1995
----------------------------------------------------------------------------------------------------
Fund Information
----------------------------------------------------------------------------------------------------
Company International Small Cap Large Cap Money
Stock Stock Stock Stock Bond Market
Fund Fund Fund Fund Fund Fund Total
---------- ------------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions (deductions) in net
assets available for plan
benefits:
Interest and dividends $ 18,569 $ 92,665 $ 106,507 $ 75,138 $ 40,820 $ 52,245 $ 385,944
Net appreciation
(depreciation)
in fair value of
investments 338,026 (5,247) 106,341 333,320 78,228 850,668
Contributions by
participants 1,488,099 2,216,154 1,590,890 2,565,322 1,279,049 1,974,437 11,113,951
Contributions by
employer 185,786 271,313 185,507 306,637 177,083 325,410 1,451,736
Benefit payments to
participants (32,466) (50,535) (25,935) (44,943) (31,964) (50,151) (235,994)
Fees and expenses (22,341) (31,484) (22,441) (37,469) (21,121) (38,805) (173,661)
Interfund transfers 29,580 (38,756) 24,690 70,036 (5,320) (80,230) -
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net increase in net
assets available for plan
benefits 2,005,253 2,454,110 1,965,559 3,268,041 1,516,775 2,182,906 13,392,644
Net assets available for plan
benefits, beginning of year
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net assets available for plan
benefits, end of year $2,005,253 $2,454,110 $1,965,559 $3,268,041 $1,516,775 $2,182,906 $13,392,644
========== ========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
Page 10 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
GENERAL
The First American Financial Corporation 401(k) Savings Plan (the "Plan") is
a defined contribution profit sharing plan covering all U.S. employees of The
First American Financial Corporation or an eligible subsidiary that has
adopted the Plan (the "Company"). An employee is eligible to participate in
the Plan if the employee is at least 21 years of age and has been employed by
the Company for at least 1 year and has completed at least 1,000 hours of
service during the plan year. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). Although it has
not expressed any intention to do so, the Company has the right, under the
terms of the Plan, to terminate the Plan subject to ERISA provisions. The
Plan is administered by an administrative committee appointed by the Board of
Directors of the Company.
CONTRIBUTIONS
Employee contributions to the Plan are based upon a percentage of gross pay
as designated by each participant. Participants may contribute up to 12% of
their annual wages but not more than the applicable limit imposed by the
Internal Revenue Service. Contributions are invested based on each
participant's election in one or more of the following funds: Company Stock
Fund, International Stock Fund, Small Cap Stock Fund, Large Cap Stock Fund,
Bond Fund, and Money Market Fund.
The Company makes matching contributions of 50% of the first $500 of a
participant's contributions each year and the Company may make profit sharing
contributions which would be determined by the Company's Board of Directors.
PARTICIPANTS' ACCOUNTS
Each participant's account is credited with the participant's contributions,
Company matching contributions, any profit sharing contributions and any Plan
earnings.
VESTING
All participant and Company contributions are fully vested at all times.
BENEFIT PAYMENTS
Participants or beneficiaries may elect to withdraw benefits upon termination
of employment, retirement, permanent disability, or death. Other withdrawals
from the Plan can be made under certain circumstances. Benefit payments are
recorded when paid.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting principles.
VALUATION OF INVESTMENTS
Investments in collective investment funds and common stock are stated at
market value determined by quoted market prices in an active market.
INVESTMENT INCOME
Dividend and interest income are recorded as earned. The net appreciation
(depreciation) in the fair value of investments consists of the realized
gains or losses and the unrealized appreciation (depreciation) of
investments.
Page 11 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Use of estimates
Certain amounts and disclosures included in the financial statements of the
Plan require management to make estimates which could differ from actual
results.
3. Investment options
Plan participants may choose among six investment options:
. Money Market Fund - This fund invests in cash equivalents and money market
-----------------
investments initially through the Fidelity U.S. Treasury Income Portfolio.
The fund's objective is to obtain current income while preserving capital
and maintaining liquidity.
. Bond Fund - This fund invests in intermediate-term maturity government
---------
bonds initially through the T. Rowe Price U.S. Treasury Intermediate Bond
Fund. The fund's objective is to preserve initial principal and accrued
interest, and obtain current income.
. Large Cap Stock Fund - This fund invests in stocks of large U.S. companies
--------------------
initially through the Fidelity Advisor Growth Opportunities Fund. The
fund's objective is to seek returns from capital growth and dividends of
stocks of larger U.S. companies.
. Small Cap Stock Fund - This fund invests in stocks of small U.S. companies
--------------------
initially through the T. Rowe Price New Horizons Fund. The fund's
objective is to seek maximum long-term return from a combination of
capital growth and dividend income.
. International Stock Fund - This fund invests in stocks of non-U.S.
------------------------
companies initially through the Templeton Foreign Fund. The fund's
objective is to seek long-term growth opportunities in non-U.S. stocks.
. Company Stock Fund - This fund invests in shares of The First American
------------------
Financial Corporation common stock ("Company Stock") and such other
assets, awaiting investment in Company Stock, as the plan trustee
considers advisable. The plan trustee may purchase shares of Company
Stock for the fund from the Company or on the open market. If purchased
from the Company, Company Stock is valued at its closing price on the day
the stock was purchased or, if no sales of Company Stock occurred on the
open market that day, on the next preceding day when the Company Stock was
traded.
4. Tax status
The Company has obtained a favorable tax determination letter, dated February
11, 1997, from the United States Treasury Department qualifying the Plan for
tax-exempt status under Section 401(a) of the Internal Revenue Code and for
exemption from federal income taxes under the provisions of Section 501(a).
5. Administrative expenses
Expenses incurred by the Plan for accounting and administration are borne
partially by the Plan's sponsor and partially by the Plan. For the years
ended December 31, 1996 and 1995, fees paid by the Plan amounted to and
$141,570 and $173,661, respectively, and fees paid by the Plan's sponsor
totaled $153,892 and $134,375, respectively.
Page 12 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA.
7. SUBSEQUENT EVENTS
Effective January 1, 1997, the Plan Administrative Committee amended the Plan
making eligible any employee of an eligible subsidiary who is at least 21
years of age and has been employed by the Company for at least 90 days.
Additionally, the Plan has amended its funds available under its Money Market
Fund and its Large Cap Stock Fund investment options. These new funds offer
essentially the same objectives as the current funds.
Page 13 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
SUPPLEMENTAL SCHEDULES
Page 14 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
SCHEDULE I -- ITEM 27A ASSETS HELD FOR INVESTMENT PURPOSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description of Investment, Including Current Value at
Identity of Issue, Borrower, Maturity Date, Rate of Interest, December 31,
Lessor, or Similar Party Collateral, Par or Maturity Value Cost 1996
------------------------ ------------------------------------ ---- ----
<S> <C> <C> <C>
Investment Companies
- --------------------
Templeton Foreign Fund 496,177 shares $ 4,738,168 $ 5,140,392
T. Rowe Price New Horizons Fund 210,159 shares 5,020,143 4,575,169
Fidelity Adv Growth Opportunity Fund 219,456 shares 6,902,507 7,746,802
T. Rowe Price U.S. Treasury
Intermediate Bond Fund 514,053 shares 2,655,232 2,662,794
----------- -----------
Total investment companies $19,316,050 $20,125,157
=========== ===========
U.S. Corporation Common Stock
- -----------------------------
First American Financial Corporation* 148,900 shares, $ 4,044,816 $ 6,123,513
common stock
Cash and Cash Equivalents
- -------------------------
Fidelity U.S. Treasury Income Portfolio 3,919,091 units, $ 4,508,306 $ 4,508,306
par value
589,215 currency
</TABLE>
* Party-in-interest.
Page 15 of 16
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
401(k) SAVINGS PLAN
SCHEDULE II - ITEM 27d SCHEDULE OF REPORTABLE TRANSACTIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPENSE CURRENT VALUE
INCURRED OF ASSET ON NET
IDENTITY OF PURCHASE SELLING LEASE WITH COST OF TRANSACTION REALIZED GAIN
PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE RENTAL TRANSACTION ASSET DATE (LOSS)
- -------------- ----------------------- ---------- ---------- ------ ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Federated Federated Mini Cap $1,982,457 $1,982,457 $1,982,457
Investment Fund
Counseling
Federated Federated Mini Cap $4,143,108 3,808,009 4,143,108 $ 335,099
Investment Fund
Counseling
Templeton Templeton Foreign Fund 2,676,258 2,676,258 2,676,258
T. Rowe Price T. Rowe Price 4,725,343 4,752,343 4,752,343
New Horizons
Fidelity Fidelity Adv Growth 4,241,506 4,241,506 4,241,506
Management and Opportunity Fund
Research
Company
T. Rowe Price T. Rowe Price Interme- 2,824,503 2,824,503 2,824,503
diate-Term U.S.
Treasury Portfolio
Fidelity Fidelity U.S. Treasury 2,540,284 2,540,284 2,540,284
Management and Income Portfolio
Research
Company
Fidelity Fidelity U.S. Treasury 735,964 735,964 735,964
Management and Income Portfolio
Research
Company
The First Common stock 2,794,414 2,794,414 2,794,414
American
Financial
Corporation
Fidelity Vanguard Admiral Inter- 1,315,713 1,315,713 1,315,713
Management and mediate-Term
Research U.S. Treasury
Company Company
Fidelity Vanguard Admiral 2,752,385 2,767,852 2,752,385 (15,467)
Management and Intermediate-Term
Research U.S. Treasury
Company Portfolio
</TABLE>
Note - Under ERISA, a reportable transaction is a transaction or series of
transactions during the period that involves more than 5% of the fair value of
plan assets at the beginning of the period.
Page 16 of 16