SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-------------------
Date of report (Date of earliest event reported) April 22, 1999
THE FIRST AMERICAN FINANCIAL CORPORATION
(Exact Name of the Registrant as Specified in Charter)
California 0-3658 95-1068610
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
114 East Fifth Street, Santa Ana, California 92701-4642
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code (714) 558-3211
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
See the attached Exhibit.
Item 7. Exhibits.
99 Press Release of The First American Financial Corporation dated April
22, 1999.
<PAGE>
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 hereunto duly authorized.
THE FIRST AMERICAN FINANCIAL CORPORATION
Date: April 23, 1999 By: /s/Thomas A. Klemens
-----------------------
Name: Thomas A. Klemens
Title: Executive Vice President and Chief
Financial Officer
EXHIBIT 99
Contact:
Thomas A. Klemens
Executive Vice President & Chief Financial Officer
(714) 558-3211 Ext. 7442
FIRST AMERICAN FINANCIAL REPORTS RECORD-SETTING
FIRST QUARTER 1999 OPERATING RESULTS
- Results Exceed Analysts' Estimates -
SANTA ANA, Calif., April 22, 1999 - The First American Financial Corporation
(NYSE: FAF), the leading provider of real estate-related information products
and services, announced today a record-setting 1999 first quarter for operating
earnings and revenues. Results exceeded analysts' estimates for the sixth
consecutive quarter.
Reported net income for the first quarter of 1999 was $24.9
million, or 40 cents per diluted share, and included the effects of a previously
reported accounting change for the company's tax service contracts which became
effective January 1, 1999, on a prospective basis. This accounting change
resulted in a decrease of $7.4 million on an after-tax basis, or 12 cents per
diluted share. Thus, earnings for the first quarter of 1999 would have been 52
cents under the former accounting rules. These comparable results exceeded the
previous record-setting 1998 first quarter operating net income of $25.1
million, or 44 cents per diluted share, which results exclude an investment gain
of $32.4 million, $19.6 million on an after-tax basis, or 35 cents relating to
the joint venture agreement with Experian. Revenues for the first three months
of 1999 totaled $706.9 million, an increase of 22 percent when compared with the
first quarter 1998 revenues of $579.8 million, which excludes the investment
gain mentioned above.
The accounting change mentioned above provides a more ratable
recognition of revenues and gross profit from tax service contracts, reducing
the amount of revenue and gross profit recognized at the inception of such
agreements and spreading it over the life of the contract. Although this
accounting change will likely cause a reduction in tax service revenues and
earnings recognized in the early years of each tax service contact, it is
anticipated that starting in the second year following its adoption, this method
will begin to reduce the volatility in reported financial results arising from
the inherent cyclicality of the company's tax service business. This change will
have no impact on cash flow from operations.
Results for 1998 have been restated to reflect the company's
1998 acquisitions accounted for as poolings of interests. In addition, 1998 per
share amounts and shares outstanding have been adjusted for the three-for-one
stock split distributed on July 17, 1998.
"Excellent first quarter operating results were achieved
despite the recent uptick in interest rates and slower refinance business," said
Parker S. Kennedy, president of The First American Financial Corporation. "We
remain focused on our strategic growth plans to continue market share
penetration in all business segments through acquisitions of businesses,
services and products, and the development and expansion of our operations in
international markets. We will continue to focus on enhancing our technological
capabilities and expanding the Consumer Risk Management business segment to
provide noncyclical, high margin income and significant opportunities for steady
growth in 1999."
Kennedy added: "We look forward to realizing the many rewards
of our successful acquisition strategy, as we integrate the acquired companies
into the First American family. We are excited about our prospects for 1999,
particularly with the opportunities that will result from our pending merger
with National Information Group, which is expected to close by the end of May."
The First American Financial Corporation, based in Santa Ana,
Calif., is the nation's leading provider of real estate-related information
products and services. The corporation's subsidiaries include First American
Title Insurance Company, a national and international title insurer; First
American Real Estate Information Services, Inc., which offers tax monitoring,
mortgage credit reporting, property data services, flood certification, field
inspection services, appraisal services, loss mitigation services, mortgage loan
origination and servicing systems, and mortgage document preparation nationally;
First American Home Buyers Protection Corporation, a home warranty company; and
First American Capital Management, an investment advisory firm; and First
American Trust Company and First Security Thrift Company in Southern California.
The company also offers automotive and direct-to-consumer credit reporting,
multifamily resident screening and pre-employment screening through its Consumer
Risk Management division. First American Financial has nearly 20,000 employees
in more than 400 branch offices in the United States and abroad. Information
about the company's subsidiaries and an archive of its press releases can be
found on the Internet at http://www.firstam.com.
<PAGE>
Any statements in this document looking forward in time involve risks
and uncertainties, including but not limited to the following risks:
the effect of interest rate fluctuations; changes in the performance of
the real estate markets; the effect of changing economic conditions;
general volatility in the capital markets; the demand for and the
acceptance of the company's products; changes in applicable government
regulations; consolidation among the company's customers; and
contingencies associated with the Year 2000 issue. The company's actual
results, performance or achievement could differ materially from those
expressed in or implied by forward looking statement, and, accordingly,
no assurances can be given that any of the events anticipated by the
forward looking statements will transpire or occur or, if any of them
do so, what impact they will have on the results of operations and
financial condition of the company.
<TABLE>
<CAPTION>
Quarter ended March 31: 1999 1998
- ----------------------- ---- ----
<S> <C> <C>
Revenues $ 706,926,000 $ 612,237,000
Income before income taxes and minority interests $ 45,365,000 $ 81,886,000
Income taxes $ 15,400,000 $ 29,400,000
Minority interest $ 5,088,000 $ 7,753,000
Net income $ 24,877,000 $ 44,733,000
Net income per share
Basic $ 0.41 $ 0.82
Diluted $ 0.40 $ 0.79
Average shares outstanding:
Basic 60,590,000 54,760,000
Diluted 62,907,000 56,578,000
Results for 1998 have been restated to reflect the company's 1998 acquisitions
accounted for as poolings of interests.
</TABLE>
(Additional Financial Data on Following Page)
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended
March 31
--------
1999 1998
<S> <C> <C>
RESULTS OF OPERATIONS
Revenues
Operating revenues $ 695,545,000 $ 568,802,000
Investment and other income 11,381,000 43,435,000*
---------------- ----------------
706,926,000 612,237,000
---------------- ---------------
Expenses
Salaries and other personnel costs 246,841,000 202,846,000
Premiums retained by agents 210,568,000 140,045,000
Other operating expenses 152,065,000 138,587,000
Provision for title losses and other claims 25,770,000 27,328,000
Depreciation and amortization 16,574,000 13,809,000
Premium taxes 5,211,000 4,154,000
Interest 4,532,000 3,582,000
---------------- ----------------
661,561,000 530,351,000
---------------- ----------------
Income before income taxes and minority interests $ 45,365,000$ 81,886,000
================ ================
OPERATING REVENUES
Title Insurance:
Direct operations $ 260,323,000 $ 225,719,000
Agency operations 260,661,000 176,536,000
---------------- ----------------
520,984,000 402,255,00
Real Estate Information 136,738,000 134,320,000
Home Warranty 15,224,000 13,173,000
Consumer Risk 15,770,000 13,228,000
Trust and Banking 6,829,000 5,826,000
---------------- ----------------
Total operating revenues $ 695,545,000 $ 568,802,000
================ ================
INCOME BEFORE INCOME TAXES
AND MINORITY INTERESTS
Title Insurance $ 35,161,000 $ 30,261,000
Real Estate Information 9,773,000 20,873,000
Home Warranty 3,736,000 3,026,000
Consumer Risk 3,282,000 2,430,000
Trust and Banking 2,212,000 1,588,000
----------------- -----------------
Total before corporate expenses and
minority interests 54,164,000 58,178,000
Corporate expenses 8,799,000 (23,708,000)
Income before income taxes and minority interests $ 45,365,000 $ 81,886,000
================= =================
TITLE INSURANCE ORDER COUNTS
FROM DIRECT OPERATIONS
Title orders opened 367400 397800
Title orders closed 295100 260600
* Includes an investment gain of $32.4 million relating to the joint venture
agreement with Experian.
# # #
</TABLE>
