<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996
Commission File Number 1-9396
FIDELITY NATIONAL FINANCIAL, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 86-0498599
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
17911 Von Karman Avenue, Irvine, California 92614
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 622-5000
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
$.0001 par value common 12,497,060 shares as of November 11, 1996
Exhibit Index appears on page 10 of 11 sequentially numbered pages.
1
<PAGE> 2
FORM 10-Q
QUARTERLY REPORT
Quarter Ended September 30, 1996
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
A. Condensed Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995 3
B. Condensed Consolidated Statements of Earnings
for the three-month and nine-month periods ended
September 30, 1996 and 1995 4
C. Condensed Consolidated Statements of Cash Flows
for the nine-month periods ended
September 30, 1996 and 1995 5
D. Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II: OTHER INFORMATION
Items 1.-5. of Part II have been omitted because they are not
applicable with respect to the current reporting period
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
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.
FIDELITY NATIONAL FINANCIAL, INC.
---------------------------------
(Registrant)
By: /s/ CARL A. STRUNK
-----------------------------
Carl A. Strunk
Executive Vice President,
Chief Financial Officer
and Treasurer Date: November 11, 1996
2
<PAGE> 3
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale, at fair value $168,381 $129,236
Equity securities, at fair value 39,159 31,412
Other long-term investments, at cost, which approximates fair value 3,500 2,627
Short-term investments, at cost, which approximates fair value 849 8,148
Investments in real estate and partnerships, net 13,168 8,659
-------- --------
Total investments 225,057 180,082
Cash and cash equivalents 56,007 47,431
Trade receivables, net 56,065 39,801
Notes receivable, net 17,038 15,926
Prepaid expenses and other assets 47,790 43,908
Title plants 52,399 41,725
Property and equipment, net 33,086 33,740
Deferred income tax assets, net 4,328 --
Income taxes receivable -- 2,450
-------- --------
$491,770 $405,063
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities $ 52,621 $ 44,549
Notes payable 146,659 136,047
Reserve for claim losses 188,914 146,094
Deferred income tax liabilities, net -- 33
Income taxes payable 4,274 --
-------- --------
392,468 326,723
Minority interest 445 393
Stockholders' equity:
Preferred stock, $.0001 par value; authorized,
3,000,000 shares; issued and outstanding, none -- --
Common stock, $.0001 par value; authorized, 55,000,000 shares
in 1996 and 1995; issued, 17,485,658 as of September 30, 1996 and
17,439,263 as of December 31, 1995 2 2
Additional paid-in capital 58,505 58,098
Retained earnings 86,052 70,273
-------- --------
144,559 128,373
Net unrealized gains on investments 8,481 5,866
Less treasury stock, 4,992,853 shares as of September 30, 1996
and 5,168,853 shares as of December 31, 1995, at cost 54,183 56,292
-------- --------
98,857 77,947
-------- --------
$491,770 $405,063
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUE:
Title insurance premiums $126,757 $ 76,992 $346,543 $202,907
Escrow fees 16,414 14,349 50,242 35,017
Other fees and revenue 19,824 15,648 56,009 41,676
Interest and investment income,
including realized gains and losses 3,697 6,482 11,924 12,424
-------- -------- -------- --------
166,692 113,471 464,718 292,024
-------- -------- -------- --------
EXPENSES:
Personnel costs 52,851 44,978 159,735 119,302
Other operating expenses 38,184 34,306 110,574 88,251
Agent commissions 53,429 19,124 131,773 59,579
Provision for claim losses 9,273 5,016 25,048 13,643
Interest expense 2,332 2,216 6,908 6,833
-------- -------- -------- --------
156,069 105,640 434,038 287,608
-------- -------- -------- --------
Earnings before income taxes
and extraordinary item 10,623 7,831 30,680 4,416
Income tax expense (benefit) 4,306 1,958 12,272 (31)
-------- -------- -------- --------
Earnings before extraordinary item 6,317 5,873 18,408 4,447
Extraordinary item -- loss on early retirement
of Senior Notes, net of applicable income
tax benefit of $437 -- -- -- (813)
-------- -------- -------- --------
Net earnings $ 6,317 $ 5,873 $ 18,408 $ 3,634
======== ======== ======== ========
Primary earnings per share
before extraordinary item $ .49 $ .46 $ 1.42 $ .34
Extraordinary item -- loss on early retirement of
Senior Notes, net of applicable income tax benefit -- -- -- (.06)
-------- -------- -------- --------
Primary earnings per share $ .49 $ .46 $ 1.42 $ .28
======== ======== ======== ========
Fully diluted earnings per share $ .42 $ .40 $ 1.22 $ .28
======== ======== ======== ========
Primary weighted average shares outstanding 13,019 12,748 12,954 13,068
======== ======== ======== ========
Fully diluted weighted average shares outstanding 17,015 16,751 16,948 13,068
======== ======== ======== ========
Cash dividends per share $ .07 $ .06 $ .21 $ .19
======== ======== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
------------------------
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 18,408 $ 3,634
Reconciliation of net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,478 9,825
Net decrease in reserve for claim losses (1,277) (6,545)
Provision for possible losses
on real estate and notes receivable 363 295
Gain on sales of investments (2,600) (4,011)
Amortization of LYONs original issue discount
and debt issuance costs 3,899 3,661
Other 127 (148)
Change in assets and liabilities, net of effects
from acquisition of subsidiaries:
Net increase in trade receivables (8,740) (8,388)
Net (increase) decrease in prepaid expenses
and other assets 2,573 (7,058)
Net decrease in accounts payable
and accrued liabilities (1,788) (3,074)
Net increase in income taxes 7,294 5,864
--------- --------
Net cash provided by (used in) operating activities 26,737 (5,945)
--------- --------
Cash flows from investing activities:
Proceeds from sales of property and equipment 1,521 3,243
Proceeds from sales of title plants -- 24
Proceeds from sales and maturities of investments:
Held to maturity -- 2,310
Available for sale 143,627 183,350
Collections of notes receivable 9,353 2,397
Additions to title plants (695) (4,826)
Additions to property and equipment (8,340) (13,708)
Additions to investments:
Held to maturity -- (1,941)
Available for sale (148,939) (99,075)
Additions to notes receivable (8,225) (5,393)
Investments in real estate and partnerships (700) (100)
Acquisition of subsidiaries, net of cash acquired (10,544) --
--------- --------
Net cash provided by (used in) investing activities (22,942) 66,281
--------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
(continued)
5
<PAGE> 6
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------------
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
Cash flows from financing activities:
Borrowings $ 10,897 $ 46,284
Debt service payments (6,030) (55,884)
Reissue (repurchase) of treasury stock 2,109 (15,831)
Dividends paid (2,602) (2,701)
Stock options exercised 407 1,209
-------- --------
Net cash provided by (used in) financing activities 4,781 (26,923)
-------- --------
Net increase in cash and cash equivalents 8,576 33,413
Cash and cash equivalents at beginning of period 47,431 34,689
-------- --------
Cash and cash equivalents at end of period $ 56,007 $ 68,102
======== ========
Supplemental cash flow information:
Income taxes paid (refunded) $ 10,493 $ (6,335)
======== ========
Interest paid $ 3,355 $ 4,810
======== ========
Noncash investing and financing activities:
Dividends declared and unpaid $ 888 $ 778
======== ========
Acquisition of Nations Title Inc.:
Assets acquired, net $ 54,907
Liabilities assumed (52,777)
--------
Value of stock issued $ 2,130
========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE> 7
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Financial Statements
- --------------------------------------
The financial information included in this report includes the accounts of
Fidelity National Financial, Inc. and its subsidiaries (collectively, the
"Company") and has been prepared in accordance with generally accepted
accounting principles and the instructions to Form 10-Q and Article 10 of
Regulation S-X. All adjustments, consisting of normal recurring accruals
considered necessary for a fair presentation, have been included. This report
should be read in conjunction with the Company's 1995 Annual Report on Form
10-K for the year ended December 31, 1995, as amended. Certain
reclassifications have been made in the 1995 Condensed Consolidated Financial
Statements to conform to the classifications used in 1996.
Note B - Dividends
- ------------------
On October 8, 1996, the Company's Board of Directors declared a cash dividend
of $.07 per share, payable on November 1, 1996, to stockholders of record on
October 18, 1996.
Note C - Proposed Acquisition of Giant Group, Ltd.
- --------------------------------------------------
In February of 1996, the Company proposed a merger with Giant Group, Ltd.
("Giant"). The Company had purchased 705,489 shares (or 14.8%) of Giant's
outstanding common stock. The Company's intent in acquiring Giant was to
utilize its liquid assets to take advantage of investment opportunities in
non-interest rate sensitive businesses. On April 26, 1996, the parties reached
a settlement agreement pursuant to which Giant repurchased its shares from
Fidelity. In addition, as part of the settlement, Fidelity acquired 767,807
shares of Rally's Hamburgers, Inc. ("Rally's") stock from Giant for $.83 per
share, as well as an option to purchase additional shares of Rally's common
stock.
Note D - Acquisitions
- ---------------------
On April 1, 1996, the Company completed its acquisition of Nations Title Inc.
The acquisition positioned Fidelity National Financial, Inc. as the nation's
fourth largest title insurance underwriter. Nations Title Inc. and its three
wholly-owned underwriting subsidiaries, Nations Title Insurance Company,
Nations Title Insurance of New York Inc. and National Title Insurance of New
York Inc., expanded the Company's national agency network and increased its
market share in the more traditional agency driven states. The Company
acquired one hundred percent of the outstanding stock of Nations Title Inc. for
an adjusted purchase price of $19.3 million plus 176,000 shares ($2.1 million)
of Fidelity National Financial, Inc.'s common stock. This transaction has been
accounted for as a purchase.
Selected unaudited pro forma combined results of operations for the nine-month
periods ended September 30, 1996 and 1995, assuming the acquisition occurred on
January 1, 1996 and 1995, are presented as follows:
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
Total revenue $509,447,000 $426,211,000
Earnings before
extraordinary item 18,349,000 4,270,000
Net earnings 18,349,000 3,457,000
Earnings per share $1.41 $.26
</TABLE>
On April 4, 1996, the Company purchased 17% of the outstanding common stock of
National Alliance Marketing Group, Inc. ("National"), a California corporation,
for $566,667; together with a warrant to acquire an additional 14% of National
common stock. In addition, the Company loaned $1,200,000 to National at closing
at a rate of prime plus one percent. Subsequently, the Company agreed to
increase the credit facility from $1,200,000 to $1,700,000. In consideration
for the increase in the credit facility National agreed to increase the warrant
shares which the Company can purchase. If the entire $1,700,000 is borrowed
the Company may purchase an additional 34% of the outstanding shares of
National. After receiving approval of the transaction from the California
Department of Insurance, the transaction closed on July 12, 1996. National is
the parent company of Alliance Home Warranty Company, a California insurance
company. Alliance sells home warranty plans to buyers of resale homes,
primarily in the Central and Southern California markets. A home warranty
contract generally promises the repair or replacement of major operating
systems and built-in appliances inside a home for a period of one year.
7
<PAGE> 8
On May 29, 1996, the Company acquired 19.8% of the outstanding common stock of
Smith/Norris Corporation ("Smith/Norris"), a California corporation, together
with a warrant to acquire an additional 20% of Smith/Norris common stock.
Smith/Norris is a privately held software development corporation which focuses
on a family of image-enabled records systems including imaging, indexing,
reporting, cashiering and accounting software for county and city government
departments. As an additional part of the transaction, the Company established
a credit facility in an amount up to $2,000,000 to finance future growth.
On November 1, 1996, the Company acquired 80% of the outstanding stock of CRM,
Inc. ("CRM") for a purchase price of $3,520,000, payable $1,000,000 in cash and
$2,520,000 in Fidelity National Financial, Inc. common stock. CRM provides
real estate information services with a heavy concentration in the areas of tax
service and flood certification. The Company intends to combine its current
tax service business with that of CRM. Under certain circumstances the Company
can purchase the remaining 20% of CRM.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Total revenue for the third quarter of 1996 increased 46.9% to $166.7 million
from $113.5 million in the third quarter of 1995. Total revenue for the
nine-month period ended September 30, 1996 increased 59.1% to $464.7 million
from $292.0 for the comparable 1995 period. The increase in the quarter and
nine-month revenue amounts can be attributed to favorable order counts and
increased closings, both resulting from stability in interest rates, the
related positive impact on the real estate market and the Company's expanded
presence in the market, including the Company's acquisition of Nations Title
Inc., on April 1, 1996.
Interest and investment income decreased 43.1% to $3.7 million in the third
quarter of 1996 from $6.5 million in the third quarter of 1995. For the
nine-month period ended September 30, 1996, interest and investment income was
$11.9 million, a 4.0% decrease from the $12.4 million of interest and
investment income earned in the comparable 1995 period. The decrease in
interest and investment income earned during the 1996 periods is primarily due
to a decrease in net realized gains compared to the same periods in 1995,
offset by an increased invested asset base during the 1996 periods. Net
realized gains from the sale of investments were $601,000 in the third quarter
of 1996 as compared to net realized gains of $3.9 million in the corresponding
1995 period. Net realized gains for the nine-month periods ended September 30,
1996 and 1995 were $2.6 million and $4.0 million, respectively. Included in
the third quarter and nine-month results of 1995 is a net realized gain of $3.4
million related to the disposition of the Company's investment in US Facilities
Corporation.
The Company's operating expenses consist primarily of personnel costs and other
operating expenses which are incurred as title insurance orders are received
and processed by the Company's operations. Title insurance premiums and escrow
fees are recognized as income at the time the underlying real estate
transaction closes. As a result, revenue lags approximately 60-90 days behind
expenses and therefore gross margins may fluctuate.
Personnel costs include both base salaries and commissions paid to employees
and are the most significant operating expense incurred by the Company. These
costs generally fluctuate with the level of orders opened and closed and with
the mix of revenue between direct and agency operations. Personnel costs, as a
percentage of total revenue, have decreased to 31.7% for the three-month period
ended September 30, 1996 from 39.6% for the corresponding period in 1995.
Personnel costs as a percentage of total revenue for the nine-month period
ended September 30, 1996 have decreased to 34.4% from 40.9% for the
corresponding 1995 period.
Other operating expenses consist primarily of facilities expenses, title plant
maintenance, premium taxes (which insurance underwriters are required to pay on
title premiums in lieu of franchise and other state taxes), escrow losses,
courier services, computer services, professional services, general insurance,
trade and notes receivable allowances and depreciation. Other operating
expenses decreased as a percentage of total revenue to 22.9% in the third
quarter of 1996 from 30.2% in the third quarter of 1995. As a percentage of
total revenue, other operating expenses for the nine-month period ended
September 30, 1996 decreased to 23.8% from 30.2% for the same period in 1995.
The period over period decreases are primarily the result of the increase in
total revenue, as well as the change in the direct operation and agency
operation title premium mix. The addition of Nations Title Inc. title
premiums, which are primarily agency related, has provided a balance to direct
operation and agency revenue. In previous periods the majority of title
premiums and total revenue were generated by direct operations, which results
in higher personnel costs and other operating expenses.
8
<PAGE> 9
The Company has also implemented and remains committed to stringent cost
control measures which are designed to reduce expenses and maximize efficiency
by maintaining expenses, including personnel costs and other operating
expenses, at levels consistent with revenue production and business mix.
Agent commissions represent the portion of policy premiums retained by agents
pursuant to the terms of their respective agency contracts. Agent commissions
were 78.7% of agent policy premiums in the third quarter of 1996 compared to
76.7% of agent policy premiums in the third quarter of 1995, and 78.6% and
76.2% of agency premiums for the nine-month periods ended September 30, 1996
and 1995, respectively. The period over period increases in agent commissions
as a percentage of agency premiums are attributable to the fact that the
average commissions paid to agents acquired in the Nations Title Inc.
acquisition exceed those paid to the former agent base. The combination of
higher agency commission rates and the significant agency revenue generated by
the Nations Title Inc. acquisition have resulted in higher overall commissions
as a percentage of agency premiums.
The provision for claim losses includes an estimate of anticipated title claims
and major claims. The estimate of anticipated title claims is accrued as a
percentage of title premium revenue based on the Company's historical loss
experience and other relevant factors. The Company monitors its claims
experience on a continual basis and adjusts the provision for claim losses
accordingly. Based on recently completed loss development studies, the Company
believes that as a result of its underwriting and claims handling practices, as
well as the refinancing business of prior years, the Company will maintain a
trend of favorable claim loss experience. The Company has provided for claim
losses at 7.0% of title insurance premiums prior to the impact of major claim
expense, recoupments and premium rates and Company loss experience in the state
of Texas. (Premiums are generally higher in Texas for similar coverage than in
other states, while loss experience is comparable. As a result, losses as a
percentage of premiums are lower.) Application of these factors resulted in a
net provision for claim losses as a percentage of premiums of 7.3% and 6.5% for
the three-month periods ended September 30, 1996 and 1995, respectively, and
7.2% and 6.7% for the nine-month periods ended September 30, 1996 and 1995,
respectively.
Interest expense is incurred by the Company in financing its capital asset
purchases and certain acquisitions. Interest expense consists of interest
related to the Company's outstanding debt and the amortization of original
issue discount and debt issuance costs related to the Liquid Yield Option Notes
("LYONs"). Interest expense of "non-LYONs" debt totaled $1.0 million and
$979,000 for the three-month periods ended September 30, 1996 and 1995,
respectively; and $3.0 million and $3.2 million for the nine-month periods
ended September 30, 1996 and 1995, respectively. The LYONs related component
of interest expense amounted to $1.3 million for the third quarter of 1996 and
$1.2 million for the third quarter of 1995; and $3.9 million and $3.6 million
for the nine-month periods ended September 30, 1996 and 1995, respectively.
Although notes payable have increased slightly, interest rates being paid by
the Company in 1996 are lower than those paid in 1995 as a result of debt
refinancing and decreases in certain rates (i.e., prime rate and LIBOR) to
which certain of the interest rates being paid by the Company are indexed.
Income tax expense for the three-month periods ended September 30, 1996 and
1995, as a percentage of earnings before income taxes, was 40.5% and 25.0%,
respectively. Income tax expense (benefit) for the nine-month periods ended
September 30, 1996 and 1995, as a percentage of earnings before income taxes,
including the extraordinary loss on the early retirement of debt in 1995, was
40.0% and (14.8%), respectively. The fluctuations in income tax expense
(benefit) can be attributed to the income (loss) mix, operating income versus
investment income and the characteristics of investment income, taxable versus
tax exempt.
In order to reduce interest expense incurred and interest rates paid, the
Company determined that prepayment of the Senior Secured Notes (the "Senior
Notes") issued in March 1993 would be in the best interests of the Company.
Pursuant to the terms and conditions of the Senior Note Agreement, the Company
provided for the Make Whole Provision, as defined, and related expenses in the
first quarter of 1995. This prepayment amount of $1.25 million, before related
income taxes, has been reflected as an extraordinary item in the Condensed
Consolidated Statement of Earnings for the nine-month period ended September
30, 1995.
Liquidity and Capital Resources
The Company's insurance subsidiaries and wholly-owned underwritten title
companies (the "UTCs") collect premiums and pay claims and operating expenses.
Fluctuations in operating cash flows are primarily the result of increases or
decreases in revenue. The insurance subsidiaries also have cash flow sources
derived from investment income, repayments of principal and proceeds from sales
and maturities of investments and dividends and distributions from
subsidiaries. Positive cash flow from the insurance subsidiaries is invested
primarily in short term investments, medium term bonds and certain equity
securities. Cash, cash equivalents and short term investments held by the
Company's insurance subsidiaries and UTCs
9
<PAGE> 10
provide liquidity for projected claims and operating expenses. As a holding
company, the Company receives cash from its subsidiaries as reimbursement for
operating and other administrative expenses it incurs. The reimbursements are
executed within the guidelines of various management agreements between the
holding company and its subsidiaries. The Company's cash requirements include
debt service, operating expenses, taxes and dividends on its common stock. The
Company believes that all anticipated cash requirements for current operations
will be met from internally generated funds and short term bank borrowings
through existing credit facilities.
One of the additional significant sources of the Company's funds is dividend
distributions from its insurance subsidiaries and UTCs. The insurance
subsidiaries and UTCs ability to pay dividends and make distributions is
restricted by state regulations. Each state of domicile regulates the extent
to which the Company's title underwriters and UTCs can pay dividends or make
other distributions to the Company.
The short and long term liquidity requirements of the Company and its
subsidiaries are monitored regularly to match cash inflows with cash
requirements. The Company and subsidiaries forecast their daily cash needs and
periodically review their short and long term projected sources and uses of
funds, as well as the asset, liability, investment and cash flow assumptions
underlying these projections.
Part II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11 -- Computation of Primary and Fully Diluted Earnings
Per Share
Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K:
None.
10
<PAGE> 1
EXHIBIT 11
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------- --------------------
1996 1995 1996 1995(1)
------- ------- ------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Earnings before
extraordinary item $ 6,317 $ 5,873 $18,408 $ 4,447
Extraordinary item -- loss
on early retirement of Senior
Notes, net of applicable income
tax benefit of $437 -- -- -- (813)
------- ------- ------- -------
Primary earnings 6,317 5,873 18,408 3,634
Add: Amortization of original
issue discount and debt issuance
costs, net of income tax effect,
applicable to LYONs 785 804 2,322 --
------- ------- ------- -------
Fully diluted earnings $ 7,102 $ 6,677 $20,730 $ 3,634
======= ======= ======= =======
Weighted average shares outstanding
during the period 12,476 12,252 12,404 12,638
Common stock equivalent
shares - primary 543 496 550 430
------- ------- ------- --------
Common and common stock equivalent
shares for purpose of calculating
primary earnings per share 13,019 12,748 12,954 13,068
Incremental shares to reflect
full dilution 3,996 4,003 3,994 --
------- ------- ------- --------
Total shares for purpose of
calculating fully diluted earnings
per share 17,015 16,751 16,948 13,068
======= ======= ======= ========
Primary earnings per share
before extraordinary item $ .49 $ .46 $ 1.42 $ .34
Extraordinary item, loss on early
retirement of Senior Debt,
net of income tax benefit -- -- -- (.06)
------- ------- ------ --------
Primary earnings per share $ .49 $ .46 $ 1.42 $ .28
======= ======= ======= ========
Fully diluted earnings per share $ .42 $ .40 $ 1.22 $ .28
======= ======= ======= ========
</TABLE>
(1) The impact of the assumed conversion of fully dilutive securities is
antidilutive, and is therefore excluded from the computation.
11
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 168,381
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 39,159
<MORTGAGE> 0
<REAL-ESTATE> 13,168
<TOTAL-INVEST> 225,057
<CASH> 56,007
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 491,770
<POLICY-LOSSES> 188,914
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
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2
0
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346,543
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</TABLE>
