<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A No. 1
[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 June 30, 1999
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, Suite 300, Irvine, California 92614
(Address of principal executive offices) (Zip Code)
(949) 622-4333
(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 Stock 30,456,895 shares as of August 6, 1999
<PAGE> 2
INTRODUCTORY STATEMENT
We are filing this Amendment No. 1 to our Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1999 to include segment disclosures in
response to comments received from the Securities and Exchange Commission
regarding our Registration Statement on Form S-3 (Registration No. 333-65837).
Please refer to Note G of Notes to Condensed Consolidated Financial Statements
filed herewith.
<PAGE> 3
FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Part I: FINANCIAL INFORMATION Page Number
<C> <S> <C>
Item 1. Condensed Consolidated Financial Statements
A. Condensed Consolidated Balance Sheets as of June 30, 1999 3
and December 31, 1998
B. Condensed Consolidated Statements of Earnings for the three- 4
month and six-month periods ended June 30, 1999 and 1998
(Restated)
C. Condensed Consolidated Statements of Comprehensive Earnings 5
for the three-month and six-month periods ended June 30, 1999
and 1998 (Restated)
D. Condensed Consolidated Statements of Cash Flows for the six-month 6
periods ended June 30, 1999 and 1998 (Restated)
E. Notes to Condensed Consolidated Financial Statements 8
</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/ Alan L. Stinson
-----------------------------------
Alan L. Stinson
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer) Date: December 21, 1999
2
<PAGE> 4
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale, at fair value ................... $331,752 $330,068
Equity securities, at fair value ..................................... 45,329 50,191
Other long-term investments, at cost, which approximates fair value .. 41,378 40,278
Short-term investments, at cost, which approximates fair value ....... 56,159 85,305
Investments in real estate and partnerships, net ..................... 3,712 4,673
-------- --------
Total investments ............................................... 478,330 510,515
Cash and cash equivalents .................................................. 55,846 51,309
Leases and residual interests in securitizations ........................... 126,202 93,507
Trade receivables, net ..................................................... 77,787 75,940
Notes receivable, net ...................................................... 16,844 10,761
Prepaid expenses and other assets .......................................... 111,925 111,471
Title plants ............................................................... 60,039 58,932
Property and equipment, net ................................................ 50,973 46,070
Deferred tax asset ......................................................... 19,300 10,965
-------- --------
$997,246 $969,470
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities ............................. $116,645 $123,357
Notes payable ........................................................ 178,395 214,624
Reserve for claim losses ............................................. 233,576 224,534
Income taxes payable ................................................. 2,832 8,683
-------- --------
531,448 571,198
Minority interests ................................................... 1,439 1,532
Stockholders' equity:
Preferred stock, $.0001 par value; authorized, 3,000,000 shares;
issued and outstanding, none ....................................... -- --
Common stock, $.0001 par value; authorized, 50,000,000 shares
in 1999 and 1998; issued, 39,189,429 as of June 30, 1999 and
35,540,036 as of December 31, 1998 ................................. 4 3
Additional paid-in capital ........................................... 246,705 173,888
Retained earnings .................................................... 305,010 265,567
-------- --------
551,719 439,458
Accumulated other comprehensive earnings ............................. 827 11,657
Less treasury stock, 8,756,002 shares as of June 30, 1999 and
6,645,487 shares as of December 31, 1998, at cost .................. 88,187 54,375
-------- --------
464,359 396,740
-------- --------
$997,246 $969,470
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 5
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------- -------- -------- --------
1999 1998 1999 1998
-------- -------- -------- --------
(Unaudited) (Unaudited)
(Restated) (Restated)
REVENUE:
<S> <C> <C> <C> <C>
Title insurance premiums ................... $248,100 $222,223 $489,974 $404,519
Escrow fees ................................ 34,213 32,624 67,008 58,935
Other fees and revenue ..................... 67,661 51,638 131,325 98,223
Interest and investment income, including
realized gains (losses) .................. 7,845 14,956 13,786 21,977
-------- -------- -------- --------
357,819 321,441 702,093 583,654
-------- -------- -------- --------
EXPENSES:
Personnel costs ............................ 105,761 97,056 214,306 181,567
Other operating expenses ................... 85,263 58,235 162,429 114,650
Agent commissions .......................... 108,605 91,732 215,597 167,756
Provision for claim losses ................. 15,099 13,418 30,330 26,757
Interest expense ........................... 2,853 3,549 5,689 6,674
-------- -------- -------- --------
317,581 263,990 628,351 497,404
-------- -------- -------- --------
Earnings before income taxes .................. 40,238 57,451 73,742 86,250
Income tax expense ............................ 16,497 24,012 30,234 36,131
-------- -------- -------- --------
Net earnings .......................... $ 23,741 $ 33,439 $ 43,508 $ 50,119
======== ======== ======== ========
Basic net earnings ......................... $ 23,741 $ 33,439 $ 43,508 $ 50,119
======== ======== ======== ========
Basic earnings per share ................... $ .78 $ 1.21 $ 1.42 $ 1.84
======== ======== ======== ========
Weighted average shares outstanding, basic
basis .................................... 30,423 27,661 30,594 27,281
======== ======== ======== ========
Diluted net earnings ....................... $ 23,741 $ 34,038 $ 43,771 $ 51,342
======== ======== ======== ========
Diluted earnings per share ................. $ .75 $ 1.02 $ 1.35 $ 1.55
======== ======== ======== ========
Weighted average shares outstanding, diluted
basis .................................... 31,788 33,396 32,502 33,028
======== ======== ======== ========
Cash dividends per share ................... $ .07 $ .06 $ .14 $ .13
======== ======== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 6
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In thousands)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
(Unaudited) (Unaudited)
(Restated) (Restated)
<S> <C> <C> <C> <C>
Net earnings .............................. $ 23,741 $ 33,439 $ 43,508 $ 50,119
Other comprehensive earnings (loss):
Unrealized gains (losses) on investments,
net (1) .............................. (4,023) 6,054 (10,031) 7,717
Reclassification adjustments for gains
included in net earnings (2) .......... (1,194) (5,942) (799) (7,099)
-------- -------- -------- --------
Other comprehensive earnings (loss) ....... (5,217) 112 (10,830) 618
-------- -------- -------- --------
Comprehensive earnings .................... $ 18,524 $ 33,551 $ 32,678 $ 50,737
======== ======== ======== ========
</TABLE>
(1) Net of income tax expense (benefit) of ($2,796) and $4,352 and ($6,971) and
$5,566 for the three-month and six-month periods ended June 30, 1999 and
1998, respectively.
(2) Net of income tax expense of $830 and $4,272, and $556 and $5,119 for the
three-month and six-month periods ended June 30, 1999 and 1998,
respectively.
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 7
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
--------- ---------
1999 1998
--------- ---------
(Unaudited)
(Restated)
<S> <C> <C>
Cash flows from operating activities:
Net earnings ..................................................................... $ 43,508 $ 50,119
Reconciliation of net earnings to net cash provided by operating activities:
Depreciation and amortization ............................................... 12,716 9,576
Net increase in reserve for claim losses .................................... 13,353 5,245
Net increase in provision for possible losses other than claims ............. 282 292
Gain on sales of assets ..................................................... (1,355) (12,218)
Equity in (gains) losses of unconsolidated partnerships ..................... (93) 713
Amortization of LYONs original issue discount ............................... 485 2,030
Change in assets and liabilities, net of effects from acquisition of subsidiaries:
Net increase in leases and lease securitization residual interest ........... (32,695) (19,756)
Net increase in trade receivables ........................................... (1,850) (9,789)
Net increase in prepaid expenses and other assets ........................... (6,049) (8,352)
Net increase (decrease) in accounts payable and accrued liabilities ......... (7,328) 11,086
Net increase (decrease) in income taxes ..................................... (7,250) 16,133
--------- ---------
Net cash provided by operating activities .............................................. 13,724 45,079
--------- ---------
Cash flows from investing activities:
Proceeds from sales of property and equipment .................................... -- 3,344
Proceeds from sale of real estate ................................................ 946 --
Proceeds from sales and maturities of investments ................................ 211,869 94,278
Collections of notes receivable .................................................. 1,787 2,123
Additions to title plants ........................................................ (1,247) (57)
Additions to property and equipment .............................................. (13,105) (11,024)
Additions to investments ......................................................... (202,836) (107,583)
Additions to notes receivable .................................................... (8,475) (7,664)
Sale of a subsidiary, net of cash ................................................ 2,468 --
Acquisitions of businesses, net of cash acquired ................................. -- 3,817
--------- ---------
Net cash used in investing activities .................................................. (8,593) (22,766)
--------- ---------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
(Continued)
6
<PAGE> 8
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
-------- --------
1999 1998
-------- --------
(Unaudited)
(Restated)
<S> <C> <C>
Cash flows from financing activities:
Borrowings ............................... $ 42,152 $ 5,379
Debt service payments .................... (7,074) (12,624)
Dividends paid ........................... (4,392) (3,662)
Purchase of treasury stock ............... (33,812) --
Stock options exercised .................. 2,532 5,892
-------- --------
Net cash used in financing activities .......... (594) (5,015)
-------- --------
Net increase in cash and cash equivalents ...... 4,537 17,298
Cash and cash equivalents at beginning of period 51,309 72,887
-------- --------
Cash and cash equivalents at end of period ..... $ 55,846 $ 90,185
======== ========
Supplemental cash flow information:
Income taxes paid ........................ $ 35,878 $ 18,951
======== ========
Interest paid ............................ $ 9,232 $ 4,684
======== ========
Noncash investing and financing activities:
Dividends declared and unpaid ............ $ 2,147 $ 1,622
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
7
<PAGE> 9
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. The Condensed Consolidated Financial Statements for both the
1999 and 1998 periods reflect the impact of the 1998 acquisitions of Granite
Financial, Inc. and Alamo Title Holding Company, which have been accounted for
as poolings-of-interests. 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 Annual Report on Form
10-K for the year ended December 31, 1998.
Certain reclassifications have been made in the 1998 Condensed Consolidated
Financial Statements to conform to classifications used in 1999.
Note B - Redemption of Liquid Yield Option Notes Outstanding
On January 13, 1999, the Company announced that it was going to redeem, pursuant
to the terms of the indenture, its outstanding Liquid Yield Option Notes
("LYONs") due 2009 for $581.25 per $1,000 maturity value on February 15, 1999.
Additionally, the LYONs holders had the right to convert the outstanding LYONs
to 28.077 shares of Company common stock per $1,000 maturity value of LYONS at
any time. Through February 15, 1999, $123,681,000 maturity value of LYONs had
converted to 3,473,000 shares of common stock, resulting in an addition of
approximately $70 million to stockholders' equity while reducing outstanding
notes payable by a like amount. The remaining $432,000 of maturity value was
redeemed for cash of approximately $251,000.
Note C - Dividends
On June 14, 1999, the Company's Board of Directors declared a cash dividend of
$.07 per share, payable on July 22, 1999, to stockholders of record on July 9,
1999.
Note D - Stock Purchase Plan and Employee Stock Purchase Loan Plan
On March 17, 1999, the Company's Board of Directors approved an increase to the
number of shares of outstanding Company common stock authorized for purchase
under the Company's previously announced purchase program. The additional
authorization will permit the Company to purchase up to 4.0 million shares.
Through August 6, 1999, the Company has purchased 2.1 million shares at an
average purchase price of $16.01 per share totaling $33.8 million. Purchases may
be made from time to time by the Company in the open market or in block
purchases or in privately negotiated transactions depending on market conditions
and other factors.
Also on March 17, 1999, the Company's Board of Directors approved the adoption
of the Fidelity National Financial, Inc. Employee Stock Purchase Loan Plan
("Loan Plan") and the Non-Employee Director Stock Purchase Loan Program ("Loan
Program"). The purpose of the Loan Plan and Loan Program is to provide key
employees and directors with further incentive to maximize shareholder value.
The Company offered an aggregate of $8,650,000 in loans. Loan Plan and Loan
Program funds must be used to make private or open market purchases of Company
common stock through a broker-dealer designated by the Company. All loans are
full recourse and unsecured, and will have a five-year term. Interest will
accrue on the loans at a rate of 5% per annum due at maturity. Loans may be
prepaid any time without penalty. Through August 6, 1999, loans had been made in
the amount of $6.5 million to purchase 431,707 shares of Company common stock at
an average purchase price of $15.08 per share.
Note E - Sale of National Title Insurance of New York, Inc.
On March 18, 1998, the Company announced that it had entered into an agreement
to sell National Title Insurance of New York Inc. ("National") to American Title
Company, a wholly-owned subsidiary of American National Financial, Inc.
("ANFI"), for $3.25 million, subject to regulatory approval and certain other
conditions. The purchase price was structured at a premium to book value. The
Company currently holds a 29.4% interest in ANFI. National was acquired in April
1996, as part of the Nations Title Inc. acquisition, and has not been actively
underwriting policies since that time. This transaction received regulatory
approval on May 27, 1999 and closed on June 10, 1999. The Company recognized a
gain of $1,161,000, prior to applicable income taxes, in connection with the
sale of National. This gain has been reflected in the Condensed Consolidated
Statements of Earnings for the three- and six-month periods ended June 30, 1999.
8
<PAGE> 10
Note F - Subsequent Event
On August 1, 1999, the Company announced that it had signed a
definitive agreement to purchase Chicago Title Corporation ("Chicago Title",
NYSE: CTZ), headquartered in Chicago, Illinois, for approximately $1.2 billion,
or $52.00 per share of Chicago Title common stock, using approximately equal
amounts of cash and Company common stock. The allocation between cash and stock
will be adjusted so Chicago Title stockholders will receive more than 50% of the
outstanding stock of the new company. The price is payable in shares of Company
common stock or, upon election by Chicago Title stockholders, in cash, subject
to proration as may be necessary to achieve the allocation between cash and
stock described above. The definitive agreement has been approved by the boards
of both companies. The transaction is subject to approval by the stockholders of
Chicago Title and the Company, requisite regulatory authorities and other
customary conditions and is expected to be completed in the first quarter of
2000.
Note G - Segment Information
During the first quarter of 1999, the Company restructured its business
segments to more accurately reflect a change in the Company's current operating
structure. All previously reported segment information has been restated to be
consistent with the current presentation.
The Company's Condensed Consolidated Financial Statements as of June
30, 1999 and 1998 and for the three-month and six-month periods ended June 30,
1999 and 1998, respectively, include five reportable segments. Reportable
segments are determined based on the organizational structure and types of
products and services from which each reportable segment derives its revenue.
As of and for the three-month period ended June 30, 1999 (dollars in
thousands):
<TABLE>
<CAPTION>
REAL ESTATE
TITLE INFORMATION MICRO
INSURANCE SERVICES GENERAL LEASING CORPORATE TOTAL
--------- ----------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenue $ 304,642 $ 21,355 $ 24,866 $ 6,339 $ 617 $357,819
========= ======== ======== ========= ======== ========
Operating earnings
(loss) $ 46,199 $ 151 $ (1,203) $ (2,678) $ (95) $ 42,374
Interest and investment
income, including
realized gains (losses) 6,953 83 5 -- 804 7,845
Depreciation and
amortization 4,764 210 1,516 586 52 7,128
Interest expense (216) 14 477 1,572 1,006 2,853
--------- -------- -------- --------- -------- --------
Earnings (loss) before
income taxes 48,604 10 (3,191) (4,836) (349) 40,238
Income tax expense
(benefit) 17,276 75 13 (1,385) 518 16,497
--------- -------- -------- --------- -------- --------
Net earnings (loss) $ 31,328 $ (65) $ (3,204) $ (3,451) $ (867) $ 23,741
========= ======== ======== ========= ======== ========
Assets $ 718,940 $ 57,219 $ 31,490 $ 130,609 $ 58,988 $997,246
========= ======== ======== ========= ======== ========
</TABLE>
As of and for the three-month period ended June 30, 1998 (dollars in
thousands):
<TABLE>
<CAPTION>
REAL ESTATE
TITLE INFORMATION MICRO
INSURANCE SERVICES GENERAL LEASING CORPORATE TOTAL
--------- ----------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenue $287,349 $21,400 $ 4,252 $ 7,903 $ 537 $321,441
======== ======= ======== ======== ======== ========
Operating earnings
(loss) $ 45,146 $ 3,583 $ 221 $ 2,910 $ (871) $ 50,989
Interest and investment
income, including
realized gains (losses) 14,379 39 1 -- 537 14,956
Depreciation and
amortization 3,666 504 381 394 -- 4,945
Interest expense 619 9 42 1,526 1,353 3,549
-------- ------- -------- -------- -------- --------
Earnings (loss) before
income taxes 55,426 2,923 (201) 990 (1,687) 57,451
Income tax expense
(benefit) 26,272 1,029 23 436 (3,748) 24,012
-------- ------- -------- -------- -------- --------
Net earnings (loss) $ 29,154 $ 1,894 $ (224) $ 554 $ 2,061 $ 33,439
======== ======= ======== ======== ======== ========
Assets $602,343 $45,738 $ 17,408 $101,504 $ 69,258 $836,251
======== ======= ======== ======== ======== ========
</TABLE>
9
<PAGE> 11
As of and for the six-month period ended June 30, 1999 (dollars in
thousands):
<TABLE>
<CAPTION>
REAL ESTATE
TITLE INFORMATION MICRO
INSURANCE SERVICES GENERAL LEASING CORPORATE TOTAL
--------- ----------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenue $597,660 $46,263 $ 44,219 $ 13,127 $ 824 $702,093
======== ======= ======== ========= ======== ========
Operating earnings
(loss) $ 81,782 $ 2,515 $ (91) $ (4,863) $ (982) $ 78,361
Interest and investment
income, including
realized gains (losses) 12,402 167 5 5 1,207 13,786
Depreciation and
amortization 8,824 715 1,972 1,101 104 12,716
Interest expense 367 18 679 2,834 1,791 5,689
-------- ------- -------- --------- -------- --------
Earnings (loss) before
income taxes 84,993 1,949 (2,737) (8,793) (1,670) 73,742
Income tax expense
(benefit) 32,655 854 29 (3,056) (248) 30,234
-------- ------- -------- --------- -------- --------
Net earnings (loss) $ 52,338 $ 1,095 $ (2,766) $ (5,737) $ (1,422) $ 43,508
======== ======= ======== ========= ======== ========
Assets $718,940 $57,219 $ 31,490 $ 130,609 $ 58,988 $997,246
======== ======= ======== ========= ======== ========
</TABLE>
As of and for the six-month period ended June 30, 1998 (dollars in
thousands):
<TABLE>
<CAPTION>
REAL ESTATE
TITLE INFORMATION MICRO
INSURANCE SERVICES GENERAL LEASING CORPORATE TOTAL
--------- ----------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenue $523,450 $40,817 $ 4,252 $ 13,935 $ 1,200 $583,654
======== ======= ======== ======== ======== ========
Operating earnings
(loss) $ 74,458 $ 5,654 $ 221 $ 5,554 $ (5,364) $ 80,523
Interest and investment
income, including
realized gains (losses) 20,696 80 1 -- 1,200 21,977
Depreciation and
amortization 6,815 1,009 381 982 389 9,576
Interest expense 1,238 11 42 2,594 2,789 6,674
-------- ------- -------- -------- -------- --------
Earnings (loss) before
income taxes 87,101 4,714 (201) 1,978 (7,342) 86,250
Income tax expense
(benefit) 34,696 1,696 23 832 (1,116) 36,131
-------- ------- -------- -------- -------- --------
Net earnings (loss) $ 52,405 $ 3,018 $ (224) $ 1,146 $ (6,226) $ 50,119
======== ======= ======== ======== ======== ========
Assets $602,343 $45,738 $ 17,408 $101,504 $ 69,258 $836,251
======== ======= ======== ======== ======== ========
</TABLE>
The activities of the reportable segments include the following:
TITLE INSURANCE
This segment, consisting of title insurance underwriters and wholly
owned title insurance agencies; provides core title insurance and escrow
services, including document preparation, collection and trust activities and
certain real estate information services. This segment coordinates its
activities with those of the real estate information services segment described
below in order to offer the full range of real estate products and services
required to execute and close a real estate transaction.
REAL ESTATE INFORMATION SERVICES
This segment, consisting of various real estate information
subsidiaries, offers the complementary specialized products and services
required to execute and close a real estate transaction that are not offered by
the title insurance segment described above. These services include document
recording services on a nationwide basis, tax qualifying property exchange
services, property appraisal services, tax monitoring
10
<PAGE> 12
services, credit reporting, real estate referral services, flood monitoring, and
foreclosure publishing and posting. These services require specialized expertise
and have been centralized for efficiency and management purposes.
MICRO GENERAL CORPORATION
Micro General Corporation is a full service enterprise solutions
provider offering a complete range of information technology and
telecommunication services including systems integration, application
development, real estate industry applications and eCommerce. Micro General
Corporation was not consolidated in the Company's Condensed Consolidated
Financial Statements until the second quarter of 1998.
LEASING
The leasing segment originates, funds, purchases, sells, securitizes and
services equipment leases for a broad range of businesses.
CORPORATE
The corporate segment includes the operations of the parent holding
company. These operations consist of certain investment activities and the
issuance and repayment of corporate debt obligations.
Expenditures for long-lived assets relate primarily to the title
insurance segment.
The accounting policies of the segments are the same as those described
in Note A, Basis of Financial Statements. Intersegment sales or transfers which
occurred in the ordinary course of consolidated operations have been eliminated
from the segment information provided.
11
