FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1998 Commission File No. 1-13990
LANDAMERICA FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Virginia 54-1589611
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
101 Gateway Centre Parkway, Richmond, Virginia 23235
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 267-8000
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, 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.
Common Stock 15,242,399 November 6, 1998
No Par Value
1
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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets......................................3
Consolidated Statements of Operations ...........................5
Consolidated Statements of Changes
in Shareholders' Equity......................................6
Consolidated Statements of
Cash Flows...................................................7
Notes to Consolidated
Financial Statements.........................................8
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations...................................11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................16
Signatures......................................................17
2
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1998 1997
- ------ ---- ----
<S> <C> <C>
INVESTMENTS:
Fixed maturities:
Available-for-sale - at fair value (amortized
cost: 1998 -$718,417; 1997 - $251,182) $ 731,865 $262,776
Mortgage loans (less allowance for doubtful
accounts: 1998 - $155; 1997 - $150) 10,577 448
Invested cash 112,851 34,420
-------------- -----------
Total Investments 855,293 297,644
CASH 60,982 35,629
NOTES AND ACCOUNTS RECEIVABLE:
Notes (less allowance for doubtful accounts:
1998 -$2,039; 1997 - $1,083) 7,968 5,911
Premiums (less allowance for doubtful
accounts: 1998 - $8,523; 1997 - $2,693) 63,262 28,659
Income tax recoverable - 2,392
--------------- -----------
Total Notes and Accounts Receivable 71,230 36,962
PROPERTY AND EQUIPMENT - at cost (less
accumulated depreciation and amortization:
1998 -$84,160; 1997 - $51,775) 48,734 21,896
TITLE PLANTS 96,594 48,984
GOODWILL (less accumulated amortization:
1998 - $24,081; 1997 - $14,507) 341,791 57,687
DEFERRED INCOME TAXES 82,511 21,610
OTHER ASSETS 77,888 34,281
--------------- -----------
Total Assets $ 1,635,023 $ 554,693
=============== ===========
</TABLE>
3
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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES 1998 1997
---- ----
<S> <C> <C>
POLICY AND CONTRACT CLAIMS $ 504,663 $ 202,477
ACCOUNTS PAYABLE AND
ACCRUED EXPENSES 157,206 47,922
INCOME TAXES 16,866 -
NOTES PAYABLE 207,630 6,994
OTHER LIABILITIES 10,109 4,896
-------------- -----------
Total Liabilities 896,474 262,289
-------------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares
authorized; no shares of Series A Junior Participating
Preferred Stock issued or outstanding; 2,200,000
shares of 7% Series B Cumulative Convertible
Preferred Stock issued and outstanding in 1998 175,700 -
Common stock, no par value, 45,000,000 shares
authorized; shares issued and outstanding:
1998 - 15,242,007; 1997 - 8,964,633 380,033 168,066
Unrealized investment gains (less related
deferred income tax expense: 1998 - $4,707;
1997 - $4,058) 8,741 7,536
Retained earnings 174,075 116,802
-------------- -----------
Total Shareholders' Equity 738,549 292,404
-------------- -----------
Total Liabilities and Shareholders' Equity $ 1,635,023 $ 554,693
============== ===========
</TABLE>
See accompanying notes.
4
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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(In thousands of dollars except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
REVENUES
<S> <C> <C> <C> <C>
Premiums, title search, escrow and other $ 498,987 $ 160,356 $ 1,241,252 $ 439,544
Investment income - net 16,262 4,036 36,618 12,419
---------- ---------- ------------ ----------
Total Revenues 515,249 164,392 1,277,870 451,963
---------- ---------- ------------ ----------
EXPENSES
Salaries and employee benefits 142,245 51,778 375,732 148,596
Agents' commissions 199,444 54,178 475,386 149,944
Provision for policy and contract claims 25,923 8,590 64,545 23,910
Assimilation costs - - 11,517 -
Interest expense 3,287 151 7,479 393
General, administrative and other 95,867 36,654 243,232 102,601
---------- ---------- ----------- ----------
Total Expenses 466,766 151,351 1,177,891 425,444
---------- ---------- ----------- ----------
INCOME BEFORE INCOME TAXES 48,483 13,041 99,979 26,519
INCOME TAX EXPENSE (BENEFIT)
Current 19,816 5,259 43,647 12,919
Deferred (1,972) (659) (7,790) (3,699)
---------- ---------- ----------- ----------
Total Income Tax Expense 17,844 4,600 35,857 9,220
---------- ---------- ----------- ----------
NET INCOME 30,639 8,441 64,122 17,299
DIVIDENDS - PREFERRED STOCK (1,925) - (4,577) -
---------- ---------- ----------- ----------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 28,714 $ 8,441 $ 59,545 $ 17,299
---------- ---------- ----------- ----------
NET INCOME PER COMMON SHARE $ 1.89 $ 0.95 $ 4.33 $ 1.94
========== ========== =========== ==========
NET INCOME PER COMMON SHARE
ASSUMING DILUTION $ 1.51 $ 0.92 $ 3.61 $ 1.90
========== ========== =========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 15,168 8,919 13,753 8,911
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
ASSUMING DILUTION 20,296 9,141 17,786 9,089
</TABLE>
See accompanying notes.
5
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LANDAMERICA FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Preferred Stock
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Balance - December 31, 1997 8,964,633 $ 168,066 - $ -
Comprehensive income
Net income - - - -
Other comprehensive income, net
of tax:
Net unrealized gains on securities - - - -
Comprehensive income - - - -
Common and preferred stock issued 6,117,973 206,975 2,200,000 175,700
Stock option and incentive plans 159,401 4,992 - -
Preferred dividends (7%) - - - -
Common dividends ($0.10/share) - - - -
----------- ---------- ---------- ----------
Balance - September 30, 1998 15,242,007 $ 380,033 2,200,000 $ 175,700
=========== ========== ========== ==========
Balance - December 31, 1996 8,889,791 $ 167,044 - $ -
Comprehensive income
Net income - - - -
Other comprehensive income
net of tax:
Net unrealized gains on securities - - - -
Comprehensive income - - - -
Stock options and incentive plans 38,250 577 - -
Dividends ($0.10/share) - - - -
----------- ---------- ---------- ----------
Balance - September 30, 1997 8,928,041 $ 167,621 - $ -
=========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Net Net Total
Unrealized Retained Stockholders'
Gains Earnings Equity
----- -------- ------
<S> <C> <C> <C>
Balance - December 31, 1997 $ 7,536 $ 116,802 $ 292,404
Comprehensive income
Net income - 64,122 64,122
Other comprehensive income, net
of tax:
Net unrealized gains on securities 1,205 - 1,205
---------
Comprehensive income - - 65,327
---------
Common and preferred stock issued - - 382,675
Stock option and incentive plans - - 4,992
Preferred dividends (7%) - (4,577) (4,577)
Common dividends ($0.10/share) - (2,272) (2,272)
------ --------- ---------
Balance - September 30, 1998 $ 8,741 $ 174,075 $ 738,549
======= ========= =========
Balance - December 31, 1996 $2,694 $ 92,430 $ 262,168
Comprehensive income
Net income - 17,299 17,299
Other comprehensive income
net of tax:
Net unrealized gains on securities 2,623 - 2,623
---------
Comprehensive income - - 19,922
---------
Stock options and incentive plans - - 577
Dividends ($0.10/share) - (1,337) (1,337)
------ -------- ----------
Balance - September 30, 1997 $ 5,317 $ 108,392 $ 281,330
======= ========= =========
</TABLE>
See accompanying notes.
6
<PAGE>
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 64,122 $ 17,299
Depreciation & amortization 17,328 7,736
Amortization of bond premium 193 339
Realized investment gains (3,056) (113)
Deferred income tax (7,790) (3,699)
Change in assets & liabilities:
Notes receivable (2,057) 607
Premiums receivable (2,437) (7,453)
Income taxes receivable/payable 17,416 (1,739)
Policy & contract claims 26,074 3,580
Accounts payable and accrued expenses (5,700) (3,923)
Cash surrender value of life insurance (1,081)
Other (19,305) (2,740)
---------- ---------
Net cash provided by operating activities 84,788 8,813
---------- ---------
Cash flows from investing activities:
Purchase of property & equipment - net (8,712) (5,090)
Purchase of businesses, net of cash acquired (126,346) -
Cost of investments acquired:
Fixed maturities (163,302) (84,128)
Equity securities - (6)
Mortgage loans - -
Proceeds from investment sales or maturities:
Fixed maturities 94,012 53,575
Equity securities - 90
Mortgage loans 10 24
---------- ---------
Net cash used in investing activities (204,338) (35,535)
---------- ---------
Cash flows from financing activities:
Shares issued 80,866 -
Repayment of cash surrender value loan (1,319) (7,713)
Dividends paid (6,849) (1,337)
Change in notes payable 150,636 3,180
---------- ---------
Net cash provided by (used in) financing activities 223,334 (5,870)
---------- ---------
Net increase (decrease) in cash and invested cash 103,784 (32,592)
Cash & invested cash at beginning of period 70,049 95,623
---------- ---------
Cash & invested cash at end of period $173,833 $ 63,031
======== =========
</TABLE>
See accompanying notes.
7
<PAGE>
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars except per share amounts)
1. Interim Financial Information
The unaudited consolidated financial information included in this
report has been prepared in conformity with the accounting principles
and practices reflected in the consolidated financial statements
included in the Form 10-K for the year ended December 31, 1997, filed
with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. This report should be read in conjunction with
the aforementioned Form 10-K. In the opinion of management, all
adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of this information have been made. The results of
operations for the interim periods are not necessarily indicative of
results for a full year.
Certain 1997 amounts have been reclassified to conform to the 1998
presentation.
2. Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share (Statement 128), which was
adopted by the Company on December 31, 1997. Under the new requirements
for calculating basic earnings per share, the dilutive effect of stock
options are excluded and dual presentation of basic and diluted
earnings per share is required unless the per share amounts are equal.
The 1997 earnings per share amounts have been restated to conform with
Statement 128 requirements (see Note 4).
As of January 1, 1998, the Company adopted Financial Accounting
Standards Board Statement No. 130, Reporting Comprehensive Income
(Statement 130). Statement 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the
adoption of this statement had no impact on the Company's net income or
shareholders' equity. Statement 130 requires unrealized gains or losses
on the Company's available-for-sale securities which, prior to
adoption, were reported separately in shareholders' equity to be
included in other comprehensive income.
3. Acquisition
On February 27, 1998, the Company acquired all of the issued and
outstanding shares of capital stock of Commonwealth Land Title
Insurance Company and Transnation Title Insurance Company
("Commonwealth/Transnation") from Reliance Insurance
8
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Company, a subsidiary of Reliance Group Holdings, Inc. (the
"Acquisition"). The shares were acquired in exchange for 4,039,473
shares of the Company's common stock (book value, net of offering costs
- $130,728); 2,200,000 shares of the Company's 7% Series B Cumulative
Convertible Preferred Stock, which are the equivalent of 4,824,561
shares of common stock (book value - $175,700); the net proceeds of an
offering of 1,750,000 shares of common stock ($65,921); and cash
financed with bank debt ($200,681). The Acquisition has been accounted
for by the Company using the "purchase" method of accounting. The
assets and liabilities of Commonwealth/Transnation have been
substantially revalued to their respective fair market values. The
financial statements of the Company reflect the combined operations of
the Company and Commonwealth/Transnation from the closing date of the
Acquisition.
Pursuant to EITF 94-3, the Company has recorded assimilation costs of
approximately $11.5 million related to exit and termination costs
incurred in connection with the acquisition of
Commonwealth/Transnation. Costs incurred to exit certain leases and to
dispose of certain title plants comprised $9.4 million of this amount.
The remaining $2.1 million primarily relates to the termination of
employees for which employee severance benefits have been accrued.
These charges have been included in the following pro forma amounts.
Exit and termination costs of Commonwealth/Transnation leases and
employees necessary to assimilate the operations of
Commonwealth/Transnation with the Company have been capitalized as part
of the purchase price.
The following unaudited pro forma results of operations of the Company
give effect to the acquisition of Commonwealth/Transnation as though
the transaction had occurred on January 1, 1997. These operating
results exclude the effect of assimilation charges.
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
---- ----
<S> <C> <C>
Gross revenues $ 1,422,583 $ 1,089,283
Operating revenues 1,380,384 1,052,441
Investment income 42,199 36,842
Expenses 782,320 625,665
Net income 76,814 36,880
Less preferred dividends (5,775) (5,775)
------------ ------------
Net income available to common shareholders 71,039 31,105
Net income per common share $ 4.71 $ 2.08
Net income per common share assuming dilution 3.80 1.85
Weighted number of average common shares
outstanding 15,098 14,963
Weighted number of average common
shares assuming dilution 20,203 19,965
</TABLE>
9
<PAGE>
4. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
Numerator:
<S> <C> <C> <C> <C>
Net income $ 30,639 $ 8,441 $ 64,122 $ 17,299
Preferred stock dividends (1,925) - 4,577 -
---------- --------- ---------- ----------
Numerator for basic earnings
per share - income available
to common shareholders $ 28,714 $ 8,441 $ 59,545 $ 17,299
Preferred stock dividends 1,925 - 4,577 -
---------- --------- ---------- ----------
Numerator for diluted
earnings per share -
income available to common
shareholders after assumed
conversion $ 30,639 $ 8,441 $ 64,122 $ 17,299
Denominator:
Denominator for basic earnings
per share - weighted average
shares 15,168 8,919 13,753 8,911
Effect of dilutive securities:
Employee stock options 303 222 281 177
Convertible preferred stock 4,825 - 3,752 -
---------- --------- ---------- ----------
Denominator for diluted
earnings per share -
adjusted weighted-average
shares 20,296 9,141 17,786 9,088
Basic earnings per share $ 1.89 $ 0.95 $ 4.33 $ 1.94
========== ========= ========== ==========
Diluted earnings per share $ 1.51 $ 0.92 $ 3.61 $ 1.90
========== ========= ========== ==========
</TABLE>
10
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Results of Operations
General
On February 27, 1998, the Company acquired all of the issued and outstanding
shares of capital stock of Commonwealth Land Title Insurance Company and
Transnation Title Insurance Company ("Commonwealth/Transnation") from Reliance
Insurance Company, a subsidiary of Reliance Group Holdings, Inc. (the
"Acquisition"). The assets and liabilities of Commonwealth/Transnation have been
revalued to their respective fair market values. The financial statements of the
Company reflect the combined operations of the Company and
Commonwealth/Transnation from the closing date of the Acquisition.
The following discussion includes information on pro forma results of operations
that assumes that the Commonwealth/Transnation operations were included for the
entire first nine months of 1998 and 1997. For additional information, see Note
3 of the Notes to Consolidated Financial Statements set forth elsewhere in this
report.
Net Income
The Company reported net income of $30.6 million, or $1.51 per share on a
diluted basis, for the third quarter ended September 30, 1998, compared to net
income of $8.4 million, or $0.92 per share on a diluted basis, for the third
quarter ended September 30, 1997. On a pro forma basis, net income for the third
quarter of 1997 was $18.7 million or $0.94 per share on a diluted basis.
Included in the 1998 third quarter results were after-tax gains from sales of
investments of $1.8 million, or $0.09 per share on a diluted basis.
For the nine months ended September 30, 1998, net income was $64.1 million, or
$3.61 per share on a diluted basis, as compared to $17.3 million, or $1.90 per
share on a diluted basis, in the prior year period. Net income before
assimilation costs for the nine months ended September 30, 1998 was $71.6
million, or $4.03 per share on a diluted basis. Included in the 1998 nine-month
results were after-tax gains from sales of investments of $2.1 million, or $0.12
per share on a diluted basis. On a pro forma basis, net income would have been
$76.8 million and $36.9 million in the first nine months of 1998 and 1997,
respectively. Also, on a pro forma basis, diluted earnings per share would have
been $3.80 and $1.85 in the first nine months of 1998 and 1997, respectively.
11
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Revenues
Operating revenues for the third quarter of 1998 were a record $499.0 million,
compared to $160.4 million in the third quarter of 1997. On a pro forma basis,
operating revenues for the third quarter of 1997 would have been $386.6 million.
In addition to the inclusion of Commonwealth and Transnation revenues in the
1998 quarter, the increase is the result of increased volumes in residential and
commercial resale and refinancing transactions, reflecting the continuing
favorable interest rate environment and the general health of the national real
estate markets.
For the first nine months of 1998, operating revenues were $1.24 billion,
compared to $439.5 million in the corresponding 1997 period. On a pro forma
basis, operating revenues for the first nine months of 1998 would have been
$1.38 billion, compared to $1.05 billion in the prior year period.
Expenses
Assimilation costs of approximately $11.5 million were incurred in the first
nine months of 1998 in connection with the acquisition of
Commonwealth/Transnation. No such costs were incurred in the third quarter of
1998.
The operating margin (before claims, interest expense and investment income and
excluding the charge for assimilation costs) was 12.3% in the third quarter of
1998 compared to 11.1% in the third quarter of 1997. In the first nine months of
1998, the operating margin was 11.8% compared to 8.7% in the first nine months
of 1997. The improvement in operating margins reflects continued benefit of
increased operating revenues with a less than proportionate increase in expenses
to handle the increased volumes.
The Company claims experience continues to be favorable as evidenced by claims
ratios of 5.2% of operating revenue for the third quarter and first nine months
of 1998 compared to 5.4% in the comparable 1997 periods.
Liquidity and Capital Resources
Cash provided by operating activities for the nine months ended September 30,
1998 was $84.8 million. As of September 30, 1998, the Company held cash and
invested cash of $173.8 million and fixed maturity securities of $731.9 million.
With the closing of the Acquisition on February 27, 1998, the Company incurred
debt of $200.7 million and issued 2.2 million shares of 7% Series B Cumulative
Convertible Preferred Stock. The Company believes that it will be able to fund
the approximately $20.0 million annual servicing requirement of the debt and
preferred stock largely from increased cash flow from operations as a result of
the Acquisition. In addition, the Company has a working capital line of credit
in the amount of $30 million which was unused at September 30, 1998.
12
<PAGE>
The Company believes that it will have sufficient liquidity and capital
resources to meet both its short and long term capital needs.
Year 2000 Issues
Many existing computer programs use only two digits to identify a year in the
date field. These programs were designed and developed without considering the
impact of the change in the century. If not corrected, many date-sensitive
applications could fail or create erroneous results by or in the year 2000. The
Company understands the importance of having systems and equipment operational
through the year 2000 and beyond and is committed to addressing these challenges
while continuing to fulfill its business obligations to its clients and business
partners.
Year 2000 readiness is a major undertaking involving the review and modification
of multiple, interacting information technology systems, including the Company's
systems, equipment, facilities, services, and products as well as those of third
party business partners (essential suppliers, vendors, service contractors,
distributors, joint ventures, creditors, borrowers, financial service
organizations, etc.). Certain equipment and facilities (such as telephones,
voicemail, elevators) may contain embedded chips or microcontrollers that will
need to be replaced.
The Company began its formal Year 2000 compliance program in 1996. The Year 2000
Project Team was appointed to assess the Year 2000 vulnerability of the
Company's significant systems, equipment, facilities, services, and products.
The Year 2000 Project Team is comprised of internal and external personnel.
Several Company executives, including the Company's President, serve as Project
Team Sponsors. The Year 2000 Project Team is separate and distinct from the
Company's information and technology department.
Through the Year 2000 Project Team, the Company has undertaken an internal
quality assurance program to evaluate and test its significant systems,
equipment, facilities, services, and products. The Year 2000 Project Team is
independently validating the initial assessment and recommendations made by the
quality assurance program. The internal and external assessments are the basis
of a full remediation and testing process. In addition to the Project Team
Sponsors, the Year 2000 compliance program is subject to the independent review
of a Corporate Steering Committee. Both the Project Team Sponsors and Corporate
Steering Committee review the Year 2000 compliance program for its impact (and
the impact of the Year 2000 issues) on all phases of the Company's business.
The Year 2000 Project Team has divided its Year 2000 compliance program into
four (4) phases with estimated completion deadlines: assessment (internal fourth
quarter 1998, external first quarter 1999), remediation/replacement (second
quarter 1999), testing (second quarter 1999), and integration (third quarter
1999). The Company has assembled and engaged the Year 2000 Project Team. Budgets
and resources have been examined. Remediation tools have been acquired. The
Company's headquarter main frame and facilities have been assessed. A
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<PAGE>
pilot program for testing resources and facilities in the field has been
implemented and, as of the end of the third quarter, 95% of the field has been
inventoried.
Although the Company has developed a Year 2000 compliance program, there is no
guarantee that the systems of other companies, upon which the Company's systems
rely, will be properly converted in a timely manner or will not have an adverse
effect on the Company's systems. Thus, the Company has surveyed and continues to
monitor its important business partners to undertake a self-analysis and report
any Year 2000-related issues that might impact the Company. The Company
considers the Year 2000 readiness of its business partners as an important
factor in its business dealings and relationships. Of course, notwithstanding
the Company's efforts or results, the actions or omissions of third parties
beyond the Company's knowledge or control may adversely affect its ability to
function unaffected to and through the Year 2000, including the possibility of
lost revenues or lawsuits by third parties.
Realizing the importance of Year 2000 readiness, the Company has allocated
approximately $14.1 million in the aggregate from its general operating funds to
the Year 2000 issue. Although significant, this amount is not material to the
Company's operational budget. An approximate allocation of the budgeted amount
is $4.0 for assessment, $5.0 for remediation/replacement, $2.5 for testing, $1.3
for integration, and $1.3 for contingencies. To date, approximately $3.6 million
has been spent in the assessment, remediation and testing phase(s). Since the
Year 2000 Project Team is separate from the Company's information and technology
department and the amount allocated to the Year 2000 issue is specifically
allocated for that purpose, the allocation has not resulted in the delay of any
other non-Year 2000 related information and technology projects.
The Company believes that it has identified all of the business systems vital to
its operations and that its Year 2000 compliance program will result in the
continuation of the Company's operations to and through the Year 2000 and
beyond. However, the Year 2000 issue, and its resolution, is complex and
multifaceted. The success of a response plan cannot be conclusively known until
the Year 2000 is reached (or an earlier date to the extent that systems and
equipment address Year 2000 date data prior to year 2000). Even with appropriate
and diligent pursuit of a well-conceived response plan, including testing
procedures, there is no certainty that any company will achieve complete
success. However, the Company is diligently trying to ensure that its
significant systems, equipment, facilities, services, and products will not be
adversely affected by the Year 2000 problem. As such, the Company has engaged a
Corporate Contingency Planner to develop a contingency plan to address the worst
case scenario if the Company's Year 2000 compliance program should fail to
address the Year 2000.
Forward-Looking and Cautionary Statements
The Company cautions readers that the foregoing discussion and analysis includes
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and are subject to the safe harbor created by
that Act. These forward-looking statements, which include statements regarding
the impact of the Year 2000
14
<PAGE>
issue on the Company's business and operations, the ability to meet servicing
requirements on the Company's debt and preferred stock and the availability of
sufficient capital resources to meet short and long-term capital needs, are
believed by the Company to be reasonable based upon management's current
knowledge and assumptions about future events, but are subject to the
uncertainties generally inherent in any such forward-looking statement,
including factors discussed above as well as other factors that may generally
affect the Company's business, financial condition or operating results.
Reference is made to the discussion of "Forward-Looking and Cautionary
Statements" contained in Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, regarding important
factors that could cause actual results, performance or achievements to differ
materially from future results, performance or achievements expressed or implied
in any forward-looking statement made by or on behalf of the Company.
15
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit No. Document
10.1 Employment Agreement dated March 31, 1998 between the
Registrant and John M. Carter.
11 Statement re: Computation of Per Share Earnings.
27 Financial Data Schedule (electronic copy only).
b) Reports on Form 8-K
None.
16
<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 thereunto duly authorized.
LANDAMERICA FINANCIAL GROUP, INC.
(Registrant)
Date: November 11, 1998 /s/ Charles Henry Foster, Jr.
-------------------------- ---------------------------------------
Charles Henry Foster, Jr.
Chairman and Chief Executive Officer
Date: November 11, 1998 /s/ Jeffrey Alan Tischler
------------------------- ---------------------------------------
Jeffrey Alan Tischler
Executive Vice President and Chief
Financial Officer
17
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
10.1 Employment Agreement dated March 31, 1998 between the Registrant
and John M. Carter.
11 Statement Re: Computation of Earnings Per Share.
27 Financial Data Schedule (electronic copy only).
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
March, 1998, by and between LandAmerica Financial Group, Inc., a Virginia
corporation (the "Company"), and John M. Carter (the "Executive").
WITNESSETH:
WHEREAS, effective on or around March 1, 1998, the Executive was
promoted to Executive Vice-President Law and Employee Relations; and
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to maintain the services of the Executive for the benefit of the Company and to
encourage the Executive's full attention and dedication to the Company and to
provide the Executive with compensation and benefits arrangements which ensure
that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth in this Agreement, the Company and the Executive agree as follows:
1. Certain Definitions. (a) The term "affiliated companies" shall
include any company controlled by, controlling or under common control with the
Company.
(b) Every capitalized term used herein, but not otherwise
defined herein, shall have the meaning ascribed to such term in the Stock
Purchase Agreement.
2. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for the period commencing on March 1, 1998 and ending on the first anniversary
thereof (the "Employment Period"), unless this Agreement is earlier terminated
pursuant to Section 9 below.
3. Terms of Employment. (a) Position and Duties. During the Employment
Period, and excluding any periods of vacation and leave to which the Executive
is entitled, the Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve on corporate,
civic, charitable, title insurance industry association or professional
association boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
<PAGE>
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of Two Hundred
Thousand Dollars ($200,000.00) (the "Annual Base Salary"), which shall be paid
in equal installments on a semi-monthly basis. The Annual Base Salary shall be
reviewed at least annually and may be increased at any time and from time to
time, but in no event shall the Annual Base Salary be reduced. The Annual Base
Salary shall not be reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to the Annual Base Salary as so
increased.
(ii) Annual Bonus. In addition to the Annual Base
Salary, the Executive shall be entitled to an annual bonus (the "Annual Bonus")
as established by the Compensation Committee of the Board (the "Compensation
Committee"). Each such Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the receipt
of such Annual Bonus pursuant to a Company deferral plan. In the event that this
Agreement is terminated prior to the close of the Employment Period pursuant to
either Section 4 or 10 below, the Compensation Committee, in its sole discretion
following a review of all relevant factors, may award the Executive a pro-rata
portion of the Annual Bonus measured to the date of termination for any partial
year completed, or the entire Annual Bonus if Executive terminates as of the
close of the fiscal year.
(iii) Annual Stock Options. The Executive may receive
annual stock options as provided at the discretion of the Compensation
Committee.
(iv) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in all
incentive (including, without limitation, stock incentive), savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies. For all purposes of
this Agreement, the term "peer executives" means the most senior executives of
the Company.
(v) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies.
(vi) Supplemental Pension Plan. During the Employment
Period, the Executive shall be entitled to participate in the Lawyers Title
Insurance Corporation 1995 Benefit Restoration Plan, as such plan may be amended
from time to time, to the extent applicable generally to other peer executives
of the Company and its affiliated companies.
Page 2
<PAGE>
(vii) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
employment expenses incurred by the Executive in accordance with the policies in
effect generally at any time with respect to other peer executives of the
Company and its affiliated companies.
(viii) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits in accordance with the plans,
practices, programs and policies of the Company and its affiliated companies in
effect generally at any time with respect to other peer executives of the
Company and its affiliated companies.
(ix) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to personal secretarial and other
assistance as provided generally at any time to other peer executives of the
Company and its affiliated companies.
(x) Deferred Compensation. During the Employment
Period, the Executive shall be entitled to deferred compensation benefits in
accordance with the plans, practices, programs and policies of the Company and
its affiliated companies in effect generally at any time with respect to other
peer executives of the Company and its affiliated companies.
(xi) Vacation. During the Employment Period, the
Executive shall be entitled to a minimum of four weeks paid vacation in
accordance with the plans, policies, programs and practices of the Company and
its affiliated companies as in effect generally at any time with respect to
other peer executives of the Company and its affiliated companies.
(xii) Financial, Tax and Estate Planning Allowance.
The Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive for the purpose of personal
financial, tax and estate planning, up to a maximum amount of five thousand
dollars ($5,000.00) for the Employment Period, in accordance with the policies
in effect generally at any time with respect to other peer executives of the
Company and its affiliated companies.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive, as defined in the Company's long-term disability plan, has
occurred during the Employment Period, it may give to the Executive written
notice in accordance with Section 10(b) of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that, within the
thirty (30) days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) a material breach by the Executive of the
Executive's obligations under Section 3(a) (other than as a result of incapacity
due to physical or mental illness) which is demonstrably willful and deliberate
Page 3
<PAGE>
on the Executive's part, which is committed in bad faith or without reasonable
belief that such breach is in the best interests of the Company and which is not
remedied in a reasonable period of time after receipt of written notice from the
Company specifying such breach or (ii) the conviction of the Executive of a
felony involving moral turpitude.
(c) Good Reason. The Executive's employment may be terminated
during the Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent generally with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a) or any other action by the Company which results in
a diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 3(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(iv) any failure by the Company to comply with and
satisfy Section 8(c), provided that such successor has received at least ten
days prior written notice from the Company or the Executive of the requirements
of Section 8(c).
For purposes of this Section 4(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10(b).
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen (15) days after
the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
Page 4
<PAGE>
(e) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
5. Obligations of the Company upon Termination. (a) Good Reason; Other
than for Cause or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or Disability or
the Executive shall terminate employment for Good Reason:
(i) All stock options held by the Executive on the
Date of Termination shall vest and be immediately exerciseable.
(ii) This Agreement shall terminate and the Executive
shall receive, until the end of the initial employment term, (i) his Annual Base
Salary; plus (ii) one-half (1/2) of the sum of the highest Annual Bonus paid for
any two (2) fiscal years in the five (5) fiscal years immediately preceding that
year in which the Date of Termination occurs.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate and the Executive shall receive, until the end of the
initial employment term, (i) his Annual Base Salary; plus (ii) one-half (1/2) of
the sum of the highest Annual Bonus paid for any two (2) fiscal years in the
five (5) fiscal years immediately preceding that year in which the Date of
Termination occurs.
(c) Cause; Other than for Good Reason or Death. If the
Executive terminates employment during the Employment Period, excluding a
termination for Good Reason, or if the Executive's employment shall be
terminated for Cause or by reason of the Executive's death during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive his Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive and vested on the Date of Termination.
6. Nonexclusivity of Rights. Except as provided in Section 5, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
Page 5
<PAGE>
7. Restrictive Covenants.
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or except as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it.
(b) Ownership of Information. The Executive acknowledges and
agrees that all memoranda, notes, reports, records and other documents made or
compiled by the Executive, or made available to the Executive during the term of
his employment concerning the business of the Company or any of its affiliated
companies, shall be the Company's property and shall be delivered to the Company
upon the termination of the Executive's employment hereunder or at any other
time upon request by the Board.
(c) Non-Competition. The Executive agrees that, for so long as
he is employed by the Company and for six (6) months after the termination of
the Executive's employment with the Company, he will not, without the prior
written consent of the Company, directly or indirectly, engage in or have an
interest in (as owner, partner, shareholder, employee, director, officer,
consultant or otherwise), with or without compensation, any business which is in
competition with the lines of business actually being conducted by the Company
during the term of employment or on the date that the employment terminates.
Nothing herein, however, will prohibit the Executive from acquiring or holding
not more than five percent (5%) of any class of publicly traded securities of
any such business, provided that such securities entitle the Executive to no
more than five percent (5%) of the total outstanding votes entitled to be cast
by security-holders of such business in matters in which such security-holders
are entitled to vote.
(d) Non-Interference. (i) The Executive agrees and covenants
that, for a period of six (6) months after the Date of Termination of this
Agreement, the Executive shall not, without the prior written approval of the
Board, Interfere directly or indirectly in any way with the Company or any of
its affiliated companies.
(ii) For purposes of this Agreement, "Interfere"
shall mean, to solicit, entice, persuade, induce, influence or attempt to
influence, directly or indirectly, clients or Prospective Clients, employees,
agents or independent contractors of the Company or any of its affiliated
companies to restrict, reduce, sever or otherwise alter their relationship with
the Company or any of its affiliated companies.
Page 6
<PAGE>
(iii) For purposes of this Agreement, "Prospective
Clients" shall mean persons or entities identified by the Company as prospective
clients of the Company or any of its affiliated companies within twelve (12)
months of the Date of Termination and with whom the Company or such affiliated
companies have had contact.
(e) Severability and Reduction in Scope of Provisions. The
covenants and agreements of the Executive contained in paragraphs (a) through
(d) above are separate and distinct covenants and agreements of the Executive
and if any part of any such paragraph is void, invalid or unenforceable, such
paragraph shall be severed from this Agreement and shall not affect or impair
any other paragraph or the balance of this Agreement, and this Agreement with
the void, invalid or unenforceable paragraph stricken herefrom shall remain in
full force and effect. Further, the periods and scope of the restrictions set
forth in any such paragraph or subparagraph shall be reduced by the minimum
amount necessary to reform such paragraph or subparagraph to the maximum level
of enforcement permitted to the Company by the law governing this Agreement, if
such reform is permitted.
(f) Remedy for Breach. The Executive acknowledges that the
Company and its affiliated companies or any one of them will be irrevocably
damaged if all of the provisions of this Section 7 are not specifically
enforced. Accordingly, the Executive agrees that, in addition to any other
relief to which the Company may be entitled, any one of the Company or its
affiliated companies will be entitled to seek and obtain injunctive relief from
a court of competent jurisdiction for the purpose of restraining the Executive
from any actual or threatened breach of this Section 7.
(g) Validity of Covenant. The Executive agrees that the
covenants contained in this Section 7 are reasonably necessary to protect the
legitimate interests of the Company and its affiliated companies, are reasonable
with respect to time and territory, and do not interfere with the interests of
the public. The Executive further agrees that the descriptions of the covenants
contained in this Section 7 are sufficiently accurate and definite to inform the
Executive of the scope of the covenants. Finally, the Executive agrees that the
consideration provided for in this Agreement is full, fair and adequate to
support the Executive's obligations hereunder.
8. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
Page 7
<PAGE>
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
9. Termination of Agreement upon a Change of Control. Upon any Change
of Control, as that term is defined in that certain Change of Control Employment
Agreement, of even date herewith, between the Company and the Executive, the
Change of Control Employment Agreement shall become effective and shall apply to
the extent its terms are more advantageous to the Executive.
10. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive to: If to the Company to:
John M. Carter LandAmerica Financial Group, Inc.
LandAmerica Financial Group, Inc. 101 Gateway Centre Parkway
101 Gateway Centre Parkway Gateway One
Gateway One Richmond, Virginia 23235-5153
Richmond, Virginia 23235-5153
Attention: Russell W. Jordan, III,
Esquire
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 4(c)(i)-(iv), shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
Page 8
<PAGE>
(f) In the event of a dispute with respect to any term of this
Agreement, either party may elect, by delivering written notice to the other
stating the nature of the dispute, to have such dispute settled by arbitration.
Within ten (10) days of the delivery of the written notice electing arbitration
both parties shall appoint an arbitrator and within ten (10) days thereafter the
two arbitrators shall select a third. If a party does not appoint an arbitrator
within the ten-day period, such party shall forfeit the right to do so and the
matter shall be settled by the sole appointed arbitrator. The arbitrator(s)
shall follow the rules of arbitration established by the American Arbitration
Association and shall render a decision within ten (10) days of the hearing
which shall occur no later than twenty (20) days after the arbitrator(s) is/are
appointed. The decision of a majority of the arbitrators, or of the sole
arbitrator, as the case may be, shall be binding upon the respective parties to
the arbitration hearing, their heirs, legal representatives, assigns and
successors. Each party shall pay the fees and expenses of their chosen
arbitrator, and shall pay one-half of the fees and expenses of the third
arbitrator. If only one arbitrator is appointed each party shall pay one-half of
his or her fees and expenses. Judgment upon any award rendered by the
arbitrator(s) may be entered in any court of competent jurisdiction.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
Landamerica financial group, inc. EXECUTIVE
By: /s/ Charles H. Foster, Jr. /s/ John M. Carter
----------------------------------------- -----------------------
Title: Chairman and Chief Executive Officer John M. Carter
Page 9
Exhibit 11
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Statement Re: Computation of Earnings Per Share
The information required by this Exhibit is contained in Note 4 to the
Consolidated Financial Statements of LandAmerica Financial Group, Inc. and its
subsidiaries for the quarter ended September 30, 1998 set forth on page 10 of
this report.
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<DEBT-HELD-FOR-SALE> 731,865
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 10,577
<REAL-ESTATE> 0
<TOTAL-INVEST> 855,293
<CASH> 60,982
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 1,635,023
<POLICY-LOSSES> 504,663
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 207,630
0
175,700
<COMMON> 380,033
<OTHER-SE> 182,816
<TOTAL-LIABILITY-AND-EQUITY> 1,635,023
1,241,252
<INVESTMENT-INCOME> 36,618
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 64,545
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 1,113,346
<INCOME-PRETAX> 99,979
<INCOME-TAX> 35,857
<INCOME-CONTINUING> 64,122
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,122
<EPS-PRIMARY> 4.33
<EPS-DILUTED> 3.61
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
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</TABLE>
