2000 Third Quarter Report

Transcription

1 Fidelity National Financial, Inc Third Quarter Report For the nine months ended September 30, 2000 For the nine months ended September 30, 1999

2 Dear Stockholder: The 3rd quarter was solid on a number of fronts. The strength of our nationwide title franchise, primarily comprised of the five core brands of Fidelity National Title, Chicago Title,Ticor Title, Security Union Title and Alamo Title, is clearly evident in our second full quarter since the merger with Chicago Title. Our goal at the time of the merger was to maintain our diverse revenue base and increase our operating margins. There was some external skepticism as to whether we could accomplish this goal.we believe our merger has been highly successful. Our unique decision to leave the existing brands intact and operate them independently will continue to drive our market-leading performance in the future.we have proven we can retain and manage our combined revenue base and we are now focused on enhancing our #1 market position.you can see proof of that in our results for this quarter. Financials Our results reflect the acquisition of Chicago Title on March 20, 2000.Therefore, prior year comparisons may not be meaningful. Net cash earnings, which exclude goodwill amortization, were $47.9 million for the third quarter of 2000, compared with $20.2 million for the third quarter of Net cash earnings per diluted share were $.68 versus $.65 in the prior year period. Net earnings were $37.6 million for the third quarter of 2000, compared with $18.6 million for the third quarter of Net earnings per diluted share were $.54 versus $.60 in the prior year period. For the nine-month period ended September 30, 2000, net cash earnings, excluding certain non-recurring, non-title related charges, were $107.7 million, compared with $66.1 million for the prior year period. Net cash earnings per diluted share, excluding those charges, were $1.87 for the nine-month period ended September 30, 2000 versus $2.06 in the prior year period. For the nine-month period ended September 30, 2000, net earnings, excluding certain nonrecurring, non-title related charges, were $84.2 million, compared with $62.1 million for the prior year period. Net earnings per diluted share, excluding those charges, were $1.46 for the nine-month period ended September 30, 2000 versus $1.95 in the prior year period. Revenues for the third quarter of 2000 were $790 million, compared with $342 million for the third quarter of For the nine-months ended September 30, 2000, revenues were $1.9 billion, versus $1.0 billion in the prior year period. Total title premiums were $562 million for the third quarter of 2000, compared with $237 million for the third quarter of For the nine-months ended September 30, 2000, total title premiums were $1.4 billion, versus $727 million in the prior year period. Technology Update We continue to prepare for the beta launch of our Next Generation System in the first quarter of 2001.This browser-based system, when fully implemented, will be the state of the art system in the title industry.this web-based platform will substantially increases the efficiency of our title production process. Quarterly Dividend The company declared a quarterly cash dividend in the amount of $.10 per share.the dividend was payable on October 27, 2000 to stockholders of record as of October 13, Our Commitment While we are proud of our third quarter results, we are in no way satisfied.we are committed to maximizing the value of our #1 market position.we believe we have the right strategy to do that.we also are focused on increasing the contribution of our real estate related services. Technology does and will continue to play a major role in the success of our company.we believe we are at the forefront, particularly with the impending rollout of our Next Generation System. Our commitment to efficiency and productivity will continue to allow us to improve on our industry leading financial performance. William P. Foley, II Chairman and Chief Executive Officer

3 Fidelity National Financial, Inc. and Subsidiaries Condensed Consolidated Balance Sheets September 30, December 31, (In thousands, except share and per share data) (Unaudited) Assets Investments: Fixed maturities available for sale, at fair value, at September 30, 2000 includes $243,053 of pledged fixed maturity securities related to secured trust deposits $ 1,146,080 $ 347,051 Equity securities, at fair value 53,289 38,881 Other long-term investments, at cost, which approximates fair value 43,835 43,253 Short-term investments, at cost, which approximates fair value, at September 30, 2000 includes $171,845 of pledged short-term investments related to secured trust deposits 364,628 74,232 Investments in real estate and partnerships, net 512 3,499 Total investments 1,608, ,916 Cash and cash equivalents, at September 30, 2000 includes $251,135 of pledged cash related to secured trust deposits 372,536 38,569 Leases and residual interests in securitizations 152, ,141 Trade receivables, net 126,566 60,784 Notes receivable, net 17,490 18,304 Cost in excess of net assets acquired, net 758,340 53,576 Prepaid expenses and other assets 192,158 75,310 Title plants 264,175 59,914 Property and equipment, net 178,014 55,453 Deferred tax asset 147,984 31,579 $ 3,818,023 $ 1,042,546 Liabilities and Stockholders Equity Liabilities: Accounts payable and accrued liabilities $ 362,650 $ 135,943 Notes payable 787, ,359 Reserve for claim losses 908, ,962 Secured trust deposits 659,630 Income taxes payable 67,434 3,175 2,785, ,439 Minority interests 4,668 4,613 Stockholders equity: Preferred stock, $.0001 par value; authorized, 3,000,000 shares; issued and outstanding, none Common stock, $.0001 par value; authorized, 100,000,000 shares as of September 30, 2000 and 50,000,000 shares as of December 31, 1999; issued, 68,058,757 as of September 30, 2000 and 39,224,169 as of December 31, Additional paid-in capital 654, ,959 Retained earnings 378, ,785 1,032, ,748 Accumulated other comprehensive loss (4,597) (5,975) Less treasury stock, cancelled in 2000 and 12,036,102 shares as of December 31, 1999, at cost (136,279) 1,028, ,494 $ 3,818,023 $ 1,042,546

4 Fidelity National Financial, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings Three months ended Nine months ended September 30, September 30, (In thousands, except per share data) (Unaudited) (Unaudited) Revenue Title insurance premiums $ 561,705 $ 236,895 $1,357,109 $ 726,869 Escrow and other title-related fees 134,595 50, , ,343 Real estate related services 49,309 17, ,256 56,455 Interest and investment income, including realized gains (losses) 26,618 5,961 61,963 19,747 Other income 17,876 31,583 64,737 83, , ,837 1,925,402 1,043,930 Expenses Personnel costs 247,900 96, , ,137 Other operating expenses 168,927 84, , ,391 Agent commissions 254, , , ,235 Provision for claim losses 28,085 14,864 67,855 45,194 Interest expense 16,821 4,358 41,512 10, , ,050 1,770, ,004 Earnings before amortization of costs in excess of net assets acquired 74,291 31, , ,926 Amortization of cost in excess of net assets acquired 10,614 1,571 24,142 3,968 Earnings before income taxes 63,677 30, , ,958 Income tax expense 26,107 11,609 59,762 41,843 Net earnings $ 37,570 $ 18,607 $ 70,810 $ 62,115 Basic earnings per share $ 0.56 $ 0.62 $ 1.27 $ 2.05 Weighted average shares outstanding, basic basis 67,496 29,861 55,582 30,353 Diluted earnings per share $ 0.54 $ 0.60 $ 1.23 $ 1.95 Weighted average shares outstanding, diluted basis 69,971 31,169 57,467 32,037 Cash dividends per share $ 0.10 $ 0.07 $ 0.30 $ 0.21

5 Primary Subsidiaries Fidelity National Title Insurance Company Von Karman Avenue Suite 300 Irvine, CA (949) (800) Fidelity National Title Insurance Company of New York Two Park Avenue 3rd Floor New York, NY (212) Chicago Title Insurance Co. 171 N. Clark (312) Ticor Title Insurance Co. 171 N. Clark (312) Security Union Title Insurance Co. 171 N. Clark (312) Alamo Title Insurance San Pedro Avenue Suite 800 San Antonio,TX (800) Nations Title Insurance of New York Inc. Two Park Avenue 3rd Floor New York, NY (212) FNF Capital, Inc Table Mountain Parkway Suite A Golden, CO (303) National Services Fidelity National Title Commercial Division 1500 Walnut St. Suite 300 Philadelphia, PA (215) (888) Dove St. Suite 310 Newport Beach, CA, (949) (949) (fax) 100 Pine St. Suite 1850 San Francisco, CA, (415) Connecticut Ave., N.W. Suite 1125 Washington, D.C., (202) Galleria Parkway Suite 1695 Atlanta, GA (770) (888) Park Ave. 3rd Floor New York, NY, (800) Dallas Pkwy. Suite 380 Dallas,TX, (972) Bank of American Center 700 Louisiana Suite 2600 Houston,TX, (713) (800) Liberty Center 100 W. Big Beaver Rd. Suite 140 Troy, MI (248) (888) S.W. 5th Ave. Portland, OR (503) Chicago Title/Ticor Title/ Security Union Commercial Division 171 N. Clark St. (312) Third Ave. New York, NY (212) Peachtree-Dunwoody Rd. Atlanta, GA (404) Byron St. Dallas,TX, (214) B St. San Diego, CA (619) Fifth Avenue Suite 1800 Seattle,WA (206) Market St. SanFrancisco, CA (415) Investment Property Exchange Services, Inc. 300 Montgomery Street, Suite 650 San Francisco, CA (415) (800) (415) (fax) Fidelity Relocation and Residential Solution 700 Louisiana, S 2600 Houston,TX (713) (800) (713) (fax) Fidelity National Lender Solutions 2540 North Red Hill Ave., Ste. 200 Santa Ana, CA (888) Fidelity National Tax Services 489 Rosemead Blvd. Pasadena, CA (800) (626) (fax) Fidelity National Flood Services 1521 N. Cooper St. 4th Floor Arlington,TX (800) (888) (fax) Fidelity National Credit Services 918 Ulster Ave. Kingston, NY (800) Fidelity National Default Solutions Red Hill Ave., Suite 201 Santa Ana, CA (800) , ext Fidelity National Insurance Services 4050 Calle Real Santa Barbara, CA (888)

6 Fidelity National Financial, Inc. (FNF) is a diversified real estate services company engaged in doing business in 49 states, the District of Columbia, Canada, Mexico, Puerto Rico, Guam and the Virgin Islands. FNF, through its principal subsidiaries, issues title insurance policies and performs other real estate related services such as escrow, collection and trust activities, real estate information and technology services, trustee appraisals, sale guarantees, credit reporting, flood certifications, real estate tax services, home warranty insurance, reconveyances, recordings, foreclosure publishing and posting services and exchange intermediary services in connection with real estate transactions. Additionally, FNF originates, funds, purchases, sells, securitizes and services equipment leases for a broad range of businesses. Corporate Officers William P. Foley, II Chairman of the Board and Chief Executive Officer Frank P. Willey Vice Chairman Patrick F. Stone President and Chief Operating Officer Alan L. Stinson, Chief Financial Officer Christopher Abbinante William J. Massey Ronald R. Maudsley Raymond R. Quirk Peter T. Sadowski Ernest D. Smith Brent B. Bickett Senior Vice President Bradley J. Brigante Senior Vice President, Corporate Counsel and Corporate Secretary Edward J. Dewey Senior Vice President Gary R. Nelson Senior Vice President The common stock of Fidelity National Financial, Inc. is traded on the New York Stock Exchange under the symbol FNF. Stock Transfer Agent and Registrar: Continental Stock Transfer & Trust Company, 2 Broadway, New York, NY (212) The Company s Annual Report on Form 10-K and quarterly reports on Form 10-Q are available from the Investor Relations Department. Fidelity National Financial, Inc. Daniel Kennedy Murphy Director of Investor Relations 4050 Calle Real, Suite 240 Santa Barbara, CA (805) dkmurphy@fnf.com Bulk Rate US Postage P A I D Permit No.123 Irvine, CA