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The First American Corporation Reports Financial Results for the Third Quarter of 2009.

Article Excerpt
-- Reports Earnings Per Diluted Share of 59 Cents -- -- Executes Letter of Intent to Amend Experian Joint Venture that Would Facilitate 2010 Buy-in --

SANTA ANA, Calif., Oct. 29 /PRNewswire-FirstCall/ -- The First American Corporation , America's largest provider of business information, today announced financial results for the third quarter ended Sept. 30, 2009.

Total revenues for the third quarter of 2009 were $1.6 billion, an increase of 3 percent relative to the third quarter of 2008. Net income was $55.4 million, or 59 cents per diluted share, compared with a net loss of $8.3 million, or 9 cents per diluted share, in the third quarter of 2008. Adjusted net income was $60.2 million, or 64 cents per diluted share, compared with adjusted net income of $17.6 million, or 19 cents per diluted share, in the third quarter of 2008. The current quarter results include, on an after-tax basis, intangible impairments of $6.5 million, or 7 cents per diluted share; employee separation and lease termination costs of $4.0 million, or 4 cents per diluted share; and spin-off-related costs of $2.4 million, or 2 cents per diluted share; offset in part by net realized investment gains of $3.1 million, or 3 cents per diluted share; and a reduction in the reserve for policy year 2009 claims losses of $5.0 million, or 5 cents per diluted share. Results for the third quarter of 2008 included net realized investment losses, employee separation and other restructuring costs, a reduction in employee benefit costs and a reduction in the reserve for estimated tax exposures totaling $26.3 million, or 28 cents per diluted share, net of tax.

Amendment to Joint Venture Agreement with Experian Information Solutions, Inc.

First American has executed a letter of intent with Experian Information Solutions, Inc. that would facilitate the purchase of Experian's interest in the First American Real Estate Solutions LLC (FARES) joint venture by, among other matters, fixing the exercise price for 2010. The letter of intent provides for:

-- The buy-out of Experian's indirect interest in FARES' plant management and imaged document business for $48.0 million in cash (which is anticipated to occur in the fourth quarter); -- Amending the buy-out arrangement to provide that, if exercised by either party in 2010, the exercise price will be $313.8 million in cash and would close on Dec. 31, 2010; and -- The ability to substantially eliminate Experian's veto rights if the buy-out option is exercised by either party.

The arrangement remains subject to customary closing conditions, including the execution of definitive agreements. For the nine months ended Sept. 30, 2009, the noncontrolling interest expense related to Experian's interest in the joint venture was approximately $43.8 million before taxes.

Current Quarter Highlights -- Adjusted earnings per diluted share of 64 cents, or 59 cents before adjusting for intangible impairments, employee separation costs and lease termination costs, spin-off-related costs, net realized investment gains, and a reduction in the reserve for claim losses described above -- Financial Services and Information Solutions Groups experienced pretax margin improvement relative to the third quarter of 2008 -- Cash flow from operations was $158.1 million in the third quarter, versus $115.4 million in the prior year -- Debt-to-capital ratio was 20.1 percent as of Sept. 30, 2009 -- Letter of intent signed with Experian to amend joint venture agreement -- Exchange offer commenced to acquire minority interest in First Advantage Corporation

"The company has made significant progress in our efforts to improve the flexibility of the organization and to effect our spin-off transaction," stated Parker S. Kennedy, chairman and chief executive officer of The First American Corporation. "We have substantially finalized the capital structures of both companies, commenced an exchange...

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