FIRST AMERICAN CORP - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-3658

THE FIRST AMERICAN CORPORATION

(Exact name of registrant as specified in its charter)

Incorporated in California

(State or other jurisdiction of

incorporation or organization)

95-1068610

(I.R.S. Employer

Identification No.)

1 First American Way, Santa Ana, California

(Address of principal executive offices)

92707-5913

(Zip Code)

(Registrant’s telephone number, including area code)

______________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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.

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. $1 par value - 71,614,281 shares as of August 6, 2002

INFORMATION INCLUDED IN REPORT

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.

THE FIRST AMERICAN CORPORATION (Registrant)

/s/ Thomas A. Klemens
Thomas A. Klemens Executive Vice President Chief Financial Officer


/s/ Max O. Valdes
Max O. Valdes Vice President Chief Accounting Officer

Date: August 14, 2002

Part I: Financial Information

Item 1: Financial Statements

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Balance Sheets

	June 30, 2002			December 31, 2001
	(Unaudited)
Assets
Cash and cash equivalents	$	685,161,000		$	645,240,000

Accounts and accrued income receivable, net		300,999,000			273,090,000

Investments:
Deposits with savings and loan associations and banks		40,994,000			27,597,000
Debt securities		294,576,000			257,045,000
Equity securities		45,283,000			52,014,000
Other long-term investments		130,009,000			113,995,000

		510,862,000			450,651,000

Loans receivable, net		106,744,000			104,264,000

Property and equipment, at cost:
Land		43,101,000			43,018,000
Buildings		175,566,000			173,878,000
Furniture and equipment		257,976,000			237,354,000
Capitalized software		272,943,000			251,072,000

		749,586,000			705,322,000
Less - accumulated depreciation and amortization		(313,218,000	)		(269,237,000	)

		436,368,000			436,085,000

Title plants and other indexes		357,172,000			344,947,000

Deferred income taxes		23,570,000			22,221,000

Goodwill, net		475,351,000			418,649,000

Other assets		175,958,000			142,116,000

	$	3,072,185,000		$	2,837,263,000

Liabilities and Stockholders' Equity
Demand deposits	$	87,705,000		$	91,285,000

Accounts payable and accrued liabilities		406,274,000			373,170,000

Deferred revenue		323,864,000			294,227,000

Reserve for known and incurred but not reported claims		335,383,000			314,777,000

Income taxes payable		18,312,000			13,342,000

Notes and contracts payable		436,742,000			415,341,000

Minority interests in consolidated subsidiaries		141,824,000			130,669,000

Mandatorily redeemable preferred securities of the Company's subsidiary trust whose sole assets are the Company's $100,000,000 8.5% deferrable interest subordinated. notes due 2012		100,000,000			100,000,000

Stockholders' equity:
Preferred stock, $1 par value
Authorized - 500,000 shares; outstanding - none
Common stock, $1 par value
Authorized - 180,000,000 shares
Outstanding - 71,557,000 and 68,694,000 shares		71,557,000			68,694,000
Additional paid-in capital		320,788,000			271,403,000
Retained earnings		850,737,000			777,971,000
Accumulated other comprehensive loss		(21,001,000	)		(13,616,000	)

		1,222,081,000			1,104,452,000

	$	3,072,185,000		$	2,837,263,000

See notes to condensed consolidated financial statements.

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income and Comprehensive Income

	For the Three Months Ended June 30						For the Six Months Ended June 30
	2002			2001			2002			2001
Revenues
Operating revenues	$	1,085,471,000		$	908,009,000		$	2,109,590,000		$	1,658,193,000
Investment and other income		19,576,000			20,077,000			38,379,000			36,757,000
Net realized investment losses		(12,627,000	)		(44,000	)		(12,568,000	)		(167,000	)

		1,092,420,000			928,042,000			2,135,401,000			1,694,783,000

Expenses
Salaries and other personnel costs		363,918,000			311,396,000			709,243,000			586,215,000
Premiums retained by agents		308,839,000			216,415,000			593,133,000			405,822,000
Other operating expenses		244,719,000			214,431,000			482,856,000			405,519,000
Provision for policy losses and other claims		52,697,000			40,525,000			99,796,000			77,015,000
Depreciation and amortization		25,084,000			25,672,000			49,232,000			50,105,000
Premium taxes		8,393,000			5,704,000			15,592,000			10,712,000
Interest		8,716,000			7,567,000			16,936,000			13,865,000

		1,012,366,000			821,710,000			1,966,788,000			1,549,253,000

Income before income taxes and minority interests		80,054,000			106,332,000			168,613,000			145,530,000
Income taxes		26,300,000			39,200,000			57,300,000			52,700,000

Income before minority interests		53,754,000			67,132,000			111,313,000			92,830,000
Minority interests		13,633,000			12,615,000			27,117,000			19,537,000

Net income		40,121,000			54,517,000			84,196,000			73,293,000

Other comprehensive (loss) gain, net of tax
Unrealized (loss)gain on securities		(4,475,000	)		959,000			(5,010,000	)		(919,000	)
Minimum pension liability adjustment		(100,000	)		85,000			(2,375,000	)		(115,000	)

		(4,575,000	)		1,044,000			(7,385,000	)		(1,034,000	)

Comprehensive income	$	35,546,000		$	55,561,000


Part I:		Financial Information

Item 1.		Financial Statements

		A. Condensed Consolidated Balance Sheets

		B. Condensed Consolidated Statements of Income and Comprehensive Income

		C. Condensed Consolidated Statements of Cash Flows

		D. Notes to Condensed Consolidated Financial Statements

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.		Quantitative and Qualitative Disclosures About Market Risk

Part II:		Other Information

Item 4.		Submission of Matters to a Vote of Security Holders

Item 6.		Exhibits and Reports on Form 8-K

		Items 1-3 and 5 have been omitted because they are not applicable with respect to the current reporting period.

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