GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

The First American Corp. Reports Operating Results (10-Q)

August 09, 2010 | About:
insider

10qk

18 followers
The First American Corp. (FAF) filed Quarterly Report for the period ended 2010-06-30.

The First American Corp. has a market cap of $1.57 billion; its shares were traded at around $15.08 . The dividend yield of The First American Corp. stocks is 0.4%.FAF is in the portfolios of Diamond Hill Capital of Diamond Hill Capital Management Inc.

Highlight of Business Operations:

As part of the Distribution, on May 26, 2010 we issued to FAFC approximately $250.0 million of our issued and outstanding common shares, or 12,933,265 shares of our common stock to FAFC. Based on the closing price of our stock on June 1, 2010, the value of the equity issued to FAFC was $242.6 million. As a result we will pay FAFC $7.4 million in cash to arrive at the full value of $250.0 million. FAFC is expected to dispose of the shares within five years following the Separation.

Our total operating expense increased 1.1% for the three months ended June 30, 2010 and increased 0.5% for the six months ended June 30, 2010, when compared to the previous year. GAAP requires that we include all of the corporate costs of FAC up to the Separation date in our income statement. For the three and six month periods ended June 30, 2010, those net expenses totaled approximately $38.6 million and $70.5 million, respectively, (including spin-related expenses totaling approximately $12.7 million and $31.4 million respectively) as compared to $19.2 million and $37.9 million for the three and six months ended June 30, 2009, respectively.

The effective income tax rate (total income tax expense related to income from continuing operations as a percentage from continuing operations before income taxes) was 66.0 % and 45.5% for the three and six months ended June 30, 2010 respectively and 30% and 33% respectively for the same periods of the prior year. The increase in the effective rate is primarily attributable to non-deductible transaction costs incurred in connection with the Separation. Income taxes included in equity in earnings of affiliates was $5.6 million and $10.6 million for the three and six months ended June 30, 2010, respectively, and $10.5 million and $18.2 million, respectively, for the same periods of the prior year.

Net income was $33.4 million and $89.1 million for the three months ended June 30, 2010 and 2009, respectively. Net loss from continuing operations attributable to the Company for the three months ended June 30, 2010, was $0.3 million, or $0.01 per diluted share. Net income from continuing operations attributable to the Company for the three months ended June 30, 2009, was $36.8 million, or $0.39 per diluted share. Net income attributable to noncontrolling interests was $9.0 million and $18.9 million for the three months ended June 30, 2010 and 2009, respectively. The net income for the Company for the current three-month period was primarily a function of (i) the level of corporate expense, including Separation-related expenses and the legacy FAC corporate costs that would have been allocated to FAFC totaling approximately $38.6 million and (ii) the impact on the tax provision of Separation-related items totaling approximately $7.2 million.

Net income was $72.1 million and $141.6 million for the six months ended June 30, 2010 and 2009, respectively. Net income from continuing operations attributable to the Company for the six months ended June 30, 2010, was $10.3 million, or $0.09 per diluted share. Net income from continuing operations attributable to the Company for the six months ended June 30, 2009, was $60.4 million, or $0.64 per diluted share. Net income from continuing operations attributable to noncontrolling interests was $18.3 million and $35.3 million for the six months ended June 30, 2010 and 2009, respectively. The net income for the Company for the current six-month period was primarily a function of (i) the level of legacy FAC corporate expense, including Separation-related expense and the corporate costs that would have been allocated to FAFC totaling approximately $70.5 million and (ii) the impact on the tax provision of Separation-related items totaling approximately $7.2 million.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 4.0/5 (2 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide