e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2008
or
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o |
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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 001-02658
STEWART INFORMATION SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
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74-1677330 |
(State or other jurisdiction of
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(I.R.S. Employer Identification No.) |
incorporation or organization) |
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1980 Post Oak Blvd., Houston TX
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77056 |
(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (713) 625-8100
(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. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
On
May 7, 2008, the following shares of each of the issuers classes of common stock were outstanding:
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Common |
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17,071,734 |
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Class B Common |
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1,050,012 |
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FORM 10-Q QUARTERLY REPORT
QUARTER ENDED MARCH 31, 2008
TABLE OF CONTENTS
As used in this report, we, us, our, the Company, and Stewart mean Stewart Information
Services Corporation and our subsidiaries, unless the context indicates otherwise.
STEWART
INFORMATION SERVICES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS AND COMPREHENSIVE EARNINGS
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THREE MONTHS ENDED |
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MAR 31 |
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MAR 31 |
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2008 |
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2007 |
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($000 omitted) |
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Revenues |
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Title insurance: |
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Direct operations |
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180,587 |
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229,614 |
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Agency operations |
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191,053 |
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272,254 |
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Real estate information |
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14,716 |
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16,533 |
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Investment income |
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8,078 |
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9,051 |
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Investment and other (losses) gains net |
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(297 |
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4,222 |
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394,137 |
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531,674 |
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Expenses |
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Amounts retained by agencies |
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155,562 |
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222,390 |
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Employee costs |
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151,962 |
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176,793 |
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Other operating expenses |
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86,836 |
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93,643 |
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Title losses and related claims |
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29,721 |
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31,859 |
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Depreciation and amortization |
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9,091 |
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9,885 |
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Interest |
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1,815 |
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1,668 |
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434,987 |
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536,238 |
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Loss before taxes and minority interests |
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(40,850 |
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(4,564 |
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Income tax benefit |
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(16,761 |
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(2,621 |
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Minority interests |
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1,203 |
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2,819 |
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Net loss |
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(25,292 |
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(4,762 |
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Changes in other comprehensive earnings,
net of taxes of $85 and $448 |
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159 |
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833 |
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Comprehensive loss |
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(25,133 |
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(3,929 |
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Basic and diluted loss per share: |
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Net loss per share |
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(1.40 |
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(0.26 |
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Average shares outstanding |
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18,046 |
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18,237 |
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See notes to condensed consolidated financial statements.
- 1 -
STEWART INFORMATION SERVICES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
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MAR 31 |
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DEC 31 |
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2008 |
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2007 |
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($000 omitted) |
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Assets |
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Cash and cash equivalents |
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90,903 |
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109,239 |
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Short-term investments |
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77,648 |
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79,780 |
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Investments statutory reserve funds |
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516,613 |
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518,586 |
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Investments other |
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93,424 |
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98,511 |
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Receivables premiums from agencies |
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37,379 |
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48,040 |
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Receivables income taxes |
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50,543 |
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38,084 |
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Receivables other |
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51,029 |
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55,251 |
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Allowance for uncollectible amounts |
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(12,001 |
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(11,613 |
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Property and equipment |
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91,151 |
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96,457 |
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Title plants |
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78,650 |
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78,245 |
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Goodwill |
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209,628 |
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208,824 |
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Intangible assets |
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15,950 |
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17,157 |
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Other assets |
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104,751 |
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105,413 |
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1,405,668 |
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1,441,974 |
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Liabilities |
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Notes payable |
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116,223 |
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108,714 |
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Accounts payable and accrued liabilities |
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89,639 |
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108,658 |
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Estimated title losses |
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439,109 |
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441,324 |
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Deferred income taxes |
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15,314 |
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13,509 |
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Minority interests |
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14,971 |
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15,710 |
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675,256 |
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687,915 |
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Contingent liabilities and commitments |
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Stockholders equity |
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Common and Class B Common Stock and
additional paid-in capital |
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142,682 |
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141,196 |
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Retained earnings |
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571,826 |
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597,118 |
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Accumulated other comprehensive earnings |
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20,001 |
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19,842 |
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Treasury stock 330,407 Common shares, at cost |
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(4,097 |
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(4,097 |
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Total stockholders equity
(18,119,822 and 18,031,110 shares outstanding) |
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730,412 |
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754,059 |
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1,405,668 |
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1,441,974 |
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See notes to condensed consolidated financial statements.
- 2 -
STEWART INFORMATION SERVICES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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THREE MONTHS ENDED |
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MAR 31 |
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MAR 31 |
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2008 |
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2007 |
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($000 omitted) |
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Reconciliation of net loss to cash used by operating activities: |
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Net loss |
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(25,292 |
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(4,762 |
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Add (deduct): |
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Depreciation and amortization |
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9,091 |
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9,885 |
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Provision for deferred taxes |
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1,968 |
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(2,725 |
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Realized investment losses (gains) |
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297 |
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(4,222 |
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Provisions for title losses (less than) in excess of payments |
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(760 |
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6,406 |
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(Increase) decrease in receivables net |
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(413 |
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14,865 |
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Increase in other assets net |
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(664 |
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(5,447 |
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Decrease in payables and accrued liabilities net |
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(18,398 |
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(31,841 |
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Minority interests |
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1,203 |
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2,819 |
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Net earnings from equity investees |
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(3 |
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(456 |
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Dividends received from equity investees |
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476 |
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925 |
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Other net |
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1,048 |
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(563 |
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Cash used by operating activities |
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(31,447 |
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(15,116 |
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Investing activities: |
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Proceeds from investments matured and sold |
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162,466 |
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102,119 |
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Purchases of investments |
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(154,529 |
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(86,763 |
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Purchases of property and equipment, title plants and real estate net |
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(2,994 |
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(12,733 |
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Increases in notes receivable |
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(753 |
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(7,819 |
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Collections on notes receivable |
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3,988 |
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240 |
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Cash paid for cost-basis investments, equity investees and related intangibles |
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(2,531 |
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Cash paid for acquisitions of subsidiaries net (see below) |
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(5,431 |
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Cash provided (used) by investing activities |
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8,178 |
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(12,918 |
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Financing activities: |
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Distributions to minority interests |
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(1,984 |
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(2,979 |
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Proceeds from exercise of stock options |
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451 |
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Proceeds from notes payable |
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10,738 |
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7,119 |
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Payments on notes payable |
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(4,013 |
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(7,608 |
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Cash provided (used) by financing activities |
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5,192 |
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(3,468 |
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Effects of changes in foreign currency exchange rates |
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(259 |
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(561 |
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Decrease in cash and cash equivalents |
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(18,336 |
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(32,063 |
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Cash and cash equivalents at beginning of period |
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109,239 |
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136,137 |
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Cash and cash equivalents at end of period |
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90,903 |
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104,074 |
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Supplemental information: |
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Assets acquired: |
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Goodwill |
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776 |
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7,313 |
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Investments |
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981 |
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Property and equipment |
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942 |
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Title plants |
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2,874 |
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Intangible assets |
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467 |
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Other |
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78 |
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862 |
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Liabilities assumed |
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(5,389 |
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Debt issued |
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(854 |
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(2,619 |
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Cash paid for acquisitions of subsidiaries net |
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5,431 |
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See notes to condensed consolidated financial statements.
- 3 -
STEWART INFORMATION SERVICES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
Interim financial statements. The financial information contained in this report for the three
months ended March 31, 2008 and 2007, and as of March 31, 2008, is unaudited. This report should be
read in conjunction with the Companys Annual Report on Form 10-K for the year ended December 31,
2007.
A. Managements responsibility. The accompanying financial statements were prepared by management,
which is responsible for their integrity and objectivity. These financial statements have been
prepared in accordance with U.S. GAAP, including managements best judgments and estimates. In the
opinion of management, all adjustments necessary for a fair presentation of this information for
all interim periods, consisting only of normal recurring accruals, have been made. The results of
operations for the interim periods are not necessarily indicative of results for a full year and
actual results could differ from estimates.
B. Reclassifications. Certain amounts in the 2007 interim financial statements have been
reclassified for comparative purposes. Net earnings and stockholders equity, as previously
reported, were not affected.
C. Consolidation. The condensed consolidated financial statements include all subsidiaries in which
the Company owns more than 50% voting rights in electing directors, and variable interest entities
when required by FIN 46(R). Unconsolidated investees, in which the Company typically owns 20%
through 50% of the equity, are accounted for by the equity method. All significant intercompany
amounts and transactions are eliminated and provisions have been made for minority interests.
NOTE 2
New significant accounting pronouncements. In March 2008, SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities was issued. SFAS 161 amends and expands the
disclosure requirements of SFAS 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS 161 requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative
instruments and disclosures about credit-risk-related contingent features in derivative
agreements. SFAS 161 is effective January 1, 2009. The Company does not believe the adoption of
SFAS 161 will have a material effect on its consolidated financial statements.
In December 2007, SFAS No. 141(R), Business Combinations, was issued. SFAS 141(R) establishes
principles and requirements for the financial statement recognition and measurement of identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS
141(R) also establishes the recognition and measurement of goodwill acquired in the business
combination or gain from a bargain purchase and determines the financial statement disclosures
related to the nature and financial effects of the business combination.
In December 2007, SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements an
amendment of ARB No. 51, was issued. SFAS 160 establishes accounting and reporting standards for
the noncontrolling (minority) interest in, and the deconsolidation of, a subsidiary.
SFAS 141(R) and SFAS 160 are required to be adopted simultaneously and are effective January 1,
2009. The Company is in the process of evaluating the impact that SFAS 141(R) and SFAS 160 will
have on its consolidated financial statements.
- 4 -
NOTE 3
Fair value measurements. Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value
Measurements, which defines fair value as the exchange price that would be received for an asset
or paid to transfer a liability (an exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between market participants at the measurement
date. SFAS 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to
measure fair value. This hierarchy requires entities to maximize the use of observable inputs when
possible. The three levels of inputs used to measure fair value are as follows:
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Level 1 quoted prices in active markets for identical assets or liabilities |
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Level 2 observable inputs other than quoted prices included in Level 1, such as quoted
prices for similar assets and liabilities in active markets; quoted prices for identical or
similar assets and liabilities in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data |
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Level 3 unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities including certain
pricing models, discounted cash flow methodologies and similar techniques that use
significant unobservable inputs |
The
Companys adoption of SFAS 157 did not have a material impact on
its consolidated financial
statements. The Company has segregated all financial assets and liabilities that are measured at
fair value on a recurring basis into the most appropriate level within the fair value hierarchy
based on the inputs used to determine the fair value at the measurement date in the table below.
FSP FAS 157-2 delayed the effective date for all nonfinancial assets and liabilities until
January 1, 2009, except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis. Accordingly, the provisions of
SFAS 157 were not applied to goodwill and other intangible
assets held by the Company and measured annually for impairment
testing purposes only.
Effective
January 1, 2008, the Company adopted SFAS No. 159,
The Fair Value Option for Financial Assets and Financial
Liabilities, which provides entities the option to
measure many financial instruments and certain other items at fair value. Entities that choose the
fair value option will recognize in earnings any unrealized gains and losses on items for which the
fair value option was elected at each subsequent reporting date. The Company has chosen not to
elect the fair value option for any items that are not already required to be measured at fair
value in accordance with U.S. GAAP.
Assets at March 31, 2008 measured at fair value on a recurring basis are summarized below (in
millions):
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Fair value |
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Level 1 |
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Level 2 |
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Level 3 |
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measurements |
Investments available-for-sale |
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$ |
341.9 |
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$ |
345.8 |
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$ |
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$ |
687.7 |
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At
March 31, 2008, Level 1 investments consist of short-term
investments, U.S. government and foreign bonds, equity securities and
a portion of our municipal and corporate bonds. Level 2
investments consist of municipal and corporate bonds.
NOTE 4
Stock option plan. The Company accounts for its stock option plan in accordance with SFAS No.
123(R), Share-Based Payment, and uses the modified prospective method under which share-based
compensation expense is recognized for new share-based awards granted, and any outstanding awards
that are modified, repurchased or cancelled subsequent to January 1, 2006. Compensation expense is
based on the fair value of the options, which is estimated using the Black-Scholes Model. All
options expire 10 years from the date of grant and are granted at the closing market price of the
Companys Common Stock on the date of grant. There are no unvested awards since all options are
immediately exercisable.
There were no options granted during the quarters ended March 31, 2008 and 2007 and, accordingly,
no compensation expense has been reflected in the accompanying condensed consolidated financial
statements.
- 5 -
A summary of the status of the Companys stock option plan follows:
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Weighted- |
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average |
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exercise |
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Options |
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prices ($) |
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December 31, 2007 |
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426,400 |
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29.69 |
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Granted |
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Exercised |
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(24,000 |
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18.78 |
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March 31, 2008 |
|
|
402,400 |
|
|
|
30.34 |
|
|
|
|
|
|
|
|
At March 31, 2008, the weighted-average remaining contractual life of options outstanding was 5.2
years and the aggregate intrinsic value of options was $1.7 million. The aggregate intrinsic value
of options exercised during the three months ended March 31, 2008 was $0.2 million. The tax benefit
of options exercised during the three months ended March 31, 2008 was not material.
During the three months ended March 31, 2008, the Company granted 42,000 shares of restricted
Common Stock, at a fair value of $1.2 million, which vest on December 31, 2008. Compensation
expense associated with restricted stock awards will be recognized over the vesting period and was
less than $0.1 million for the three months ended March 31, 2008.
NOTE 5
Earnings per share. The Companys basic earnings per share was calculated by dividing net earnings
by the weighted-average number of shares of Common Stock and Class B Common Stock outstanding
during the reporting periods.
To calculate diluted earnings per share, the number of shares determined above was increased by
assuming the issuance of all dilutive shares during the same reporting periods. The treasury stock
method was used to calculate the additional number of shares. The only potentially dilutive effect
on earnings per share for the Company relates to its stock option plan.
As the Company reported a net loss for the three months ended March 31, 2008 and 2007, there was no
calculation of diluted earnings per share as outstanding options and
shares of restricted common stock were considered anti-dilutive.
NOTE 6
Contingent liabilities and commitments. The Company holds proceeds from tax-deferred property
exchanges for customers until a qualifying exchange can occur, which resulted in a contingent
liability to the Company of approximately $523.4 million at March 31, 2008 ($763.9 million at
December 31, 2007). These are exchanger funds and, as is industry practice, are not included in the
Companys consolidated balance sheets. However, the Company is obligated to its customers for the
disbursements of the exchanger funds in accordance with its customer agreements.
The exchanger funds at March 31, 2008 included approximately $387.1 million of auction rate
securities. These particular securities, purchased at par value, are rated AAA and AA and comprised
of student loan funds of $254.7 million guaranteed by the U.S. government and
preferred stocks issued by closed-end mutual funds of $132.4 million.
Since mid-February 2008, there has not been a normal market for auction rate securities which has
adversely affected the liquidity of the securities. The liquidity issue was caused by circumstances
existing in the U.S. and global credit markets, which have been highly publicized. Significant
attention is currently being given to redemptions or other means of restoring liquidity to auction
rate
- 6 -
securities by the issuers of the securities, the financial markets and federal and state
government officials. However, any future redemptions, including timing and amounts, cannot be
predicted.
The Company believes the absence of a normal market for auction rate securities has not affected
the value of the assets underlying the auction rate securities, and the Company continues to
receive interest at contractually stated rates.
The Company has certain corporate assets and available borrowing capacity that can be utilized, to
provide continuous and immediate liquidity, if needed, for the exchanger funds. When and as they
occur, future redemptions and conversions of these auction rate securities would increase the
liquidity of the exchanger accounts.
In providing liquidity to the exchanger funds, the Company may purchase a portion of the auction
rate securities for its long-term investment portfolio, which may result in an impairment charge,
depending upon the value of the securities at the time of such transaction. While the Company
cannot predict the amount of the securities that it may acquire or the amount of any impairment
that may be recognized, the Company does not believe such amounts will be material to the Companys
consolidated financial condition.
At March 31, 2008, the Company was contingently liable for guarantees of indebtedness owed
primarily to banks and others by certain third parties. The guarantees primarily relate to
business expansion and expire no later than 2019. At March 31, 2008, the maximum potential future
payments on the guarantees amounted to $16.8 million. Management believes that the related
underlying assets and available collateral, primarily corporate stock and title plants, would
enable the Company to recover amounts paid under the guarantees. The Company believes no provision
for losses is needed since no loss is expected on these guarantees.
In the ordinary course of business the Company guarantees the third-party indebtedness of certain
of its consolidated subsidiaries. At March 31, 2008, the maximum potential future payments on the
guarantees were not more than the related notes payable recorded in the condensed consolidated
balance sheet. The Company also guarantees the indebtedness related to lease obligations of certain
of its consolidated subsidiaries. The maximum future obligations arising from these lease-related
guarantees are not more than the Companys future minimum lease payments. In addition, at March
31, 2008 the Company had unused letters of credit amounting to $3.2 million primarily related to
workers compensation coverage.
The Company is also subject to lawsuits incidental to its business, most of which involve disputed
policy claims. In many of these lawsuits, the plaintiff seeks exemplary or treble damages in excess
of policy limits based on the alleged malfeasance of an issuing agency. The Company does not expect
that any of these proceedings will have a material adverse effect on its consolidated financial
condition or results of operations. Additionally, the Company has received various other inquiries
from governmental regulators concerning practices in the insurance industry. Many of these
practices do not concern title insurance and the Company does not anticipate that the outcome of
these inquiries will materially affect its consolidated financial condition or results of
operations. Along with the other major title insurance companies, the Company is party to a number
of class actions concerning the title insurance industry and believes that it has adequate reserves
for these contingencies and that the likely resolution of these matters will not materially affect
its consolidated financial condition or results of operations.
- 7 -
NOTE 7
Segment information. The Companys two reportable segments are title insurance-related services
(Title) and real estate information (REI). Selected financial information related to these
segments follows:
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
MAR 31 |
|
MAR 31 |
|
|
2008 |
|
2007 |
|
|
($000 omitted) |
Revenues: |
|
|
|
|
|
|
|
|
Title |
|
|
378,542 |
|
|
|
511,941 |
|
REI (1) |
|
|
15,595 |
|
|
|
19,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
394,137 |
|
|
|
531,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment revenues: |
|
|
|
|
|
|
|
|
Title |
|
|
136 |
|
|
|
88 |
|
REI |
|
|
837 |
|
|
|
1,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
973 |
|
|
|
1,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization: |
|
|
|
|
|
|
|
|
Title |
|
|
8,454 |
|
|
|
9,321 |
|
REI |
|
|
637 |
|
|
|
564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
9,091 |
|
|
|
9,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings before taxes and minority interests: |
|
|
|
|
|
|
|
|
Title |
|
|
(41,544 |
) |
|
|
(8,056 |
) |
REI (1) |
|
|
694 |
|
|
|
3,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(40,850 |
) |
|
|
(4,564 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The three months ended March 31, 2008 and 2007 include a
$0.9 million and $3.2 million gain, respectively, from sales
of subsidiaries, which are included in investment and
other (losses) gains net in the condensed consolidated statements of earnings and
comprehensive earnings. |
|
|
|
|
|
|
|
|
|
|
|
MAR 31 |
|
DEC 31 |
|
|
2008 |
|
2007 |
|
|
($000 omitted) |
Identifiable assets: |
|
|
|
|
|
|
|
|
Title |
|
|
1,336,987 |
|
|
|
1,369,649 |
|
REI |
|
|
68,681 |
|
|
|
72,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,405,668 |
|
|
|
1,441,974 |
|
|
|
|
|
|
|
|
|
|
- 8 -
NOTE 8
Regulatory developments. In January 2007, the California Insurance Commissioner filed a rate
reduction order that would have reduced title insurance rates in California by 26% commencing in
2009. However, the Company believes that California law requires rates to be established
competitively and not by administrative order. This rate reduction order was rejected by the
California Office of Administrative Law in February 2007. In May 2007, Californias Insurance
Commissioner submitted revised regulations that, in addition to reducing rates effective in 2010,
would have increased financial and operating data, market conduct examinations and other regulatory
requests by the California Department of Insurance (CDOI). In October 2007, subsequent to several
title insurance industry meetings with the CDOI, the states Insurance Commissioner proposed to
reduce the requirements of data and market conduct requests, delay the effective date to 2011, and
eliminate the interim rate reduction previously submitted to the CDOI. These proposals are
contingent upon the ongoing work of the title insurance industry with the CDOI to identify
alternative methods of providing the additional data and reforming the existing rate structure. In
April 2008, the Insurance Commissioner announced at the California Land Title Association annual
meeting that revised proposed regulations will be released in May 2008 to limit the amount spent by
title insurance marketing representatives and to eliminate the interim rate reduction and the
maximum rate formula.
The Company cannot predict the outcome of proposed regulations. However, to the extent that rate
decreases are mandated in the future, the outcome could materially affect the Companys
consolidated financial condition and results of operations.
The Company also is subject to other administrative actions and inquiries into its conduct of
business in certain of the states in which it operates. While the Company cannot predict the
outcome of these matters, it believes that it has adequately reserved for these matters and that
the outcome will not materially affect its consolidated financial condition or results of
operations.
On or about February 1, 2008, an antitrust class action lawsuit was filed in the United States
District Court for the Eastern District of New York against Stewart Title Insurance Company, an
affiliated New York underwriter, Stewart Information Services Corporation (SISCO), several other
title insurance companies, and the Title Insurance Rate Service Association, Inc. (TIRSA). The
complaint alleges that the defendants violated Section 1 of the Sherman Act by collectively filing
proposed rates for title insurance in New York through TIRSA, a state-authorized and licensed rate
service organization. Several complaints were subsequently filed in the federal district courts for
the Eastern and Southern Districts of New York making similar allegations and, in certain
instances, alleging that the defendants violated the Real Estate Settlement Procedures Act of 1974,
as amended, and New York consumer protection law. Similar complaints have been filed in federal
district courts in Pennsylvania, New Jersey, and Ohio, alleging that defendants violated Section 1
of the Sherman Act by collectively filing proposed rates for title insurance through rate service
organizations authorized and licensed by those respective states. Complaints also have been filed
in federal district courts in Florida, Massachusetts, Arkansas, California, Washington, West
Virginia, and Texas, alleging collective action affecting rates in those and other states in
violation of Section 1 of the Sherman Act and various state consumer protection laws. The
complaints generally request treble damages in an unspecified amount, declaratory and injunctive
relief, and attorneys fees. At least fifty-seven such complaints have been filed to date, each of
which names SISCO and/or one or more of its affiliates as a defendant. The Company intends to contest these complaints vigorously.
- 9 -
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements overview. We
reported a net loss of $25.3 million for the three months ended March
31, 2008 compared with a net loss of $4.8 million for the same period in 2007. On a diluted per
share basis, our net loss was $1.40 for the first three months of 2008 compared with a net loss of
$0.26 for the first three months of 2007. Revenues for the first three months of 2008 decreased
25.9% to $394.1 million from $531.7 million for the same period last year.
Operating results for the three months ended March 31, 2008 were negatively impacted by a
significant decrease in home sales, lower home prices and reduced financing activity relating
primarily to tightening of mortgage lending practices and issues in the credit market.
We continue to respond aggressively to the decline in the real estate market and are taking
appropriate steps to restore profitability. In addition to workforce reductions, we continue to
consolidate branch offices and locations, and are pursuing the completion of title search and
production efficiencies company-wide. Our shared services initiative also remains on target and
will generate benefits during 2008 in the areas of procurement and information technology
infrastructure by reducing costs and enhancing service levels.
In addition, excluding acquisitions, divestitures and startups, we have reduced employee counts
company-wide approximately 2,500, or 25.4%, since December 31, 2005, when the real estate market
downturn began. We reduced our employee counts company-wide by approximately 460, or 5.4%, during
the first quarter of 2008. Employee costs in the first quarter of 2008 decreased 14.0% compared
with the first quarter of 2007 as we began to realize the benefits from our efforts to reduce
staffing. We will continue to incur significant costs relating to conversion of our technology to
more efficient platforms. Although other operating expenses have declined, they have not declined
at the same rate as revenues due to the relatively fixed nature of some of these costs, such as
rent and other occupancy expenses, and costs associated with our growing, profitable international
and commercial businesses.
Fannie Mae and other industry experts expect the downturn in the real estate and related lending
markets to continue through at least 2009. Therefore, our consolidated financial condition and
results of operations will continue to be subject to adverse market conditions.
Critical accounting estimates. Actual results can differ from our accounting estimates. While we
do not anticipate significant changes in our estimates, there is a risk that such changes could
have a material impact on our consolidated financial condition or results of operations for future
periods.
Title loss reserves
Our most critical accounting estimate is providing for title loss reserves. Our liability for
estimated title losses at March 31, 2008 comprises both known claims ($114.2 million) and our
estimate of claims that may be reported in the future ($324.9 million). The amount of the reserve
represents the aggregate future payments (net of recoveries) that we expect to incur on policy and
escrow losses and in costs to settle claims.
We base our estimates on reported claims, historical loss payment experience, title industry
averages and the current legal and economic environment. In making estimates, we use moving-average
ratios of recent actual policy loss payment experience (net of recoveries) to premium revenues.
Provisions for title losses, as a percentage of title
operating revenues, were 8.0% and 6.3% for
the three months ended March 31, 2008 and 2007, respectively. Actual loss payment experience,
including the impact of large losses, is the primary reason for increases or decreases in our loss
provision. A change of 100 basis points in this percentage, a reasonably likely scenario based on
our historical loss experience, would have changed our provision for title losses and pretax
earnings by approximately $3.7 million for the three months ended March 31, 2008.
- 10 -
Estimating future loss payments is difficult and our assumptions are subject to change. Claims, by
their very nature, are complex and involve uncertainties as to the dollar amount and timing of
individual payments. Our experience has been that most policy claims and claim payments are made in
the first six years after the policy has been issued, although claims are incurred and paid many
years later.
We have consistently followed the same basic method of estimating and recording our loss reserves
for more than 10 years. As part of our process, we also obtain
input from third-party actuaries
regarding our methodology and resulting reserve calculations. While we are responsible for
determining our loss reserves, we utilize this actuarial input to assess the overall reasonableness
of our reserve estimation.
Agency revenues
We recognize revenues on title insurance policies written by independent agencies (agencies) when
the policies are reported to us. In addition, where reasonable estimates can be made, we accrue for
revenues on policies issued but not reported until after period end. We believe that reasonable
estimates can be made when recent and consistent policy issuance information is available. Our
estimates are based on historical reporting patterns and other information about our agencies. We
also consider current trends in our direct operations and in the title industry. In this accrual,
we are not estimating future transactions. We are estimating revenues on policies that have already
been issued by agencies but not yet reported to or received by us. We have consistently followed
the same basic method of estimating unreported policy revenues for more than 10 years.
Our accruals for revenues on unreported policies from agencies were not material to our total
assets or stockholders equity at March 31, 2008 and December 31, 2007. The differences between the
amounts our agencies have subsequently reported to us compared to our estimated accruals are
substantially offset by any differences arising from prior years accruals and have been immaterial
to consolidated assets and stockholders equity during each of the three prior years. We believe
our process provides the most reliable estimate of the unreported revenues on policies and
appropriately reflects the trends in agency policy activity.
Goodwill and other long-lived assets
Our goodwill evaluation is completed annually in the third quarter using June 30 balances and when
events may indicate impairment. We also evaluate the carrying values of title plants and other
long-lived assets when events occur that may indicate impairment. The process of determining
impairment relies on projections of future cash flows, operating results and market conditions.
Uncertainties exist in these projections and are subject to changes relating to factors such as
interest rates and overall real estate market conditions. Actual market conditions and operating
results may vary materially from our projections.
Based on this evaluation, we estimate and expense to current operations any loss in value of these
assets. As part of our process, we obtain input from third-party appraisers regarding the fair
value of our reporting units. While we are responsible for assessing whether an impairment of
goodwill exists, we utilize the input from third-party appraisers to assess the overall
reasonableness of our conclusions. There were no impairment write-offs of goodwill or other
long-lived assets during the quarters ended March 31, 2008 or 2007.
Operations. Our business has two operating segments: title insurance-related services and real
estate information (REI). These segments are closely related due to the nature of their operations
and common customers.
Our primary business is title insurance and settlement-related services. We close transactions and
issue title policies on homes and commercial and other real properties located in all 50 states,
the District of Columbia and in international markets. We also provide post-closing lender
services, automated county clerk land records, property ownership mapping, geographic information
systems, property information reports, document preparation, background checks and expertise in
Internal Revenue Code Section 1031 tax-deferred exchanges.
- 11 -
Factors affecting revenues. The principal factors that contribute to changes in operating revenues
for our title and REI segments include:
|
|
|
mortgage interest rates; |
|
|
|
|
ratio of purchase transactions compared with refinance transactions; |
|
|
|
|
home prices; |
|
|
|
|
consumer confidence; |
|
|
|
|
demand by buyers; |
|
|
|
|
number of households; |
|
|
|
|
availability of loans for borrowers; |
|
|
|
|
premium rates; |
|
|
|
|
market share; |
|
|
|
|
opening of new offices and acquisitions; and |
|
|
|
|
number of commercial transactions, which typically yield higher premiums. |
To the extent inflation causes increases in the prices of homes and other real estate, premium
revenues are also increased. Premiums are determined in part by the insured values of the
transactions we handle. These factors may override the seasonal nature of the title insurance
business. Generally, our first quarter is the least active and our fourth quarter is the most
active in terms of title insurance revenues.
RESULTS OF OPERATIONS
A comparison of our results of operations for the three months ended March 31, 2008 with the three
months ended March 31, 2007 follows. Factors contributing to fluctuations in results of operations
are presented in order of monetary significance, and we have quantified, when necessary,
significant changes. Results from our REI segment are included in our discussions regarding the
three months ended March 31, 2008, as those amounts are immaterial in relation to consolidated
totals. When relevant, we have discussed our REI segments results separately.
Our statements on home sales and loan activity are based on published industry data from sources
including Fannie Mae, the National Association of Realtors®, the Mortgage Bankers
Association and Freddie Mac. We also use information from our direct operations.
Operating
environment. Sales of new and existing homes decreased 30.8% and
23.8%, respectively, for the three months ended March 31, 2008 compared with the same period in 2007. March 2008 existing
home sales saw a seasonally adjusted annual rate of 4.68 million versus 5.65 million a year
earlier. One-to-four family residential lending declined from an estimated $612 billion in the
first three months of 2007 to $499 billion in the first three months of 2008. The decline in
lending volume was primarily a result of decreasing home sales, lower home prices and reduced
financing activity primarily due to tightening of mortgage lending practices and issues in the
credit market.
Fannie Mae and other industry experts expect the downturn in the real estate and related lending
markets to continue through at least 2009. Therefore, our results of operations and financial
condition will continue to be adversely affected by the current market conditions.
Title revenues. Our revenues from direct operations decreased $49.0 million, or 21.4%, in the first
quarter of 2008 compared with the first quarter of 2007. The largest revenue decreases were in
California, Texas and New York. Revenues from commercial and large transactions in the first
quarter of 2008 decreased $3.7 million over prior-year levels. Acquisitions made since the same
period in the prior year increased revenues $2.3 million in the first quarter of 2008.
The number of direct closings we handled decreased 18.1% in the first quarter of 2008 compared with
the first quarter of 2007. The average revenue per closing decreased 6.4% in the first quarter of
2008 primarily due to the decrease in residential revenue per transaction, partially offset by an
increase in revenue per commercial transaction.
- 12 -
Our order levels for the first quarter of 2008 compared with the first quarter of 2007 decreased
13.0% as a result of a significant decrease in home sales, lower home prices and reduced financing
activity relating primarily to tightening of mortgage lending practices and issues in the credit
market.
Revenues from agencies decreased $81.2 million, or 29.8%, for the three months ended March 31, 2008
compared with the three months ended March 31, 2007. This decrease was due to the impact of a
reduction in home sales and prices in most markets and the overall decline in business related to
current market conditions. The largest decreases in revenues from agencies during the three months
ended March 31, 2008 were in Florida, California and New York.
REI revenues. Real estate information operating revenues were $14.7 million and $16.5 million in
the first quarters of 2008 and 2007, respectively. The decrease from 2007 resulted primarily from
a reduction in real estate-related transactions due to the continued decline in the housing
markets.
In January 2007, we sold our mapping and aerial photography businesses. We recorded a pretax gain
of $3.2 million from the sale of these subsidiaries, which is included in our results of operations
in investment and other (losses) gains net in our consolidated statements of earnings and
comprehensive earnings. The impact of the sale was not material to our consolidated financial
condition, results of operations or cash flows.
Investments. Investment income decreased $1.0 million, or 10.8%, in the first quarter of 2008
compared with the first quarter of 2007, due primarily to decreases in yields and average balances
invested. Certain investment gains and losses were realized as part of the ongoing management of
our investment portfolio for the purpose of improving performance, and are included in our results
of operations in investment and other (losses) gains net.
Retention by agencies. The amounts retained by agencies, as a percentage of revenues generated by
them, were 81.4% and 81.7% in the first quarters of 2008 and 2007, respectively. Amounts retained
by title agencies are based on agreements between agencies and our title underwriters. This
retention percentage may vary from year-to-year because of the geographical mix of agency
operations, the volume of title revenues and, in some states, laws or regulations.
Employee costs. Our employee costs and certain other operating expenses are sensitive to inflation.
Employee costs for the three months ended March 31, 2008 decreased $24.8 million, or 14.0%, to
$152.0 million from $176.8 million for the three months ended March 31, 2007. Excluding the effect
of new offices and divestitures, we reduced our employee headcount company-wide by approximately
460 during the first quarter of 2008 and approximately 2,100 since the beginning of 2007.
Partially offsetting the decreases in headcount in the first quarter of 2008 were annual raises and
employee costs relating to international and commercial businesses and personnel required for our
conversion to new technologies. In addition, acquisitions made since the same period in the prior
year added $1.4 million in employee costs for the three months ended March 31, 2008.
In our REI segment, total employee costs for the first three months of 2008 decreased $2.6 million,
or 20.6%, from the same period in 2007 primarily in our lender services and property information
businesses due to lower transaction volumes.
Other operating expenses. Other operating expenses decreased $6.8 million, or 7.3%, in the first
quarter of 2008 compared with the first quarter of 2007 primarily due to lower litigation and
regulatory expenses, lower premium taxes due to the decline in revenues and certain REI expenses.
These decreases were offset somewhat by increases in outside search fees relating to our commercial
business, insurance and bad debt expense. Other operating expenses also include rent and other
occupancy costs, title plant expenses, technology costs, attorneys fees, repairs and maintenance,
auto expenses, business promotion, travel and office supplies. Most of our operating expenses are
fixed in nature, although some follow, to varying degrees, the changes in transaction volume and
revenues.
- 13 -
Title losses. Provisions for title losses,
as a percentage of title operating revenues, were 8.0%
and 6.3% for the first quarters of 2008 and 2007, respectively. The first quarter of 2007 included
additions to title loss reserves of $5.1 million relating to four large title claims. The first quarter of 2008
included an addition to title loss reserves of $4.6 million related to an agency defalcation. An increase
in loss payment experience for recent policy years resulted in an increase in our loss ratio in
2008.
Income taxes. Our effective tax rates, based on losses before taxes and after deducting minority
interests (losses of $42.1 million and $7.4 million for the three months ended March 31, 2008 and
2007, respectively), were 39.9% and 35.5% for the quarters ended March 31, 2008 and 2007,
respectively. Our effective income tax rate increased in the first quarter of 2008 primarily due to
the level of our quarterly operating losses compared with our significant permanent differences,
such as tax-exempt interest, which remain relatively fixed in amount, and the ratio of earnings
from our international operations compared with our consolidated operating losses. Our annual
effective tax rate was 37.3% for 2007.
Liquidity. Cash used by operations was $31.4 million and $15.1 million for the first three months
of 2008 and 2007, respectively. This decline was due to the increases in our losses and title loss payments. Cash flow from operations has been the primary source of financing for
additions to property and equipment, expanding operations, dividends to stockholders, purchases of
our Common Stock and other requirements. This source is supplemented, as needed, by bank borrowings
for operations.
The most significant non-operating source of cash was from proceeds of investments matured and sold
in the amounts of $162.5 million and $102.1 million in the first three months of 2008 and 2007,
respectively. We used cash for the purchases of investments in the amounts of $154.5 million and
$86.8 million in the first three months of 2008 and 2007, respectively.
Unrealized gains and losses on investments, net of taxes, are reported in accumulated other
comprehensive earnings, a component of stockholders equity, until realized. During the first
three months of 2008, unrealized investment gains increased comprehensive earnings by $1.7
million, net of taxes. During the first three months of 2007, unrealized investment losses decreased comprehensive earnings by $0.7 million, net of taxes. These unrealized investment gains and losses were
primarily related to changes in bond values caused by interest rate
fluctuations. For the three months
ended March 31, 2008, changes in foreign currency exchange rates decreased comprehensive earnings
$1.5 million and for the three months ended March 31, 2007 increased comprehensive earnings $1.5
million, net of taxes.
During the first three months of 2008 and 2007, acquisitions resulted in additions to goodwill of
$0.8 million and $7.3 million, respectively.
A substantial majority of our consolidated cash and investments at March 31, 2008 was held by
Stewart Title Guaranty Company (Guaranty) and its subsidiaries. The use and investment of these
funds, dividends to us and cash transfers between Guaranty and its subsidiaries and us are subject
to certain legal restrictions. See Notes 2 and 3 to our consolidated financial statements included
in our Annual Report on Form 10-K for the year ended December 31, 2007.
Our liquidity at March 31, 2008, excluding Guaranty and its subsidiaries, consisted of cash and
investments aggregating $23.6 million and short-term liabilities of $5.1 million. We know of no
commitments or uncertainties that are likely to materially affect our ability to fund cash needs.
Loss reserves. Our loss reserves are fully funded, segregated and invested in high-quality
securities and short-term investments, as required by the insurance regulators of the states in
which our underwriters are domiciled. At March 31, 2008, these investments aggregated $473.2
million and our estimated title loss reserves were $439.1 million.
Historically, our operating cash flow has been sufficient to pay all title policy losses. Combining
our expected annual cash flow provided by operating activities with investments maturing in less
than one year, we do not expect future loss payments to create a liquidity problem for us. Beyond
providing funds for loss payments, we manage the maturities of our investment portfolio to provide
safety of capital, improve earnings and mitigate interest rate risks.
- 14 -
Commitments. We hold proceeds from tax-deferred property exchanges for customers until a
qualifying exchange can occur, which resulted in a contingent liability to us of approximately
$523.4 million at March 31, 2008 ($763.9 million at December 31, 2007). These are exchanger funds
and, as is industry practice, are not included in our consolidated balance sheets. However, we are
obligated to our customers for the disbursements of the exchanger funds in accordance with our
customer agreements.
The exchanger funds at March 31, 2008 included approximately $387.1 million of auction rate
securities. These particular securities, purchased at par value, are rated AAA and AA and comprised
of student loan funds of $254.7 million guaranteed by the U.S. government and
preferred stocks issued by closed-end mutual funds of $132.4 million.
Since mid-February 2008, there has not been a normal market for auction rate securities which has
adversely affected the liquidity of the securities. The liquidity issue was caused by circumstances
existing in the U.S. and global credit markets, which have been highly publicized. Significant
attention is currently being given to redemptions or other means of restoring liquidity to auction
rate securities by the issuers of the securities, the financial markets and federal and state
government officials. However, any future redemptions, including timing and amounts, cannot be
predicted.
We believe the absence of a normal market for auction rate securities has not affected the value of
the assets underlying the auction rate securities, and we continue to receive interest at
contractually stated rates.
We have certain corporate assets and available borrowing capacity that can be utilized, to provide
continuous and immediate liquidity, if needed, for the exchanger funds. When and as they occur,
future redemptions and conversions of these auction rate securities would increase the liquidity of
the exchanger accounts.
In providing liquidity to the exchanger funds, we may purchase a portion of the auction rate
securities for its long-term investment portfolio, which may result in an impairment charge,
depending upon the value of the securities at the time of such transaction. While we cannot predict
the amount of the securities that we may acquire or the amount of any impairment that may be
recognized, we do not believe such amounts will be material to our consolidated financial
condition.
Other-than-temporary impairments of investments. We have reviewed our investment portfolio as of
March 31, 2008 and determined that we do not hold any investments that we believe will be impaired
as a result of the decline in financing activity related to the subprime lending market or are
backed by subprime loans. In addition, for the three months ended March 31, 2008, we have not
recorded any other-than-temporary impairments of our investments.
Capital resources. We consider our capital resources to be adequate. We expect external capital
resources will be available, if needed, because of our low debt-to-equity ratio. Notes payable and
stockholders equity were $116.2 million and $730.4 million, respectively, at March 31, 2008. We
are not aware of any trends, either favorable or unfavorable, that would materially affect notes
payable or stockholders equity. We do not expect any material changes in the mix or relative cost
of such resources. Significant acquisitions in the future could materially affect the notes payable
or stockholders equity balances.
Off-balance sheet arrangements. We do not have any material source of liquidity or financing that
involves off-balance sheet arrangements, other than our contractual obligations under operating
leases.
Forward-looking statements. All statements included in this report, other than statements of
historical facts, addressing activities, events or developments that we expect or anticipate will
or may occur in the future, are forward-looking statements. Such forward-looking statements are
subject to risks and uncertainties including, among other things, adverse changes in the level of
real estate activity, technology changes, unanticipated title losses, adverse changes in
governmental regulations, actions of competitors, general economic conditions and other risks and
uncertainties discussed under Item 1A Risk Factors in our Annual Report on Form 10-K for the
year ended December 31, 2007.
- 15 -
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in our investment strategies, types of financial instruments
held or the risks associated with such instruments that would materially alter the market risk
disclosures made in our Annual Report on Form 10-K for the year ended December 31, 2007.
Item 4. Controls and Procedures
Our principal executive officers and principal financial officer, after evaluating the
effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of March 31, 2008, have concluded that, as of such date, our disclosure controls
and procedures are adequate and effective to ensure that material information relating to us and
our consolidated subsidiaries would be made known to them by others within those entities.
There have been no changes in our internal controls over financial reporting during the quarter
ended March 31, 2008 that have materially affected, or are reasonably likely to materially affect,
our internal controls over financial reporting. As a result, no corrective actions were required
or undertaken.
All internal control systems, no matter how well designed, have inherent limitations. Therefore,
even those systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Internal control over financial reporting is a
process that involves human diligence and compliance and is subject to lapses in judgment and
breakdowns resulting from human failures. Internal controls over financial reporting also can be
circumvented by collusion or improper management override. Because of such limitations, there is a
risk that material misstatements may not be prevented or detected on a timely basis by internal
controls over financial reporting. However, these inherent limitations are known features of the
financial reporting process. Therefore, it is possible to design into the process safeguards to
reduce, though not eliminate, this risk.
- 16 -
PART II OTHER INFORMATION
Item 1. Legal Proceedings
In January 2007, the California Insurance Commissioner filed a rate reduction order that would have
reduced title insurance rates in California by 26% commencing in 2009. However, we believe that
California law requires rates to be established competitively and not by administrative order. This
rate reduction order was rejected by the California Office of Administrative Law in February 2007.
In May 2007, Californias Insurance Commissioner submitted revised regulations that, in addition to
reducing rates effective in 2010, would have increased financial and operating data, market conduct
examinations and other regulatory requests by the California Department of Insurance (CDOI). In
October 2007, subsequent to several title insurance industry meetings with the CDOI, the states
Insurance Commissioner proposed to reduce the requirements of data and market conduct requests,
delay the effective date to 2011, and eliminate the interim rate reduction previously submitted to
the CDOI. These proposals are contingent upon the ongoing work of the title insurance industry
with the CDOI to identify alternative methods of providing the additional data and reforming the
existing rate structure. In April 2008, the Insurance Commissioner announced at the California
Land Title Association annual meeting that revised proposed regulations will be released in May
2008 to limit the amount spent by title insurance marketing representatives and to eliminate the
interim rate reduction and the maximum rate formula.
We cannot predict the outcome of proposed regulations. However, to the extent that rate decreases
are mandated in the future, the outcome could materially affect our consolidated financial
condition and results of operations.
We are also subject to other administrative actions and inquiries into our conduct of business in
certain of the states in which we operates. While we cannot predict the outcome of these matters,
we believe that we have adequately reserved for these matters and that the outcome will not
materially affect our consolidated financial condition or results of operations.
On or about February 1, 2008, an antitrust class action lawsuit was filed in the United States
District Court for the Eastern District of New York against Stewart Title Insurance Company, an
affiliated New York underwriter, Stewart Information Services Corporation (SISCO), several other
title insurance companies, and the Title Insurance Rate Service Association, Inc. (TIRSA). The
complaint alleges that the defendants violated Section 1 of the Sherman Act by collectively filing
proposed rates for title insurance in New York through TIRSA, a state-authorized and licensed rate
service organization. Several complaints were subsequently filed in the federal district courts for
the Eastern and Southern Districts of New York making similar allegations and, in certain
instances, alleging that the defendants violated the Real Estate Settlement Procedures Act of 1974,
as amended, and New York consumer protection law. Similar complaints have been filed in federal
district courts in Pennsylvania, New Jersey, and Ohio, alleging that defendants violated Section 1
of the Sherman Act by collectively filing proposed rates for title insurance through rate service
organizations authorized and licensed by those respective states. Complaints also have been filed
in federal district courts in Florida, Massachusetts, Arkansas, California, Washington, West
Virginia, and Texas, alleging collective action affecting rates in those and other states in
violation of Section 1 of the Sherman Act and various state consumer protection laws. The
complaints generally request treble damages in an unspecified amount, declaratory and injunctive
relief, and attorneys fees. At least fifty-seven such complaints have been filed to date, each of
which names SISCO and/or one or more of its affiliates as a
defendant. We intend to contest these complaints
vigorously.
Item 1A. Risk Factors
There have been no changes during the quarter ended March 31, 2008 to our risk factors as listed in
our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.
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Item 5. Other Information
We had a book value per share of $40.31 and $41.82 at March 31, 2008 and December 31, 2007,
respectively. At March 31, 2008, book value per share was based on approximately $730.4 million in
stockholders equity and 18,119,822 shares of Common and Class B Common Stock outstanding. At
December 31, 2007, book value per share was based on approximately $754.1 million in stockholders
equity and 18,031,110 shares of Common and Class B Common Stock outstanding.
Item 6. Exhibits
Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Index to
Exhibits immediately preceding the exhibits filed herewith and such listing is incorporated herein
by reference.
- 18 -
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, I have duly caused this
report to be signed on our behalf by the undersigned thereunto duly authorized.
May 8,
2008
Date
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Stewart Information Services Corporation
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Registrant |
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By: |
/s/ Max Crisp
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Max Crisp, Executive Vice President and |
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Chief Financial Officer, Secretary, Treasurer,
Principal Financial Officer and Director |
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INDEX TO EXHIBITS
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Exhibit |
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3.1
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Certificate of Incorporation of the Registrant, as
amended March 19, 2001 (incorporated by reference
in this report from Exhibit 3.1 of the Annual
Report on Form 10-K for the year ended December
31, 2000) |
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3.2
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By-Laws of the Registrant, as amended March 13,
2000 (incorporated by reference in this report
from Exhibit 3.2 of the Annual Report on Form 10-K
for the year ended December 31, 2000) |
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4.1
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Rights of Common and Class B Common Stockholders
(incorporated by reference to Exhibits 3.1 and 3.2
hereto) |
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31.1
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*
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-
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Certification of Co-Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 |
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31.2
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*
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-
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Certification of Co-Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 |
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31.3
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*
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-
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Certification of Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1
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*
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-
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Certification of Co-Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 |
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32.2
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*
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-
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Certification of Co-Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 |
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32.3
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*
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-
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Certification of Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 |
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99.1
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*
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Details of investments |