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First Advantage CorporationIssues Operating Results For the Fourth Quarter and Full Year 2003

February 11, 2004

ST. PETERSBURG, Fla., /PRNewswire-FirstCall/ -- First Advantage Corporation (Nasdaq: FADV ) announced operating results for the fourth quarter and year ended Dec. 31, 2003. The company was formed by the June 2003 merger of The First American Corporation (NYSE: FAF ) screening information operations with US SEARCH.com Inc. Therefore, First Advantage operating results for the year ended Dec. 31, 2003, include results for the First American Screening Technologies division from Jan. 1, 2003, and the results for US SEARCH.com from June 1, 2003.

The company reported a net loss for the quarter ended Dec. 31, 2003, of $1.0 million, or 5 cents per diluted share. For the year ended Dec. 31, 2003, the company reported net income of $2.8 million, or 14 cents per diluted share. The results for the fourth quarter and the full year include an after-tax charge of $1.1 million (5 cents per diluted share) for the write-down of capitalized software and severance costs in connection with the continued integration of operations. The First American Screening Technologies division's net loss was $547 thousand for the quarter ended Dec. 31, 2002, and net income was $2.7 million for the year ended Dec. 31, 2002.

Revenue for the company was $49.9 million and $166.5 million for the quarter and year ended Dec. 31, 2003, respectively. The First American Screening Technologies division's revenue was $26.6 million for the quarter and $100.9 million for the year ended Dec. 31, 2002.

Earnings before interest, taxes, depreciation and amortization was $796,000 and $13.4 million for the quarter and the year ended Dec. 31, 2003. The fourth quarter has historically been the company's slowest. Volumes decreased as a result of reductions in hiring and resident screening activities due to the holiday season.

John Long, chief executive officer and president of First Advantage Corporation, said: "In our first seven months, First Advantage made significant progress toward our long-term growth goals by successfully executing on our acquisition strategy. Since August, we have acquired five employment screening companies, four occupational health services companies and two motor vehicle record companies. These companies will add to top line revenue growth in 2004 and beyond. Margin improvement will take longer as the cost of integration largely offsets the interim benefits of the acquisitions. Consequently, we expect little contribution to earnings from these acquisitions during the first quarter of 2004, with steady improvement throughout the year. The full benefit of these acquisitions is anticipated in 2005.

"During the first quarter of 2004, we will continue with acquisitions in our employment screening, occupational health services and resident screening businesses, as evidenced by our activities to date. Looking beyond first quarter, we will primarily target companies that offer First Advantage an opportunity to expand our service lines or reach new geographic markets. From an operational standpoint, these acquisitions will be less likely to be merged into existing units but rather form new business units, creating additional cross-sell opportunities to our existing and prospective customers. 2004 will also be a year for organic growth as we act on the cross-sell potential between our business units and develop products and sales initiatives to support new markets."

Fourth quarter 2003 acquisitions included Greystone Health Sciences, Inc.; Agency Records, Inc.; MedTech Diagnostics, Inc.; and Credential Check& Personnel Services, Inc. To date in 2004, First Advantage has acquired Quantitative Risk Solutions LLC; Proudfoot Reports Incorporated; MVRS, Inc.; and Background Information Systems, Inc.

The company estimates that revenue will exceed $250 million in 2004.
Three Months Ended
December 31,
Year Ended
December 31,

2003 2002 2003 2002

Service revenues

$41,027,000 $19,964,000 $134,910,000 $73,040,000

Reimbursed government fee revenue

8,862,000 6,685,000 31,585,000 27,885,000

Total revenue

49,889,000 26,649,000 166,495,000 100,925,000

Cost of service revenues

13,500,000 5,721,000 38,154,000 17,534,000

Government fees paid

8,862,000 6,685,000 31,585,000 27,885,000

Total cost ofsales

22,362,000 12,406,000 69,739,000 45,419,000

Gross margin

27,527,000 14,243,000 96,756,000 55,506,000

Salaries and benefits

15,080,000 9,595,00 051,178,000 31,863,000

Other operating expenses

9,923,000 3,991,000 30,449,000 15,046,000

Depreciation and amortization

2,462,000 1,452,000 8,428,000 4,096,000

Impairment loss

1,739,000 -- 1,739,000 --

Income (loss)from operations

(1,677,000) (795,000) 4,962,000 4,501,000

Interest (expense) income: Interest expense

(87,000) (94,000) (154,000) (229,000)

Interest income

11,000 12,000 41,000 59,000

Total interest expense, net

(76,000) (82,000) (113,000) (170,000)

Income (loss) before income taxes

(1,753,000) (877,000) 4,849,000 4,331,000

Provision (benefit) for income taxes

(746,000) (330,000) 2,046,000 1,629,000

Net income(loss)

$(1,007,000) $(547,000) $2,803,000 $2,702,000


Three Months Ended December 31, Years Ended
December 31,

2003 2002 2003 2002

Per share amounts: Basic earnings (loss) per share

$(0.05) N/A $0.14 N/A

Basic weighted-average shares outstanding

20,828,429 20,260,854

Diluted earnings (loss) per share

$(0.05) N/A

weighted-average shares outstanding

21,020,537 20,397,587

EBITDA calculation:Net income (loss)

$(1,007,000) $(547,000) $2,803,000 $2,702,000

Provision (benefit) for income taxes

(746,000) (330,000) 2,046,000 1,629,000

Interest expense

87,000 94,000 154,000 229,000

Depreciation and amortization

2,462,000 1,452,000 8,428,000 4,096,000

Earnings before interest, taxes, depreciation and amortization (EBITDA)*

$796,000 $669,000 $13,431,000 $8,656,000

*EBITDA is not a measure of financial performance under generally accepted accounting principles.EBITDA is used by certain investors to analyze and compare companies.

Source: First Advantage Corporation



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