LandAmerica Announces Third Quarter Results
October 25, 2002
RICHMOND, Va., /PRNewswire-FirstCall/ -- LandAmerica Financial Group, Inc. (NYSE: LFG - News), a provider of real estate transaction services, announced record setting earnings for the third quarter ended September 30, 2002 of $39.9 million, or $2.15 per diluted share, compared to $18.8 million, or $1.01 per diluted share in the comparable quarter of 2001.
The results for the third quarter of 2002, reflecting the new accounting rules in effect for goodwill, included $79,000 of amortization of acquisition- related intangibles, compared to $2.5 million in the third quarter of 2001. The third quarter of 2002 included after-tax losses from the sale of investments of $11,000, which had no effect on earnings per share, while the third quarter of 2001 included after-tax gains from the sale of investments of $346,000, or $.02 per diluted share.
As previously disclosed, the company reached a final settlement on October 8, 2002 with the State of California in the defendant class action lawsuit filed in the Sacramento County Superior Court by the California Attorney General against the company and the company's principal competitors in California. Pursuant to the settlement, the company will pay $1.6 million to the California Attorney General and a total of $8.0 million in the form of (i) cash payments to former escrow customers that meet certain eligibility requirements and file timely claims and (ii) discounts on future escrow and title insurance services to eligible customers as agreed to in the settlement.
The company recorded a reserve for the $1.6 million payment in prior periods as the case developed. A charge of $660,000 was recorded in the third quarter of 2002 for estimated cash refund payments to former customers. Discounts on future escrow and title services will be treated as reductions of revenue during the period in which they occur.
Operating revenues, excluding investment income, for the third quarter of 2002, increased 17% to $615.4 million, compared to $528.0 million in the comparable quarter of 2001.
During the third quarter of 2002, new open order counts totaled 352,900, or over 41% ahead of the 250,400 new orders opened in the same quarter of 2001.
For the first nine months of 2002, net income was $83.0 million, compared to $53.9 million for the first nine months of 2001. The nine months results for 2002 include after-tax charges of $11.3 million related to termination and restructuring charges, during the first and second quarters, associated with the residential appraisal operations. The results for the first nine months of 2002, reflecting the new accounting rules in effect for goodwill, included $324,000 of amortization of acquisition-related intangibles, compared to $7.3 million for the first nine months of 2001. The first nine months of 2002 included after-tax losses from the sale of investments of $25,000, which had no effect on earnings per share, compared to after-tax losses from the sale of investments of $151,000, or $.01 per diluted share for the first nine months of 2001.
Commenting on the company's performance, chairman and chief executive officer Charles H. Foster, Jr. noted, "We are very pleased with our third quarter results. Quarterly operating revenue was a record for the company. While yet another wave of refinancing transactions led us to enjoy a 17% increase in revenue, our attention to managing the cost side of the business led to net income for the quarter just completed more than doubling compared to the prior year.
"During the past three months, mortgage rates have been at levels not seen in the past 40 years. With the impact this has had on residential refinancing transactions and a continued strong home purchase market, we opened a record setting 352,900 orders during the past quarter, surpassing the previous record, which was set in the fourth quarter of last year by almost 15%. This strong open order inventory bodes well for the fourth quarter and we expect a strong finish to this record setting year.
"Additionally during the quarter, we continued to enhance our product offering with the acquisition of National Assessment Corporation, a provider of due diligence services for commercial real estate transactions."
Source: LandAmerica Financial Group, Inc.