Index First American Profile Financial Highlights Letter to Stockholders First American's Strength in Numbers Title Information and Services Real Estate Information and Services Consumer Information and Services Management's Discussion and Analysis Selected Financial Data Common Stock Prices and Dividends Quarterly Financial Data Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Accountants Officers Board of Directors Primary Companies Stockholder Information Back Cover

title information and services


First American Title Insurance Company solidly advanced its objectives of technology implementation, productivity improvement, product innovation, geographic expansion, and market-share growth in 2001.

Positive Financial Results Increased home sales and a sharp rise in refinance activity contributed to record order counts and strong earnings. Business for the Title Company was strong as 2001 began and continued throughout the year, which ended with a surge of refinance activity in the fourth quarter. This activity led to record-breaking order counts, with more than 1.9 million orders opened and over 1.4 million orders closed by year end, and to our highest-ever efficiency ratios. Operating revenues grew stronger throughout the year—up 17 percent in each of the first two quarters, then gaining 33 percent in the third period and 44 percent in the fourth. For the full year, operating revenues were 28 percent greater than in the previous year, at $2.65 billion, and income before income taxes and minority interests soared 83 percent, to $170.7 million. Technology Implementation The Title Company continued implementation of its technology initiatives in 2001, gaining momentum with FASTSearch™, the FAST Transaction System, and FASTWeb.

FASTSearch, which automates the title searching process, is now operational in 100 key counties across the nation. Today, more than half of the company’s transactions flow through this system that performs title searches in six minutes, as opposed to the hours that it had previously taken to accomplish this task.

Our technology efforts were also forwarded as the FAST Transaction System, a fully integrated, browser-based system designed to automate and enable the centralization of title and escrow settlement services, was rolled out in 75 title offices in 2001. An additional 100 offices implemented this system during the first quarter of 2002, with roll out to all First American Title offices expected by year end.

FASTWeb, the Company’s online ordering, routing, and delivery system, which now has 98,000 registered users, processed more than 1.3 million property profiles during 2001.

The January 2002 acquisition of InfoStream, Inc. brought technology advantages, as well. This company provides production systems to independent title and escrow agencies, expanding the service offerings of SMS Settlement Services, Inc.

In early 2002, The First American Corporation acquired an interest in Irvine Technology Corporation, which had worked closely with First American to develop the FAST Transaction System. This team of computer-industry veterans will strengthen First American’s ability to develop technology that meets our clients’ needs and our own.

Productivity Improvement
After decades of growth through acquisitions, First American Title undertook an administrative consolidation effort in 2000, which was completed in 2001. By regionally consolidating the accounting, payroll, human resources, and other back-office functions across the nation, the company is realizing administrative efficiencies and cost savings.

Operational efficiencies are being accomplished through the establishment of centralized title production centers now operating in 10 states. Also streamlining procedures are the Company’s escrow processing improvement centers, known as EPIC, located in Arizona, California, Florida, Illinois, Indiana, Michigan, New Mexico, Ohio, Oregon, Texas, Utah, and Washington.

Unprecedented order counts coupled with technology streamlining led to record-breaking productivity efficiencies in 2001. Orders-toemployee counts, a traditional productivity measure, jumped to 14.87 in 2001 from 10.65 the prior year. The Company’s productivity ratio, measured by the amount of openings and closings performed per employee each month, rose to 25.63 in 2001 from its 19.11 level in 2000.

Continued Product Innovation
Lenders participating in last year’s vigorous refinancing business benefited from SUPER Eagle, a new service of First American Title Insurance Company developed specifically for this segment of the lender market. The service streamlines the refinance process by abbreviating many of the closing components, centralizing and automating the processing methods, and accelerating signing and closing procedures. Attractive also because of its simplified pricing schedule, this system processed more than 43,000 transactions in 2001.

First American’s new FACT product was also introduced in 2001, providing home equity lenders with electronic delivery of streamlined title reports, flood-zone determinations, automated valuations, and title insurance services from a single source.

Launched in 2000, the EAGLE 9™ UCC Insurance Division saw continuous growth in its first 18 months of operation. This division’s product offers unprecedented coverage that insures the proper creation, attachment, perfection, priority, and effectiveness of a lender’s security interest covered under the Uniform Commercial Code. This new revenue stream, independent of real estate cycles, showed significant growth in all market segments. Its order count in January 2002 was more than twice that of the year-earlier period. As a result of the increase in order count, gross revenue for this division was 183 percent greater in January 2002 than in the same month of 2001.

Vendor Management Services, a company formed in 2000 to provide the technology and service needed to streamline multiple-vendor relationships for mortgage lenders, continued its work with leading lenders in 2001, as well.