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

notes to consolidated financial statements

 NOTE 10

Earnings Per Share:

    The Company’s potential dilutive shares are stock options and convertible debt. Stock options are reflected in diluted earnings per share by application of the treasury-stock method and convertible debt is reflected in diluted earnings per share by application of the if-converted method. A reconciliation of net income and weighted-average shares outstanding is as follows:

(in thousands, except per share amounts)		2001				2000		1999
Numerator:
Net income — numerator for
basic net income per share	$	167,268	$	82,223	$	33,003
Effect of dilutive securities:
Convertible debt — interest
expense (net of tax)		5,247		–		–
Numerator for diluted
net income per share	$	172,515	$	82,223	$	33,003
Denominator:
Weighted-average shares —
denominator for basic
net income per share		66,568		63,680		64,669
Effect of dilutive securities:
Employee stock options		3,073		2,370		1,682
Convertible debt		6,193		–		–
Denominator for diluted
net income per share		75,834		66,050		66,351
Net income per share:
Basic	$	2.51	$	1.29	$	.51
Diluted	$	2.27	$	1.24	$	.50

    For the three years ended December 31, 2001, 2.8 million, 4.5 million and 3.7 million options, respectively, were excluded from the weighted-average diluted common shares outstanding due to their antidilutive effect.