Annual Reports

 
Quarterly Reports

  • 10-Q (Oct 29, 2009)
  • 10-Q (Jul 30, 2009)
  • 10-Q (Apr 30, 2009)
  • 10-Q (Oct 30, 2008)
  • 10-Q (Jul 31, 2008)
  • 10-Q (May 1, 2008)

 
8-K

 
Other

First Advantage 10-Q 2005
Form 10-Q
Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2005

 

OR

 

¨ 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: 001-31666

 

FIRST ADVANTAGE CORPORATION

(Exact name of registrant as specified in its charter)

 

Incorporated in Delaware   61-1437565
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification Number)

 

One Progress Plaza, Suite 2400

St. Petersburg, Florida 33701

(Address of principal executive offices, including zip code)

 

(727) 214-3411

(Registrant’s telephone number, including area code)

 

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 x  No ¨

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨  No x

 

There were 9,178,956 shares of outstanding Class A Common Stock of the registrant as of November 8, 2005.

 

There were 46,076,066 shares of outstanding Class B Common Stock of the registrant as of November 8, 2005.

 



Table of Contents

INDEX

 

Part I. FINANCIAL INFORMATION

    

Item 1.

   Financial Statements    1
     Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004 (unaudited)    3
     Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2005 and September 30, 2004 (unaudited)    4
     Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2005 (unaudited)    5
     Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and September 30, 2004 (unaudited)    6
     Notes to Consolidated Financial Statements (unaudited)    7

Item 2.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations    19

Item 3.

   Quantitative and Qualitative Disclosures About Market Risk    34

Item 4.

   Controls and Procedures    35

Part II. OTHER INFORMATION

    

Item 1.

   Legal Proceedings    35

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds    36

Item 3.

   Defaults Upon Senior Securities    36

Item 4.

   Submission of Matters to a Vote of Security Holders    36

Item 5.

   Other Information    37

Item 6.

   Exhibits    37


Table of Contents

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

-1-


Table of Contents

First Advantage Corporation

Consolidated Financial Statements

For the Nine Months Ended

September 30, 2005 and 2004

 

-2-


Table of Contents

First Advantage Corporation

 

Consolidated Balance Sheets (Unaudited)

 

     September 30,
2005


   December 31,
2004


Assets

             

Current assets:

             

Cash and cash equivalents

   $ 17,438,000    $ 9,996,000

Accounts receivable (less allowance for doubtful accounts of $4,203,000 and $3,444,000 in 2005 and 2004, respectively)

     97,462,000      67,981,000

Notes receivable

     —        4,000,000

Due from affiliates

     —        553,000

Prepaid expenses and other current assets

     6,770,000      3,217,000
    

  

Total current assets

     121,670,000      85,747,000

Property and equipment, net

     49,947,000      44,966,000

Goodwill

     437,442,000      380,596,000

Intangible assets, net

     54,187,000      43,596,000

Database development costs, net

     10,039,000      9,688,000

Investment in equity investee

     36,086,000      34,854,000

Deferred income tax asset

     17,369,000      —  

Other assets

     4,808,000      3,657,000
    

  

Total assets

   $ 731,548,000    $ 603,104,000
    

  

Liabilities and Stockholders’ Equity

             

Current liabilities:

             

Accounts payable

   $ 10,675,000    $ 14,726,000

Accrued compensation

     24,232,000      19,918,000

Accrued liabilities

     28,578,000      19,482,000

Deferred income

     6,125,000      4,558,000

Due to affiliates

     3,835,000      —  

Income taxes payable

     473,000      4,381,000

Current portion of long-term debt and capital leases

     31,685,000      24,326,000
    

  

Total current liabilities

     105,603,000      87,391,000

Long-term debt and capital leases, net of current portion

     95,208,000      86,480,000

Deferred income tax liability

     —        8,454,000

Other liabilities

     2,523,000      861,000
    

  

Total liabilities

     203,334,000      183,186,000
    

  

Commitments and contingencies

             

Stockholders’ equity:

             

Preferred stock, $.001 par value; 1,000,000 shares authorized, no shares issued or outstanding

     —        —  

Class A common stock, $.001 par value; 125,000,000 and 75,000,000 shares authorized; 8,223,667 and 7,226,801 shares issued and outstanding as of September 30, 2005 and December 31, 2004, respectively

     8,000      7,000

Class B common stock, $.001 par value; 75,000,000 shares authorized; 46,076,066 and 42,856,553 shares issued and outstanding as of September 30, 2005 and December 31, 2004, respectively

     46,000      43,000

Additional paid-in capital

     386,043,000      298,243,000

Retained earnings

     141,730,000      121,367,000

Accumulated other comprehensive income

     387,000      258,000
    

  

Total stockholders’ equity

     528,214,000      419,918,000
    

  

Total liabilities and stockholders’ equity

   $ 731,548,000    $ 603,104,000
    

  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

-3-


Table of Contents

First Advantage Corporation

 

Consolidated Statements of Income and Comprehensive Income (Unaudited)

 

     For the Three Months Ended
September 30,


    For the Nine Months Ended
September 30,


 
     2005

    2004

    2005

    2004

 

Service revenue

   $ 157,746,000     $ 122,865,000     $ 437,022,000     $ 356,526,000  

Reimbursed government fee revenue

     12,200,000       11,208,000       36,669,000       33,569,000  
    


 


 


 


Total revenue

     169,946,000       134,073,000       473,691,000       390,095,000  
    


 


 


 


Cost of service revenue

     49,881,000       37,219,000       133,026,000       112,901,000  

Government fees paid

     12,200,000       11,208,000       36,669,000       33,569,000  
    


 


 


 


Total cost of service

     62,081,000       48,427,000       169,695,000       146,470,000  
    


 


 


 


Gross margin

     107,865,000       85,646,000       303,996,000       243,625,000  
    


 


 


 


Salaries and benefits

     46,646,000       37,018,000       130,308,000       105,876,000  

Facilities and telecommunications

     6,205,000       5,333,000       18,974,000       15,673,000  

Other operating expenses

     20,193,000       15,115,000       57,845,000       48,919,000  

Depreciation and amortization

     6,685,000       5,878,000       19,085,000       17,134,000  
    


 


 


 


Total operating expenses

     79,729,000       63,344,000       226,212,000       187,602,000  
    


 


 


 


Income from operations

     28,136,000       22,302,000       77,784,000       56,023,000  
    


 


 


 


Other (expense) income:

                                

Interest expense

     (1,580,000 )     (714,000 )     (4,115,000 )     (1,665,000 )

Interest income

     22,000       150,000       48,000       567,000  
    


 


 


 


Total other (expense), net

     (1,558,000 )     (564,000 )     (4,067,000 )     (1,098,000 )

Equity in earnings of investee

     280,000       349,000       1,232,000       986,000  
    


 


 


 


Income before income taxes

     26,858,000       22,087,000       74,949,000       55,911,000  

Provision for income taxes

     10,835,000       9,125,000       32,251,000       23,067,000  
    


 


 


 


Net income

     16,023,000       12,962,000       42,698,000       32,844,000  
    


 


 


 


Other comprehensive income, net of tax:

                                

Foreign currency translation adjustments

     189,000       130,000       129,000       141,000  
    


 


 


 


Comprehensive income

   $ 16,212,000     $ 13,092,000     $ 42,827,000     $ 32,985,000  
    


 


 


 


Per share amounts:

                                

Basic

   $ 0.30     $ 0.26     $ 0.82     $ 0.67  
    


 


 


 


Diluted

   $ 0.30     $ 0.26     $ 0.81     $ 0.66  
    


 


 


 


Weighted-average common shares outstanding:

                                

Basic

     53,200,609       49,683,345       52,132,551       49,318,123  

Diluted

     53,964,766       50,128,761       52,616,858       49,646,664  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

-4-


Table of Contents

First Advantage Corporation

 

Consolidated Statement of Changes in Stockholders’ Equity

For the Nine Months Ended September 30, 2005 (Unaudited)

 

     Common
Stock Shares


   Common
Stock Amount


   Additional
Paid-in Capital


   Accumulated
Other
Comprehensive
Income


   Retained
Earnings


    Total

 

Balance at December 31, 2004, as previously reported

   23,254,087    $ 23,000    $ 271,995,000    $ 258,000    $ 17,895,000     $ 290,171,000  

CIG acquisition

   26,829,267      27,000      26,248,000             103,472,000       129,747,000  
    
  

  

  

  


 


December 31, 2004, as restated

   50,083,354    $ 50,000    $ 298,243,000    $ 258,000    $ 121,367,000     $ 419,918,000  

Distribution to First American from CIG prior to the merger

   —      $ —      $ —      $ —      $ (22,335,000 )   $ (22,335,000 )

Net income

   —        —        —        —        42,698,000       42,698,000  

Class A Shares issued in connection with acquisitions

   742,336      1,000      16,432,000      —        —         16,433,000  

Class A Shares issued in connection with option, benefit and savings plans

   254,530      —        4,629,000      —        —         4,629,000  

Class B Shares issued in connection with acquisitions

   2,243,903      2,000      46,553,000      —        —         46,555,000  

Class B Shares issued in connection with conversion of debt

   975,610      1,000      19,999,000      —        —         20,000,000  

Tax benefit related to stock options

   —        —        187,000      —        —         187,000  

Foreign currency translation

   —        —        —        129,000      —         129,000  
    
  

  

  

  


 


Balance at September 30, 2005

   54,299,733    $ 54,000    $ 386,043,000    $ 387,000    $ 141,730,000     $ 528,214,000  
    
  

  

  

  


 


 

The accompanying notes are an integral part of these consolidated financial statements.

 

-5-


Table of Contents

First Advantage Corporation

 

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2005 and 2004 (Unaudited)

 

     For the Nine Months Ended
September 30,


 
     2005

    2004

 

Cash flows from operating activities:

                

Net income

   $ 42,698,000     $ 32,844,000  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization

     19,085,000       17,134,000  

Deferred income tax

     (25,823,000 )     (5,646,000 )

Equity in earnings of investee

     (1,232,000 )     (986,000 )

Change in operating assets and liabilities, net of acquisitions:

                

Accounts receivable

     (20,675,000 )     (21,230,000 )

Prepaid expenses and other current assets

     (3,363,000 )     248,000  

Goodwill, intangibles and other assets

     28,028,000       1,958,000  

Accounts payable

     (5,933,000 )     174,000  

Accrued liabilities

     2,643,000       2,100,000  

Deferred income

     (845,000 )     2,000  

Due to affiliates

     4,207,000       49,000  

Income taxes

     (3,762,000 )     4,845,000  

Accrued compensation and other liabilities

     6,055,000       (2,163,000 )
    


 


Net cash provided by operating activities

     41,083,000       29,329,000  
    


 


Cash flows from investing activities:

                

Database development costs

     (2,552,000 )     (2,226,000 )

Purchases of property and equipment

     (10,749,000 )     (5,803,000 )

Notes receivable

     4,000,000       1,000,000  

Cash paid for acquisitions

     (31,041,000 )     (49,970,000 )

Cash balance of companies acquired

     6,486,000       3,212,000  
    


 


Net cash used in investing activities

     (33,856,000 )     (53,787,000 )
    


 


Cash flows from financing activities:

                

Proceeds from long-term debt

     114,000,000       57,000,000  

Repayment of long-term debt and capital leases

     (95,179,000 )     (18,308,000 )

Proceeds from class A shares issued in connection with stock option plan and employee stock purchase plan

     3,727,000       3,509,000  

Distribution to First American from CIG prior to the merger

     (22,335,000 )     (19,152,000 )
    


 


Net cash provided by financing activities

     213,000       23,049,000  
    


 


Effect of exchange rates on cash

     2,000       —    

Increase (decrease) in cash and cash equivalents

     7,442,000       (1,409,000 )

Cash and cash equivalents at beginning of period

     9,996,000       8,623,000  
    


 


Cash and cash equivalents at end of period

   $ 17,438,000     $ 7,214,000  
    


 


Supplemental disclosures of cash flow information:

                

Cash paid for interest

   $ 4,221,000     $ 1,244,000  
    


 


Cash paid for income taxes

   $ 11,210,000     $ 176,000  
    


 


Non-cash investing and financing activities:

                

Class A shares issued in connection with acquisitions

   $ 16,433,000     $ 19,180,000  
    


 


Class B shares issued in connection with acquisitions

   $ 46,555,000     $ —    
    


 


Notes issued in connection with acquisitions

   $ 16,905,000     $ 30,819,000  
    


 


Class A shares issued for benefit plan

   $ 902,000     $ —    
    


 


Class B shares issued for converted debt

   $ 20,000,000     $ —    
    


 


Class A shares issued in connection with convertible notes

     —       $ 8,961,000  
    


 


 

The accompanying notes are an integral part of these consolidated financial statements.

 

-6-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

1. Organization and Nature of Business

 

The Company operates in six primary business segments: Lender Services, Data Services, Dealer Services, Employer Services, Multifamily Services, and Investigative and Litigation Support Services. The business lines in the Lender Services segment offers lenders across the country credit reporting solutions for mortgage and home equity needs. The Data Services segment includes business lines that provide transportation credit reporting, motor vehicle record reporting, fleet management, supply chain theft and damage mitigation consulting, consumer location, criminal records reselling, subprime credit reporting, and consumer credit reporting services. The Dealer Services business segment serves the automotive dealer marketplace by delivering consolidated consumer credit reports, credit automation software and lead development services. The Employer Services segment is comprised of the business lines that deliver global employment background verifications, occupational health services, tax credits and incentives programs and other business tax consulting services that are frequently sold to support organization’s human resource functions. The Multifamily Services segment’s business lines include resident screening, property management software and renters insurance services—providing solutions to property owners and managers across the nation. The Investigative and Litigation Support Services segment consists of the business lines that support businesses, insurers and law firms nationwide with their insurance fraud investigations, surveillance, computer forensics, electronic discovery, data recovery, due diligence reporting and corporate and litigation investigative needs.

 

The First American Corporation and affiliates (“First American”) own approximately 85% of the shares of capital stock of the Company as of September 30, 2005. The Class B common stock owned by First American is entitled to ten votes per share on all matters presented to the stockholders for vote.

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The consolidated financial information included in this report has been prepared in accordance with the instructions to Form 10-Q and does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments are of a normal recurring nature and are considered necessary for a fair statement of the results for the interim period. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission and the Proxy Statement filed June 30, 2005.

 

The accompanying financial statements have been prepared to give effect to the acquisition of the Consumer Information Group (“CIG”) Business by First Advantage. The acquisition of the CIG Business by First Advantage is a transaction between businesses under the common control of First American. In acquisition of businesses under common control, the acquiring company

 

-7-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

records acquired assets and liabilities at historical costs. The historical income statements of First Advantage for the three and nine months ended September 30, 2005 and 2004 have been restated to include operations of the CIG business at historical cost assuming the acquisition was completed on January 1, 2004. The balance sheet at December 31, 2004 has been restated to reflect the acquisition.

 

On September 14, 2005 in connection with the consummation of the acquisition of the CIG Business and related businesses from First American, First Advantage repaid in full the principal amount of $20 million under a promissory note originally issued to First American, by issuing 975,610 shares of First Advantage’s Class B common stock.

 

In conjunction with the CIG acquisition, First Advantage will be obligated to issue additional shares of Class B common stock to First American in the future if DealerTrack (a 21% owned equity investee) consummates an initial public offering of its stock on or prior to September 14, 2007 and the value of the DealerTrack Interest exceeds $50 million. If DealerTrack completes an IPO within 180 days of September 14, 2005, the number of shares to be issued will be equal to the quotient of (x) 50% of the amount by which the value of the DealerTrack Interest exceeds $50 million (based on the average closing price per share of DealerTrack’s stock over the 60 business day period beginning on the fifth business day after the completion of its initial public offering), divided by (y) $20.50. If the DealerTrack IPO occurs after the 180-day period following September 14, 2005 (but prior to September 14, 2007), the number of additional Class B common shares issuable to First American will be equal to the quotient of (x) 50% of the amount by which the DealerTrack Interest exceeds $50 million (based on the average closing price per share of DealerTrack’s stock over the 60 business day period beginning on the fifth business day after its initial public offering), divided by (y) the average closing price per share of First Advantage’s Class A common stock during the 30 trading day period ending on the third trading day prior to the date of DealerTrack’s IPO, except that the minimum price per share will be $20.50.

 

First Advantage completed three additional acquisitions during the third quarter of 2005. The Company’s operating results for the three and nine months ended September 30, 2005 and 2004 include results for the acquired entities, other than CIG, from their respective dates of acquisition.

 

Operating results for the three and nine months ended September 30, 2005 and 2004 are not necessarily indicative of the results that may be expected for the entire fiscal year.

 

The results of operations for the nine months ended September 30, 2005, include $3.2 million of nondeductible merger costs that First Advantage incurred in connection with its pending acquisition of the CIG Business from First American; $2.0 million of costs incurred in connection with the relocation of the company’s corporate headquarters and other office consolidations; and $0.6 million of costs related to the launch of the corporate branding initiative that was announced in June 2005. These costs are included in the Company’s Corporate segment.

 

Accounts Receivable

 

Accounts receivable are due from companies in a broad range of industries located throughout the United States. Credit is extended based on an evaluation of the customer’s financial condition, and generally, collateral is not required.

 

The allowance for all probable uncollectible receivables is based on a combination of historical data, cash payment trends, specific customer issues, write-off trends, general economic conditions and other factors. These factors are continuously monitored by management to arrive at the estimate for the amount of accounts receivable that may be ultimately uncollectible. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, the Company records a specific allowance for doubtful accounts against amounts due, to reduce the net recognized receivable to the amount it reasonably believes will be collected. Management believes that the allowance at September 30, 2005 and December 31, 2004 is reasonably stated.

 

-8-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

Comprehensive Income

 

Statement of Financial Accounting Standards (“SFAS”) No. 130, “Reporting Comprehensive Income”, governs the financial statement presentation of changes in stockholders’ equity resulting from non-owner sources. Comprehensive income includes all changes in equity except those resulting from investments by owners and distribution to owners.

 

Impairment of Intangible and Long-Lived Assets

 

First Advantage carries intangible and long-lived assets at cost less accumulated amortization. Accounting standards require that assets be written down if they become impaired. Intangible and long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset is not recoverable. At such time that an impairment in value of an intangible or long-lived asset is identified, the impairment will be measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. Fair value is determined by employing an expected present value technique, which utilizes multiple cash flow scenarios that reflect the range of possible outcomes and an appropriate discount rate.

 

Stock Based Compensation Plan

 

The Company adopted SFAS No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure,” as of January 1, 2003 with respect to the disclosure requirements. The Company has elected to continue accounting for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. If the Company had elected or was required to apply the fair value recognition provisions of SFAS No. 123, “Accounting for Stock Based Compensation,” to stock-based employee compensation, net income and net income per share would have been reduced to the pro forma amounts indicated in the following table.

 

     Three Months Ended
September 30,


   Nine Months Ended
September 30,


     2005

   2004

   2005

   2004

Net income, as reported

   $ 16,023,000    $ 12,962,000    $ 42,698,000    $ 32,844,000

Less: stock based compensation expense, net of tax

     1,008,000      820,000      3,146,000      2,502,000
    

  

  

  

Pro forma net income

   $ 15,015,000    $ 12,142,000    $ 39,552,000    $ 30,342,000
    

  

  

  

Earnings per share:

                           

Basic, as reported

   $ 0.30    $ 0.26    $ 0.82    $ 0.67

Basic, pro forma

   $ 0.28    $ 0.24    $ 0.76    $ 0.62

Diluted, as reported

   $ 0.30    $ 0.26    $ 0.81    $ 0.66

Diluted, pro forma

   $ 0.28    $ 0.24    $ 0.75    $ 0.61

 

In December 2004, the FASB issued SFAS No. 123R (Revised 2004), “Share-Based Payment.” SFAS No. 123R is a revision of FASB Statement 123 “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25 “Accounting for Stock Issued to Employees” and its related implementation guidance. The Statement focuses primarily on

 

-9-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). The cost will be recognized over the period during which an employee is required to provide services in exchange for the award. In April 2005, the Securities and Exchange Commission approved a new rule that amended the effective date of SFAS 123R, whereby the Company will now be required to adopt this standard no later than January 1, 2006. Based on options outstanding at September 30, 2005, the Company estimates the effects of FAS 123R will reduce diluted earnings per share by $0.09 in 2006.

 

Revenue Recognition

 

Revenue from the sale of reports is recognized at the time of delivery, as the Company has no significant ongoing obligation after delivery. Revenue from investigative services is recognized as services are performed. In accordance with generally accepted accounting principles, the Company includes reimbursed government fees in revenue and in cost of service. Membership fees, billed monthly to member’s accounts, are recognized in the month the fee is earned. A portion of the membership revenue received is paid in the form of a commission to clients and is reflected in other operating expenses. Revenue earned from providing services to third party issuers of membership based consumer products is recognized at the time the service is provided, generally on a monthly basis. Software maintenance revenues are recognized ratably over the term of the maintenance period. Custom programming and professional consulting service revenue is recognized using the percentage-of-completion method pursuant to Accounting Research Bulletin (ARB) No. 45 “Long-Term Construction-Type Contracts.” To the extent that interim amounts billed to clients exceed revenue earned, deferred income is recorded. Other revenue is recognized upon completion of the contractual obligation, which is typically evidenced by delivery of the product or performance of the service.

 

3. Acquisitions

 

During the first quarter of 2005, the Company completed two acquisitions and made a scheduled payment amounting to $233,000 of Class A shares related to a prior year acquisition. During the second quarter of 2005, the Company acquired four companies. The Company acquired three companies in the third quarter of 2005. These acquisitions have been included in the Company’s Lender Services, Dealer Services, Employer Services, Multifamily Services, and Investigative and Litigation Support Services segments. The preliminary allocation of the purchase price is based upon estimates of the assets and liabilities acquired in accordance with SFAS No. 141, “Business Combinations.” The allocations may be revised in 2005. The acquisition of these companies is based on management’s consideration of past and expected future performance as well as the potential strategic fit with the long-term goals of the Company. The expected long-term growth, market position and expected synergies to be generated by inclusion of these

 

-10-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

companies are the primary factors which gave rise to an acquisition price which resulted in the recognition of goodwill.

 

The aggregate purchase price of acquisitions completed during 2005 is as follows:

 

Cash

   $ 30,960,000

Notes

     16,905,000

Stock (729,557 Class A shares)

     16,200,000

Stock (2,243,903 Class B shares)

     46,555,000
    

Purchase price

   $ 110,620,000
    

 

The preliminary allocation of the aggregate purchase price of these acquisitions is as follows:

 

Goodwill

   $ 87,168,000

Identifiable intangible assets

     15,457,000

Net assets acquired

     7,995,000
    

     $ 110,620,000
    

 

The changes in the carrying amount of goodwill, by operating segment, are as follows for the nine months ended September 30, 2005:

 

    

Balance at

December 31, 2004


   Acquisitions

   Adjustments to net
assets acquired


  

Recognition of pre-

acquisition tax

loss carryforwards


    Balance at
September 30, 2005


Lender Services

   $ 27,710,000    $ 12,210,000    $ —      $ —       $ 39,920,000

Data Services

     116,013,000      —        211,000      (16,911,000 )     99,313,000

Dealer Services

     34,727,000      24,043,000      —        —         58,770,000

Employer Services

     123,834,000      43,553,000      355,000      (12,514,000 )     155,228,000

Multifamily Services

     44,740,000      4,531,000      2,371,000      (3,909,000 )     47,733,000

Investigative and Litigation Support Services

     33,572,000      2,831,000      75,000      —         36,478,000
                                    —  
    

  

  

  


 

Consolidated

   $ 380,596,000    $ 87,168,000    $ 3,012,000    $ (33,334,000 )   $ 437,442,000
    

  

  

  


 

 

The adjustment to net assets acquired represents changes in the fair value of net assets acquired in connection with acquisitions consummated within the past twelve months.

 

-11-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

Unaudited pro forma results of operations assuming all acquisitions were consummated on January 1, 2004 are as follows:

 

     For the Three Months Ended
September 30,


   For the Nine Months Ended
September 30,


     2005

   2004

   2005

   2004

Total revenue

   $ 172,301,000    $ 155,425,000    $ 502,145,000    $ 466,331,000
    

  

  

  

Net income

   $ 15,202,000    $ 12,411,000    $ 41,292,000    $ 31,299,000
    

  

  

  

Earnings per share:

                           

Basic

   $ 0.28    $ 0.23    $ 0.78    $ 0.59

Diluted

   $ 0.28    $ 0.23    $ 0.77    $ 0.59

Weighted-average common shares outstanding:

                           

Basic

     53,426,913      53,052,432      53,235,521      52,931,196

Diluted

     54,191,069      53,126,248      53,719,828      53,092,063

 

4. Goodwill and Intangible Assets

 

In accordance with SFAS No.142, “Goodwill and Other Intangible Assets,” the Company will complete the transitional goodwill impairment test for all reporting units. The annual test for impairment will be performed in the fourth quarter of 2005 (using the September 30 valuation date). There have been no impairments of goodwill during the nine months ending September 30, 2005.

 

The Company has approximately $54.2 million of intangible assets at September 30, 2005, with definite lives ranging from 2 to 20 years.

 

Goodwill and other intangible assets for the years ended September 30, 2005 and December 31, 2004 are as follows:

 

     September 30, 2005

    December 31, 2004

 

Goodwill

   $ 437,442,000     $ 380,596,000  
    


 


Intangible assets:

                

Customer lists

   $ 56,615,000     $ 44,841,000  

Noncompete agreements

     5,295,000       3,356,000  

Other

     2,113,000       913,000  
    


 


       64,023,000       49,110,000  

Less accumulated amortization

     (9,836,000 )     (5,514,000 )
    


 


Intangible assets, net

   $ 54,187,000     $ 43,596,000  
    


 


 

-12-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

Amortization of intangible assets totaled $4,879,000 and $2,649,000 for the nine months ended September 30, 2005 and 2004, respectively. Estimated amortization expense relating to intangible asset balances as of September 30, 2005 is expected to be as follows over the next five years:

 

2005

   $ 2,028,000

2006

     7,998,000

2007

     7,461,000

2008

     6,450,000

2009

     5,849,000

Thereafter

     24,401,000
    

     $ 54,187,000
    

 

The changes in the carrying amount of identifiable intangible assets are as follows for the nine months ended September 30, 2005:

 

     Intangible
Assets


 

Balance, at December 31, 2004

   $ 43,596,000  

Acquisitions

     15,457,000  

Adjustments

     13,000  

Amortization

     (4,879,000 )
    


Balance, at September 30, 2005

   $ 54,187,000  
    


 

-13-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

5. Debt

 

Long-term debt consists of the following at September 30, 2005:

 

Acquisition notes:

      

Weighted average interest rate of 4.75% with maturities through 2008

   $ 41,907,000

Bank notes:

      

$225 million Secured Credit Facility, interest at 30-day LIBOR plus 1.25% (5.11% at September 30, 2005), matures September 2010

     74,500,000

Promissory Note with First American:

      

$10 million revolving loan, interest at 30-day LIBOR plus 1.75% (5.61% at September 30, 2005), matures July 2006

     10,000,000

Capital leases and other debt:

      

Various interest rates with maturities through 2006

     486,000
    

Total long-term debt and capital leases

     126,893,000

Less current portion of long-term debt and capital leases

     31,685,000
    

Long-term debt and capital leases, net of current portion

   $ 95,208,000
    

 

On September 14, 2005, at the closing of the CIG Acquisition, the Company executed a $45 million unsecured subordinated promissory note in favor of First American. Under the note, First Advantage may borrow, repay and re-borrow for up to and including 90 days from closing. The note matures 135 days after September 14, 2005. The note bears interest at the rate payable under First Advantage’s line of credit with Bank of America, N.A. plus 0.5% per annum. Proceeds of the note may be used only for working capital of CIG. There is no outstanding balance at September 30, 2005.

 

On September 29, 2005, the Company executed of a revolving credit agreement, with a bank syndication (the “Credit Agreement”). Borrowings available under the Credit Agreement total up to $225 million. The Credit Agreement includes a $10 million sub-facility for the issuance of letters of credit and up to a $5 million swing loan facility. The credit facility maturity date is September 28, 2010.

 

The interest rate is based on the one of two options consisting of 1) the higher of Federal Funds Rate plus  1/2% and Bank of America’s announced “Prime Rate” or 2) a “LIBOR based rate”. The “LIBOR based rate” is based on LIBOR plus a margin that can range from 1.125% to 1.75% (based on progressive levels of leverage). First Advantage management must elect the LIBOR based option up to three days prior to its utilization.

 

The agreement contains usual and customary negative covenants for transactions of this type including but not limited to those regarding liens, investments, creation of indebtedness and fundamental changes, as well as financial covenants of consolidated leverage ratio and minimum consolidated fixed charge coverage ratio.

 

The agreement contains usual and customary provisions regarding acceleration. In the event of a default by the Company under the credit facility, the lenders will have no further obligation to make loans or issue letters of credit and in some cases may, at the option of a majority of the lenders, declare all amounts owed by the Company immediately due and payable and require the

 

-14-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

Company to provide collateral, and in some cases any amounts owed by the Company under the credit facility will automatically become immediately due and payable.

 

At September 30, 2005, the Company was in compliance with the financial covenants of its loan agreement.

 

6. Income Taxes

 

The effective tax rate was 40% and 43% for the three and nine months ended September 30, 2005, respectively. The nine month rate exceeds the Company's statutory tax rate primarily due to the nondeductible merger costs of $3.2 million that were incurred in the second quarter of 2005 in connection with the pending acquisition of the CIG Business from First American.

 

The net change in the total valuation allowance for the third quarter 2005 was a decrease of $33 million with an offsetting entry to goodwill. The valuation allowance relates primarily to deferred tax assets for federal net operating-loss carryforwards relating to acquisitions. Utilization of the pre-acquisition net operating losses is subject to limitations by the Internal Revenue Code and state jurisdictions. The Company evaluates the realizability of its deferred tax assets by assessing the valuation allowance and by adjusting the amount of such allowance if necessary. The factors used to assess the likelihood of realization are the Company’s forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets.

 

Based upon a sustained pattern of historical taxable income, projections for future taxable income over the periods in which the net operating losses will be deductible, and the impact the CIG acquisition had on the pooled historical taxable income and on the projections for future taxable income, management believes it is more likely than not that First Advantage will realize the benefits of the federal net operating losses. The valuation allowance relating to the state net operating-loss carryforwards will remain until further evidence is available to indicate that these deferred assets are realizable.

 

7. Earnings Per Share

 

A reconciliation of earnings per share and weighted-average shares outstanding is as follows:

 

     Three Months Ended
September 30,


   Nine Months Ended
September 30,


     2005

   2004

   2005

   2004

Net Income

   $ 16,023,000    $ 12,962,000    $ 42,698,000    $ 32,844,000

Interest on convertible note, net of tax

     —        40,000      —        81,000
    

  

  

  

Net Income - numerator for basic and fully diluted earnings per share

   $ 16,023,000    $ 13,002,000    $ 42,698,000    $ 32,925,000

Denominator:

                           

Weighted-average shares for basic earnings per share

     53,200,609      49,683,345      52,132,551      49,318,123

Effect of dilutive securities

     764,157      73,816      484,307      160,868

Convertible notes

     —        371,600      —        167,673
    

  

  

  

Denominator for diluted earnings per share

     53,964,766      50,128,761      52,616,858      49,646,664
    

  

  

  

Earnings per share:

                           

Basic

   $ 0.30    $ 0.26    $ 0.82    $ 0.67

Diluted

   $ 0.30    $ 0.26    $ 0.81    $ 0.66

 

For the three months ended September 30, 2005 and 2004, options and warrants totaling 361,398 and 2,163,305, respectively, were excluded from the weighted average diluted shares outstanding, as they were antidilutive. For the nine months ended September 30, 2005 and 2004, options and warrants totaling 312,125 and 1,853,676, respectively, were excluded from the weighted average diluted shares outstanding, as they were antidilutive.

 

8. Segment Information

 

The Company operates in six primary business segments: Lender Services, Data Services, Dealer Services, Employer Services, Multifamily Services, and Investigative and Litigation Support Services.

 

-15-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

The Lender Services segment offers lenders across the country credit reporting solutions for mortgage and home equity needs.

 

The Data Services segment includes business lines that provide transportation credit reporting, motor vehicle record reporting, fleet management, supply chain theft and damage mitigation consulting, consumer location, criminal records reselling, subprime credit reporting, and consumer credit reporting services. Revenue for the Data Services segment includes $68,000 and $230,000 of inter-segment sales for the three months ended September 30, 2005 and 2004, respectively, and $220,000 and $421,000 for the nine months ended September 30, 2005 and 2004, respectively.

 

The Dealer Services business segment serves the automotive dealer marketplace by delivering consolidated consumer credit reports, credit automation software and lead development services.

 

The Employer Services segment includes employment background screening, occupational health services and tax incentive services. Products and services relating to employment background screening include criminal records searches, employment and education verification, social security number verification and credit reporting. Occupational health services include drug-free workplace programs, physical examinations and employee assistance programs. Tax incentive services include services related to the administration of employment-based and location-based tax credit and incentive programs, sales and use tax programs and fleet asset management programs. Revenue for the Employer Services segment includes $210,000 and $213,000 of inter-segment sales for the three months ended September 30, 2005 and 2004, respectively, and $600,000 and $682,000 for the nine months ended September 30, 2005 and 2004, respectively.

 

The Multifamily Services segment includes resident screening and software services. Resident screening services include criminal background and eviction searches, credit reporting, employment verification and lease performance and payment histories. Revenue for the Multifamily Services segment includes $92,000 and $42,000 of inter-segment sales for the three months ended September 30, 2005 and 2004, respectively, and $228,000 and $42,000 for the nine months ended September 30, 2005 and 2004, respectively.

 

The Investigative and Litigation Support Services segment includes all investigative services. Products and services offered by the Investigative and Litigation Support Services segment includes surveillance services, field interviews, computer forensics, electronic discovery, due diligence reports and other high level investigations.

 

The elimination of inter-segment revenue and cost of service revenue is included in Corporate. These transactions are recorded at cost.

 

International operations are included in the Employer Services segment and include revenue of $2,854,000 and $352,000 for the three months ended September 30, 2005 and 2004, respectively, and $6,011,000 and $780,000 for the nine months ended September 30, 2005 and 2004, respectively.

 

-16-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

The following table sets forth segment information for the three and nine months ended September 30, 2005 and 2004.

 

     Revenue

    Depreciation
and Amortization


   Income (Loss)
From Operations


    Assets

Three Months Ended September 30, 2005

                             

Lender Services

   $ 43,907,000     $ 1,760,000    $ 12,971,000     $ 82,745,000

Data Services

     32,161,000       1,465,000      7,206,000       137,240,000

Dealer Services

     29,219,000       641,000      3,964,000       117,427,000

Employer Services

     40,404,000       1,371,000      3,560,000       221,343,000

Multifamily Services

     17,544,000       1,023,000      4,824,000       76,847,000

Investigative and Litigation Support Services

     8,237,000       385,000      353,000       49,169,000

Corporate and Eliminations

     (1,526,000 )     40,000      (4,742,000 )     46,777,000
    


 

  


 

Consolidated

   $ 169,946,000     $ 6,685,000    $ 28,136,000     $ 731,548,000
    


 

  


 

Three Months Ended September 30, 2004

                             

Lender Services

   $ 33,870,000     $ 1,657,000    $ 9,125,000     $ 62,113,000

Data Services

     25,105,000       1,307,000      5,102,000       142,331,000

Dealer Services

     18,355,000       404,000      2,125,000       87,267,000

Employer Services

     34,733,000       1,080,000      3,822,000       152,409,000

Multifamily Services

     15,711,000       1,064,000      4,498,000       74,976,000

Investigative and Litigation Support Services

     6,770,000       343,000      612,000       45,616,000

Corporate and Eliminations

     (471,000 )     23,000      (2,982,000 )     18,784,000
    


 

  


 

Consolidated

   $ 134,073,000     $ 5,878,000    $ 22,302,000     $ 583,496,000
    


 

  


 

Nine Months Ended September 30, 2005

                             

Lender Services

   $ 128,963,000     $ 4,942,000    $ 37,596,000     $ 82,745,000

Data Services

     92,083,000       4,403,000      20,956,000       137,240,000

Dealer Services

     72,252,000       1,639,000      10,522,000       117,427,000

Employer Services

     112,642,000       3,846,000      10,550,000       221,343,000

Multifamily Services

     49,134,000       3,003,000      14,155,000       76,847,000

Investigative and Litigation Support Services

     23,142,000       1,146,000      1,032,000       49,169,000

Corporate and Eliminations

     (4,525,000 )     106,000      (17,027,000 )     46,777,000
    


 

  


 

Consolidated

   $ 473,691,000     $ 19,085,000    $ 77,784,000     $ 731,548,000
    


 

  


 

Nine Months Ended September 30, 2004

                             

Lender Services

   $ 103,480,000     $ 5,322,000    $ 31,012,000     $ 62,113,000

Data Services

     82,547,000       3,882,000      8,541,000       142,331,000

Dealer Services

     53,022,000       1,179,000      6,665,000       87,267,000

Employer Services

     92,480,000       3,194,000      6,838,000       152,409,000

Multifamily Services

     41,838,000       2,715,000      9,982,000       74,976,000

Investigative and Litigation Support Services

     18,687,000       790,000      621,000       45,616,000

Corporate and Eliminations

     (1,959,000 )     52,000      (7,636,000 )     18,784,000
    


 

  


 

Consolidated

   $ 390,095,000     $ 17,134,000    $ 56,023,000     $ 583,496,000
    


 

  


 

 

-17-


Table of Contents

First Advantage Corporation

 

Notes to Consolidated Financial Statements

September 30, 2005 and 2004 (Unaudited)

 

9. Subsequent Event

 

Subsequent to September 30, 2005, the Company has acquired four companies. In consideration for the purchase of the assets and membership interest, the Company paid the sellers an aggregate purchase price of $140.1 million comprised of $71.3 million in cash, $35.0 million of subordinated notes, and $33.8 million in Class A shares.

 

-18-


Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Note of Caution Regarding Forward Looking Statements

 

Certain statements in this quarterly report on Form 10-Q relate to future results of the Company and are considered “forward-looking statements”. These statements, which may be expressed in a variety of ways, including the use of future or present tense language, relate to among other things, sufficiency and availability of cash flows and other sources of liquidity, current levels of operations, anticipated growth, future market positions, synergies from integration, ability to execute its growth strategy, levels of capital expenditures and ability to satisfy current debt. These forward-looking statements, and others forward-looking statements contained in other public disclosures of the Company are based on assumptions that involve risks and uncertainties, and that are subject to change based on various important factors (some of which are beyond the Company’s control). Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: general volatility of the capital markets and the market price of the Company’s Class A common stock; the Company’s ability to successfully raise capital; the Company’s ability to identify and complete acquisitions and to successfully integrate businesses it acquires; changes in applicable government regulations; the degree and nature of the Company’s competition; increases in the Company’s expenses; continued consolidation among the Company’s competitors and customers; unanticipated technological changes and requirements; the Company’s ability to identify suppliers of quality and cost-effective data; and other factors described in this quarterly report on Form 10-Q. Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties. The forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

 

-19-


Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

Overview

 

First Advantage Corporation (Nasdaq: FADV) (“First Advantage” or the “Company”) is a global risk mitigation and business solutions provider. The Company now operates in six primary business segments: Lender Services, Data Services, Dealer Services, Employer Services, Multifamily Services, and Investigative & Litigation Support Services. First Advantage is headquartered in St. Petersburg, Florida, and has approximately 3,700 employees in offices throughout the United States and abroad. For the nine months ended September 30, 2005, First Advantage has acquired nine companies and completed the merger of the CIG Business.

 

On September 14, 2005, the Company completed the acquisition to buy First American’s CIG Business under the terms of the master transfer agreement. First Advantage paid for the CIG Business and related businesses with 29,073,170 shares of its Class B common stock. The acquisition of CIG by First Advantage is a transaction between businesses under common control of First American. As such, First Advantage has recorded the assets and liabilities of CIG at historical cost. Historical income statements of First Advantage have been restated to include results of operations of CIG at historical costs.

 

Operating results for the three and nine months ended September 30, 2005 included total revenue of $169.9 million and $473.7 million, respectively, representing an increase of 26.8% and 30.6% over the same periods in 2004, with 11.0% and 8.4% of that growth being organic growth. Net income for the three and nine months ended September 30, 2005 was $16.0 million and $42.7 million, respectively. Net income increased $3.1 million for the three months and $9.9 million for the nine months ended September 30, 2005 in comparison to the same periods in 2004.

 

For the nine months ended September 30, 2005, the results of operations include $3.2 million of nondeductible merger costs that First Advantage incurred in connection with its pending acquisition of the CIG Business from First American; $2.0 million of costs incurred in connection with the relocation of the company’s corporate headquarters and other office consolidations; and $.6 million of costs related to the launch of the corporate branding initiative that was announced in September 2005. These costs are included in the Company’s corporate segment.

 

Critical Accounting Policies

 

Critical accounting policies are those policies used in the preparation of the company’s financial statements that require management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosure of contingencies. A summary of these policies can be found in Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for year ended December 31, 2004 and the Proxy Statement filed June 30, 2005.

 

-20-


Table of Contents

The following is a summary of the operating results by the Company’s business segments for the three months ended September 30, 2005 and 2004 and for the nine months ended September 30, 2005 and 2004.

 

Quarter ending September 30, 2005


 

Lender

Services


   

Data

Services


    Dealer
Services


    Employer
Services


    Multifamily
Services


    Invest/Litigation
Support Services


    Corporate

    Total

 

Service revenue

  $ 43,907,000     $ 22,100,000     $ 29,219,000     $ 37,673,000     $ 17,544,000     $ 8,237,000     $ (934,000 )   $ 157,746,000  

Reimbursed government fee revenue

    —         10,061,000       —         2,731,000       —         —         (592,000 )     12,200,000  
   


 


 


 


 


 


 


 


Total revenue

    43,907,000       32,161,000       29,219,000       40,404,000       17,544,000       8,237,000       (1,526,000 )     169,946,000  

Cost of service revenue

    14,200,000       3,624,000       15,635,000       12,132,000       1,788,000       3,443,000       (941,000 )     49,881,000  

Government fees paid

    —         10,061,000       —         2,731,000       —         —         (592,000 )     12,200,000  
   


 


 


 


 


 


 


 


Total cost of service

    14,200,000       13,685,000       15,635,000       14,863,000       1,788,000       3,443,000       (1,533,000 )     62,081,000  

Gross margin

    29,707,000       18,476,000       13,584,000       25,541,000       15,756,000       4,794,000       7,000       107,865,000  

Salaries and benefits

    12,500,000       3,922,000       4,222,000       13,559,000       6,064,000       2,715,000       3,664,000       46,646,000  

Facilities and telecommunications

    1,916,000       632,000       422,000       1,514,000       808,000       296,000       617,000       6,205,000  

Other operating expenses

    560,000       5,251,000       4,335,000       5,537,000       3,037,000       1,045,000       428,000       20,193,000  

Depreciation and amortization

    1,760,000       1,465,000       641,000       1,371,000       1,023,000       385,000       40,000       6,685,000  
   


 


 


 


 


 


 


 


Income (loss) from operations

  $ 12,971,000     $ 7,206,000     $ 3,964,000     $ 3,560,000     $ 4,824,000     $ 353,000     $ (4,742,000 )   $ 28,136,000  
   


 


 


 


 


 


 


 


Operating margin percentage

    29.5 %     32.6 %     13.6 %     9.4 %     27.5 %     4.3 %     N/A       17.8 %

Quarter ending September 30, 2004


 

Lender

Services


   

Data

Services


    Dealer
Services


    Employer
Services


    Multifamily
Services


    Invest/Litigation
Support Services


    Corporate

    Total

 

Service revenue

  $ 33,870,000     $ 16,678,000     $ 18,355,000     $ 31,952,000     $ 15,711,000     $ 6,770,000     $ (471,000 )   $ 122,865,000  

Reimbursed government fee revenue

    —         8,427,000       —         2,781,000       —         —         —         11,208,000  
   


 


 


 


 


 


 


 


Total revenue

    33,870,000       25,105,000       18,355,000       34,733,000       15,711,000       6,770,000       (471,000 )     134,073,000  

Cost of service revenue

    10,020,000       2,957,000       8,652,000       11,396,000       1,624,000       3,041,000       (471,000 )     37,219,000  

Government fees paid

    —         8,427,000       —         2,781,000       —         —         —         11,208,000  
   


 


 


 


 


 


 


 


Total cost of service

    10,020,000       11,384,000       8,652,000       14,177,000       1,624,000       3,041,000       (471,000 )     48,427,000  

Gross margin

    23,850,000       13,721,000       9,703,000       20,556,000       14,087,000       3,729,000       —         85,646,000  

Salaries and benefits

    10,802,000       2,735,000       2,932,000       10,879,000       5,318,000       1,956,000       2,396,000       37,018,000  

Facilities and telecommunications

    1,561,000       538,000       562,000       1,446,000       784,000       262,000       180,000       5,333,000  

Other operating expenses

    705,000       4,039,000       3,680,000       3,329,000       2,423,000       556,000       383,000       15,115,000  

Depreciation and amortization

    1,657,000       1,307,000       404,000       1,080,000       1,064,000       343,000       23,000       5,878,000  
   


 


 


 


 


 


 


 


Income (loss) from operations

  $ 9,125,000     $ 5,102,000     $ 2,125,000     $ 3,822,000     $ 4,498,000     $ 612,000     $ (2,982,000 )   $ 22,302,000  
   


 


 


 


 


 


 


 


Operating margin percentage

    26.9 %     30.6 %     11.6 %     12.0 %     28.6 %     9.0 %     N/A       18.2 %

Nine months ending September 30, 2005


 

Lender

Services


   

Data

Services


    Dealer
Services


    Employer
Services


    Multifamily
Services


    Invest/Litigation
Support Services


    Corporate

    Total

 

Service revenue

  $ 128,963,000     $ 61,860,000     $ 72,252,000     $ 104,451,000     $ 49,134,000     $ 23,142,000     $ (2,780,000 )   $ 437,022,000  

Reimbursed government fee revenue

    —         30,223,000       —         8,191,000       —         —         (1,745,000 )     36,669,000  
   


 


 


 


 


 


 


 


Total revenue

    128,963,000       92,083,000       72,252,000       112,642,000       49,134,000       23,142,000       (4,525,000 )     473,691,000  

Cost of service revenue

    41,773,000       8,928,000       36,754,000       33,808,000       4,862,000       9,689,000       (2,788,000 )     133,026,000  

Government fees paid

    —         30,223,000       —         8,191,000       —         —         (1,745,000 )     36,669,000  
   


 


 


 


 


 


 


 


Total cost of service

    41,773,000       39,151,000       36,754,000       41,999,000       4,862,000       9,689,000       (4,533,000 )     169,695,000  

Gross margin

    87,190,000       52,932,000       35,498,000       70,643,000       44,272,000       13,453,000       8,000       303,996,000  

Salaries and benefits

    37,764,000       11,161,000       10,435,000       37,175,000       16,662,000       7,846,000       9,265,000       130,308,000  

Facilities and telecommunications

    5,320,000       1,839,000       865,000       4,619,000       2,472,000       801,000       3,058,000       18,974,000  

Other operating expenses

    1,568,000       14,573,000       12,037,000       14,453,000       7,980,000       2,628,000       4,606,000       57,845,000  

Depreciation and amortization

    4,942,000       4,403,000       1,639,000       3,846,000       3,003,000       1,146,000       106,000       19,085,000  
   


 


 


 


 


 


 


 


Income (loss) from operations

  $ 37,596,000     $ 20,956,000     $ 10,522,000     $ 10,550,000     $ 14,155,000     $ 1,032,000     $ (17,027,000 )   $ 77,784,000  
   


 


 


 


 


 


 


 


Operating margin percentage

    29.2 %     33.9 %     14.6 %     10.1 %     28.8 %     4.5 %     N/A       17.8 %

 

-21-


Table of Contents

Nine months ending September 30, 2004


 

Lender

Services


   

Data

Services


    Dealer
Services


    Employer
Services


    Multifamily
Services


    Invest/Litigation
Support Services


    Corporate

    Total

 

Service revenue

  $ 103,480,000     $ 56,794,000     $ 53,022,000     $ 84,664,000     $ 41,838,000     $ 18,687,000     $ (1,959,000 )   $ 356,526,000  

Reimbursed government fee revenue

    —         25,753,000       —         7,816,000       —         —         —         33,569,000  
   


 


 


 


 


 


 


 


Total revenue

    103,480,000       82,547,000       53,022,000       92,480,000       41,838,000       18,687,000       (1,959,000 )     390,095,000  

Cost of service revenue

    29,963,000       14,063,000       24,357,000       31,830,000       4,779,000       9,868,000       (1,959,000 )     112,901,000  

Government fees paid

    —         25,753,000       —         7,816,000       —         —         —         33,569,000  
   


 


 


 


 


 


 


 


Total cost of service

    29,963,000       39,816,000       24,357,000       39,646,000       4,779,000       9,868,000       (1,959,000 )     146,470,000  

Gross margin

    73,517,000       42,731,000       28,665,000       52,834,000       37,059,000       8,819,000       —         243,625,000  

Salaries and benefits

    32,607,000       8,618,000       8,449,000       28,819,000       15,509,000       5,100,000       6,774,000       105,876,000  

Facilities and telecommunications

    5,095,000       1,621,000       1,467,000       4,334,000       2,038,000       629,000       489,000       15,673,000  

Other operating expenses

    (519,000 )     20,069,000       10,905,000       9,649,000       6,815,000       1,679,000       321,000       48,919,000  

Depreciation and amortization

    5,322,000       3,882,000       1,179,000       3,194,000       2,715,000       790,000       52,000       17,134,000  
   


 


 


 


 


 


 


 


Income (loss) from operations

  $ 31,012,000     $ 8,541,000     $ 6,665,000     $ 6,838,000     $ 9,982,000     $ 621,000     $ (7,636,000 )   $ 56,023,000  
   


 


 


 


 


 


 


 


Operating margin percentage

    30.0 %     15.0 %     12.6 %     8.1 %     23.9 %     3.3 %     N/A       15.7 %

 

-22-


Table of Contents

Lender Services Segment

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Total service revenue was $43.9 million for the three months ended September 30, 2005, an increase of $10.0 million compared to service revenue of $33.9 million in the same period of 2004. The acquisition of a mortgage credit reporting business during the first quarter of 2005 accounted for $5.0 million of the increase and an increase in transaction volume accounted for the additional growth in service revenue.

 

Cost of service revenue was $14.2 million for the three months ended September 30, 2005, an increase of $4.2 million compared to cost of service revenue of $10.0 million in the same period of 2004. The acquisition of a mortgage credit reporting business during the first quarter of 2005 accounted for $2.0 million of the increase, and an increase in transactions and the addition of a surcharge by the three credit bureaus related to free credit reports to consumers pursuant to the FACT Act were the primary reasons for the additional increase in the cost of service revenue.

 

Salaries and benefits increased by $1.7 million. Salaries and benefits were 28.5% of service revenue in the third quarter of 2005 compared to 31.9% in the same period of 2004. Salaries and benefits expense increased $1.2 million due to the acquisition, and the percentage decrease is primarily due to the efficiencies obtained on the increased transaction volume and related revenues.

 

Facilities and telecommunication expenses increased by $.4 million. Facilities and telecommunication expenses were 4.4% of service revenue in the third quarter of 2005 and 4.6% in the third quarter of 2004. The percentage decrease is primarily due to the increase in revenues.

 

Other operating expenses decreased by $.1 million. Other operating expenses were 1.3% of service revenue in the third quarter of 2005 and 2.1% in the third quarter of 2004. The decrease is primarily due to non-recurring professional fees incurred during the third quarter of 2004.

 

Depreciation and amortization increased by $.1 million due to an increase in amortization of intangible assets as a result of the acquisition.

 

The operating margin percentage increased from 26.9% to 29.5% primarily due to the 2004 period having certain non-recurring professional fees not incurred in 2005, and due to operational efficiencies achieved in 2005 based on the growth in transactions and related increase in revenue.

 

Income from operations was $13.0 million for the third quarter of 2005 compared to $9.1 million in the third quarter of 2004. Operating income from existing businesses increased by $3.4 million.

 

Data Services Segment

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Total service revenue was $22.1 million for the three months ended September 30, 2005, an increase of $5.4 million compared to service revenue of $16.7 million in the same period of 2004. Acquisitions accounted for $2.7 million of the revenue growth.

 

Salaries and benefits increased by $1.2 million. Salaries and benefits were 17.7% of service revenue in the third quarter of 2005 compared to 16.4% in the same period of 2004. The increase is based on additional employees brought in through acquisitions.

 

Facilities and telecommunication expenses were comparable to the same period in 2004. Facilities and telecommunication expenses were 2.9% of service revenue in the third quarter of 2005 and 3.2% in the third quarter of 2004. The percentage decrease is primarily due to the costs remaining constant.

 

Other operating expenses increased by $1.2 million. Other operating expenses were 23.8% of service revenue in the third quarter of 2005 and 24.2% in the third quarter of 2004. The increase is largely attributable to increased marketing expenses, consulting fees and membership costs that are all correlated to increased revenues.

 

Depreciation and amortization increased by $.2 million due to an increase in amortization of intangible assets as a result of the acquisitions.

 

The operating margin percentage increased from 30.6% to 32.6% primarily due to operational efficiencies achieved in 2005 based on the growth in transactions and related increase in revenue.

 

Income from operations was $7.2 million for the third quarter of 2005 compared to $5.1 million in the third quarter of 2004.

 

Dealer Services Segment

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Total service revenue was $29.2 million for the three months ended September 30, 2005, an increase of $10.8 million compared to service revenue of $18.4 million in the same period of 2004. The acquisition of a lead generation business during the third quarter of 2005 accounted for $7.7 million of the increase and an increase in transactions accounted for the additional growth in service revenue.

 

Cost of service revenue was $15.6 million for the three months ended September 30, 2005, an increase of $7.0 million compared to cost of service revenue of $8.6 million in the same period of 2004. The acquisition of a lead generation business during the third quarter of 2005 accounted for $4.8 million of the increase, and an increase in transactions and the addition of a surcharge by the three credit bureaus related to free credit reports to consumers pursuant to the FACT Act were the primary reasons for the additional increase in the cost of service revenue.

 

Salaries and benefits increased by $1.3 million. Salaries and benefits were 14.4% of service revenue in the third quarter of 2005 compared to 16.0% in the same period of 2004. The increase in salaries and benefits expense

 

-23-


Table of Contents

is due to the acquisition, and the percentage decrease is primarily due to operational efficiencies based on the increase in revenue.

 

Facilities and telecommunication expenses decreased by $.1 million. Facilities and telecommunication expenses were 1.4% of service revenue in the third quarter of 2005 and 3.1% in the third quarter of 2004. The percentage decrease is primarily due to expense reductions related to the relocation of certain facilities and based on the increase in revenues.

 

Other operating expenses increased by $.7 million. Other operating expenses were 14.8% of service revenue in the third quarter of 2005 and 20.0% in the third quarter of 2004. The increase in other operating expenses is primarily due to the acquisition.

 

Depreciation and amortization increased by $.2 million due to an increase in amortization of intangible assets as a result of the acquisition.

 

The operating margin percentage increased from 11.6% to 13.6% primarily due to operational efficiencies achieved in 2005 based on the growth in transactions and related increase in revenue.

 

Income from operations was $4.0 million for the third quarter of 2005 compared to $2.1 million in the third quarter of 2004. Operating income from existing businesses increased by $3.1 million.

 

Employer Services Segment

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Total service revenue was $37.7 million for the three months ended September 30, 2005, an increase of $5.7 million compared to service revenue of $32.0 million in the same period of 2004. The increase was primarily driven by organic growth of 14.8% in the background screening business and the addition of $4.0 million of revenue from acquisitions.

 

Salaries and benefits increased by $2.7 million. Salaries and benefits were 36.0% of service revenue in the third quarter of 2005 compared to 34.0% in the same period of 2004. The number of employees has increased due to acquisitions and the growth of this segment in comparison to the same period in 2004.

 

Facilities and telecommunication expenses were comparable to the same period in 2004. Facilities and telecommunication expenses were 4.0% of service revenue in the third quarter of 2005 and 4.5% in the third quarter of 2004. The percentage decrease is primarily due to the increase in revenues.

 

Other operating expenses increased by $2.2 million. Other operating expenses were 14.7% of service revenue in the third quarter of 2005 and 10.4% for the same period of 2004. Efforts to execute cross sell, consolidation and integration strategies increased travel, telecommunication, lease equipment and outside labor expenses.

 

Depreciation and amortization increased by $.3 million mostly due to the addition of intangible assets related to the acquisitions.

 

The operating margin percentage decreased from 12.0% to 9.4% primarily due to a greater increase in operating expense quarter over quarter versus the increase in revenue.

 

Income from operations was $3.6 million for the third quarter of 2005 compared to $3.8 million in the third quarter of 2004.

 

-24-


Table of Contents

Multifamily Services Segment

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Total service revenue was $17.5 million for the three months ended September 30, 2005, an increase of $1.8 million compared to service revenue of $15.7 million in the same period of 2004. The majority of the increase is derived from organic growth of 10.0% and one recent acquisition in the third quarter. The organic growth is driven by cross sell opportunities and the increase in criminal products.

 

Salaries and benefits increased by $.7 million. Salaries and benefits were 34.6% of service revenue for the third quarter of 2005 compared to 33.8% of service revenue in the same period of 2004. This is reflective of the increased compensation packages in the form of increased bonus and commission plans.

 

Facilities and telecommunication expenses were comparable to the same period in 2004. Facilities and telecommunication expenses were 4.6% of service revenue in the third quarter of 2005 and 5.0% in the third quarter of 2004. The decrease is primarily due to expenses being constant.

 

Other operating expenses increased by $.6 million and were 17.3% of service revenue in the third quarter of 2005 compared to 15.4% in the same period of 2004. This increase was primarily due to an increase in professional fees and branding expenses.

 

Depreciation and amortization is comparable to the same period of 2004. Depreciation and amortization was 5.8% of service revenue in the third quarter of 2005 compared to 6.8% in the same period of 2004. This decrease, as a percent of service revenue, is primarily due to costs remaining stable.

 

The operating margin percentage decreased from 28.6% to 27.5% due to some one-time charges related to legal fees and branding expenses in the third quarter of 2005.

 

Income from operations was $4.8 million in the third quarter of 2005 compared to income from operations of $4.5 million in the same period of 2004.

 

Investigative and Litigation Services Segment

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Total service revenue was $8.2 million for the three months ended September 30, 2005, an increase of $1.4 million compared to service revenue of $6.8 million in the same period of 2004. The increase is predominantly driven by the three acquisitions in this segment.

 

Salaries and benefits increased by $.8 million. Salaries and benefits were 33.0% of service revenue in the third quarter of 2005 compared to 28.9% in the same period of 2004. The increases are mainly due to the acquisitions.

 

Facilities and telecommunication expenses were comparable to the same period in 2004. Facilities and telecommunication expenses were 3.6% of service revenue in the third quarter of 2005 and 3.9% in the third quarter of 2004.

 

Other operating expenses increased by $.5 million. Other operating expenses were 12.7% of service revenue in the third quarter of 2005 and 8.2% for the same period of 2004.

 

Depreciation and amortization is comparable to the same period in 2004.

 

The operating margin percentage decreased from 9.0% to 4.3%.

 

-25-


Table of Contents

Income from operations was $.4 million for the third quarter of 2005 compared to $.6 million compared to income from operations in the period of 2004.

 

Corporate

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Corporate costs and expenses represent primarily compensation and benefits for senior management, administrative staff, technology personnel and their related expenses in addition to an administrative fee paid to First American. Additional costs were incurred for the increased level of professional fees for audit related services, Sarbanes Oxley compliance and increased staffing in the technology and legal departments to support corporate growth. The corporate expenses were $4.7 million in the third quarter of 2005 compared to expenses of $3.0 million in the same period of 2004. Corporate branding costs of $.3 million were incurred in the third quarter.

 

Consolidated Results

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Consolidated service revenue for the three months ended September 30, 2005 was $157.8 million, an increase of $34.9 million compared to service revenue of $122.9 million in the same period in 2004. Acquisitions accounted for $21.2 million of the increase.

 

Salaries and benefits were 29.6% of service revenue for the three months ended September 30, 2005 and 30.1% compared to the same period in 2004.

 

Facilities and telecommunication increased by $.9 million compared to the same period in 2004. Facilities and telecommunication expenses were 3.9% of service revenue in the third quarter of 2005 and 4.3% in the third quarter of 2004. The percentage decrease is primarily due to the increase in revenues.

 

Other operating expenses were 12.8% of service revenue for the three months ended September 30, 2005 and 12.3% compared to the same period for 2004. The increase is primarily related to increased marketing fees related to revenue and an increase in professional fees in the third quarter of 2005 related to legal fees and Sarbanes Oxley compliance fees.

 

Depreciation and amortization increased by $.8 million due to an overall increase in amortization of intangible assets as a result of acquisitions and additions to database assets.

 

The consolidated operating margin was 17.8% for the three months ended September 30, 2005 compared to 18.2% for the same period in 2004. The increase is due to the change in the mix of margins related to the acquired businesses, and efficiencies realized from consolidating operations and leveraging vendor relationships.

 

Income from operations was $28.1 million for the three months ended September 30, 2005 compared to $22.3 million for the same period in 2004. The increase of $5.8 million is comprised of an increase in operating income of $3.8 million in Lender Services, $2.1 million in Data Services, $1.8 million in Dealer Services and $.3 million in Multifamily Services offset by decreases in operating income of $.2 million at Employer Services and $.2 million at Investigative and Litigation Services and an increase of corporate expenses of $1.8 million.

 

-26-


Table of Contents

Lender Services Segment

 

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Total service revenue was $129.0 million for the nine months ended September 30, 2005, an increase of $25.5 million compared to service revenue of $103.5 million in the same period of 2004. The acquisition of a mortgage credit reporting business during the first quarter of 2005 accounted for $10.3 million of the increase, and an increase in transactions accounted for the additional growth in service revenue.

 

Cost of service revenue was $41.8 million for the nine months ended September 30, 2005, an increase of $11.8 million compared to cost of service revenue of $30.0 million in the same period of 2004. The acquisition of a mortgage credit reporting business during the first quarter of 2005 accounted for $4.2 million of the increase, and an increase in transactions and the addition of a surcharge by the three credit bureaus related to free credit reports to consumers pursuant to the FACT Act were the primary reasons for the additional increase in the cost of service revenue.

 

Salaries and benefits increased by $5.2 million. Salaries and benefits were 29.3% of service revenue in September 2005 compared to 31.5% in the same period of 2004. Salaries and benefits expense increased $2.4 million due to the acquisition, and the percentage decrease is primarily due to operational efficiencies based on the increased transaction volume and related increase in revenue.

 

Facilities and telecommunication expenses increased by $.2 million. Facilities and telecommunication expenses were 4.1% of service revenue in September 2005 compared to 4.9% in the same period of 2004. The percentage decrease is primarily due to the increase in revenues.

 

Other operating expenses increased by $2.1 million. Other operating expenses were 1.2% of service revenue for the nine months ended September 2005. The change is primarily due to the acquisition which increased other operating expenses by $1.5 million and due to an increase of $.6 million in an allocation from First American prior to the consummation of the CIG merger.

 

Depreciation and amortization decreased by $.4 million due primarily to the decision to lease rather than purchase most equipment since the third quarter of 2001, as partially offset by an increase in amortization of intangible assets as a result of the acquisition.

 

The operating margin percentage decreased from 30.0% to 29.2% primarily due to the impact of the acquisition which decreased operating margins to a greater extent than the operational efficiencies gained from the higher revenue within the existing business.

 

Income from operations was $37.6 million for the nine months ended September 2005 compared to $31.0 million in the same period of 2004. Operating income from existing businesses increased by $5.7 million.

 

Data Services Segment

 

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Total service revenue was $61.9 million for the nine months ended September 30, 2005, an increase of $5.1 million compared to service revenue of $56.8 million in the same period of 2004. Two acquisitions in this segment were the primary reason for the revenue growth, along with strong organic growth in the consumer location and subprime credit businesses.

 

Salaries and benefits increased by $2.5 million. Salaries and benefits were 18.1% of service revenue for the nine months ended September 30, 2005 compared to 15.2% in the same period of 2004. The percentage increase is primarily due to the acquisitions.

 

-27-


Table of Contents

Facilities and telecommunication expenses increased by $.2 million. Facilities and telecommunication expenses were 3.0% of service revenue in 2005 compared to 2.9% in the same period of 2004.

 

Other operating expenses decreased by $5.5 million. Other operating expenses were 23.6% of service revenue in 2005 and 35.3% compared to the same period at 2004. The decrease is primarily due to a $2.1 million year- to-date reduction in advertising costs related to its credit monitoring membership product in 2005 and a non-recurring expense of $5.1 incurred during the second quarter of 2004 based on payment of $3.0 million to settle a lawsuit and a $2.1 million write-off of the carrying value of the related limited liability company’s stock, offset by increases in operating cost related to increased revenues and acquisitions.

 

Depreciation and amortization increased by $.5 million due to an increase in amortization of intangible assets as a result of the acquisitions and additions to the databases.

 

The operating margin percentage increased from 15.0% to 33.9% primarily due to operating efficiencies at all the businesses and also the acquisitions, which generate higher operating margin levels than the existing companies. In addition, there was $5.1 million of non-recurring expenses in 2004 for the membership business.

 

Income from operations was $21.0 million for the third quarter of 2005 compared to $8.5 million in the third quarter of 2004.

 

Dealer Services Segment

 

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Total service revenue was $72.3 million for the nine months ended September 30, 2005, an increase of $19.3 million compared to service revenue of $53.0 million in the same period of 2004. The acquisition of a lead generation business during the second quarter of 2005 accounted for $10.6 million of the increase, and an increase in transactions accounted for the additional growth in service revenue.

 

Cost of service revenue was $36.8 million for the nine months ended September 30, 2005, an increase of $12.4 million compared to cost of service revenue of $24.4 million in the same period of 2004. The acquisition of a lead generation business during the second quarter of 2005 accounted for $6.3 million of the increase, and an increase in transactions and the addition of a surcharge by the three credit bureaus related to free credit reports to consumers pursuant to the FACT Act were the primary reasons for the additional increase in the cost of service revenue.

 

Salaries and benefits increased by $2.0 million. Salaries and benefits were 14.4% of service revenue in 2005 compared to 15.9% in the same period of 2004. Salaries and benefits expense increased $2.4 million due to the acquisition, and the percentage decrease is primarily due to operational efficiencies based on the increase in revenue.

 

Facilities and telecommunication expenses decreased by $.6 million. Facilities and telecommunication expenses were 1.2% of service revenue in 2005 compared to 2.8% in the same period of 2004. The percentage decrease is primarily due to expense reductions related to the relocation of certain facilities and based on the increase in revenues.

 

Other operating expenses increased by $1.1 million. Other operating expenses were 16.7% of service revenue in 2005 compared to 20.6% in the same period of 2004. The increase in 2005 is primarily due to the acquisition.

 

Depreciation and amortization increased by $.5 million due primarily to an increase in amortization of intangible assets as a result of the acquisition.

 

-28-


Table of Contents

The operating margin percentage increased from 12.6% to 14.6% primarily due to operational efficiencies achieved in 2005 based on the growth in transactions and related increase in revenue.

 

Income from operations was $10.5 million for the nine months ended September 2005 compared to $6.7 million in the same period of 2004. Operating income from existing businesses increased by $3.8 million.

 

Employer Services Segment

 

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Total service revenue was $104.5 million for the nine months ended September 30, 2005, an increase of $19.8 million compared to service revenue of $84.7 million in the same period of 2004. The increase is primarily due to acquisitions of the tax incentive and background screening companies in this segment. Acquisitions accounted for $16.4 million of the revenue growth on a year-to-date basis.

 

Salaries and benefits increased by $8.4 million. Salaries and benefits were 35.6% of service revenue in 2005 compared to 34.0% in the same period of 2004. The increase is primarily due to the increase of employees due to the acquisitions.

 

Facilities and telecommunication expenses increased by $.3 million. Facilities and telecommunication expenses were 4.4% of service revenue in 2005 compared to 5.1% in the same period of 2004. The percentage decrease is primarily due to expense reductions related to the relocation of certain facilities and based on the increase in revenues.

 

Other operating expenses increased by $4.8 million. Other operating expenses were 13.8% of service revenue in 2005 and 11.4% for the same period of 2004. The increase is due to increased travel, leased equipment expense, and the duplication of staff and temporary employee costs required during the transition to lower cost facilities.

 

Depreciation and amortization increased by $.7 million due to amortization of customer lists and non-compete agreements at the newly acquired entities.

 

The operating margin percentage of service revenue increased from 8.1% to 10.1% primarily due to the higher operating margins in the acquired businesses and negotiated discounts to reduce expense through consolidation and increased volumes.

 

Income from operations was $10.6 million for the nine months ended 2005 compared to $6.8 million for the same period in 2004. This increase is due to the addition of profitable acquisition companies and solid organic revenue growth in the background screening group.

 

Multifamily Services Segment

 

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Total service revenue was $49.1 million for the nine months ended September 30, 2005, an increase of $7.3 million compared to service revenue of $41.8 million in the same period of 2004. Revenue increased by $6.5 million at businesses owned in the third quarter of 2004. The growth rate of 15.6%, excluding acquisitions, is due to expanded market share and an increase in products and services.

 

-29-


Table of Contents

Salaries and benefits increased by $1.2 million. Salaries and benefits were 33.9% of service revenue in 2005 compared to 27.3% of service revenue in the same period of 2004. This increase reflects the increased compensation packages and increased personnel from acquisitions.

 

Facilities and telecommunication expenses increased by $.4 million. Facilities and telecommunication expenses were 5.0% of service revenue in 2005 compared to 4.9% in the same period of 2004.

 

Other operating expenses increased by $1.2 million and were 16.2% of service revenue in 2005 compared to 16.3% in the same period of 2004.

 

Depreciation and amortization increased by $.3 million. Depreciation and amortization was 6.1% of service revenue in 2005 compared to 6.5% in the same period of 2004.

 

The operating margin percentage of service revenue increased from 23.9% to 28.8% primarily as a result of efficiencies realized from consolidating operations and leveraging vendor relationships.

 

Income from operations was $14.2 million for the nine months ended September 30, 2005 compared to income from operations of $10.0 million in the same period of 2004. The increase was a direct result of organic revenue growth and an increase in higher margin revenue products.

 

Investigative and Litigation Services Segment

 

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Total service revenue was $23.1 million as of September 30, 2005, an increase of $4.4 million compared to service revenue of $18.7 million in the same period of 2004. The increase is due to acquisition.

 

Salaries and benefits increased by $2.7 million. Salaries and benefits were 33.9% of service revenue in 2005 compared to 27.3% in the same period of 2004. The increases are primarily due to the increase in employees related to the acquisitions.

 

Facilities and telecommunication expenses increased by $.2 million. Facilities and telecommunication expenses were 3.5% of service revenue in 2005 compared to 3.4% in 2004.

 

Other operating expenses increased by $.9 million. Other operating expenses were 11.4% of service revenue in 2005 and 9.0% for the same period of 2004.

 

Depreciation and amortization increased by $.4 million, mainly due to the amortization of customer lists.

 

The operating margin percentage increased from 3.3% to 4.5% mainly due to increased revenues with higher gross margins compared to the same period in 2004.

 

Income from operations was $1.0 million for the nine months ended September 30, 2005 compared to $.6 million in the same period of 2004.

 

Corporate

 

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Corporate costs and expenses represent primarily compensation and benefits for senior management, administrative staff, technology personnel and their related expenses in addition to an administrative fee paid to First American. Additional costs were incurred for the increased level of professional fees for audit related services, Sarbanes Oxley compliance and increased staffing in the technology and legal departments to support corporate growth. The corporate expenses were $17.0 million in the nine months ended September 30, 2005 compared to expenses of $7.6 million in the same period of 2004. The current year increase was impacted by the following one-time expenses; (a) $3.2 million related to CIG acquisition costs; (b) $2.0 million related to relocation expenses; and (c) $.6 million related to launching the Company’s branding initiative.

 

-30-


Table of Contents

Consolidated Results

 

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Consolidated service revenue for the Nine Months Ended September 30, 2005 was $437.0 million, an increase of $80.5 million compared to service revenue of $356.5 in the same period in 2004. Acquisitions accounted for $51.7 million of the increase.

 

Salaries and benefits were 29.8% of service revenue for the nine months ended September 30, 2005 and 29.7% compared to the same period in 2004.

 

Facilities and telecommunication expenses increased by $3.3 million. Facilities and telecommunication expenses were 4.3% of service revenue year to date September 2005 compared to 4.4% in the same period of 2004.

 

Other operating expenses were 13.2% of service revenue for the nine months ended September 30, 2005 and 13.7% compared to the same period for 2004. The decrease is primarily due to increased revenue levels greater than operating expense levels.

 

Depreciation and amortization increased by $2.0 million due to an overall increase in amortization of intangible assets as a result of acquisitions and additions to database assets.

 

The consolidated operating margin was 17.8% for the nine months ended September 30, 2005 compared to 15.7% for the same period in 2004. The increase is due to the change in the mix of operating margins related to the acquired businesses, and efficiencies realized from consolidating operations and leveraging vendor relationships and internal databases, along with the offset of the 2004 non-recurring expense of $5.1 million related to the membership services and the 2005 non-recurring expenses of $6.0 million related to acquisition costs, relocations, consolidations and branding.

 

Income from operations was $77.8 million for the nine months ended September 30, 2005 compared to $56.0 million for the same period in 2004. The increase of $21.8 million is comprised of an increase in operating income across the segments that is comprised of $6.6 million in Lender Services, $12.4 million in Data Services, $3.9 million in Dealer Services, $3.7 million in Employer Services, $4.2 million in Multifamily service, $.4 million in Investigative and Litigation Support Services and an increase of corporate expenses of $9.4 million.

 

Liquidity and Capital Resources

 

The Company’s primary source of liquidity is cash flow from operations and amounts available under credit lines the Company has established with a bank syndication. As of September 30, 2005, cash and cash equivalents were $17.4 million.

 

Cash provided by operating activities was $41.1 million and $29.3 million for the nine months ended September 30, 2005 and 2004, respectively.

 

Cash provided from operating activities increased $11.8 million from the nine months ended September 30, 2005 compared to the same period in 2004, while net income was $42.7 million for the nine months ended September 30, 2005 and $32.8 million for the same period in 2004. The increase was primarily comprised of an increase in net income of $9.9 million, an increase in current and deferred income tax of $28.8 million, and offset by a decrease in goodwill and other assets of $26.1 million.

 

-31-


Table of Contents

Cash used in investing activities was $33.9 million and $53.8 million for the nine months ended September 30, 2005 and 2004, respectively. For the nine months ended September 30, 2005, cash in the amount of $31.0 million was used for acquisitions and $50.0 million in the same period of 2004. Purchases of property and equipment were $10.7 million for the nine months ended September 30, 2005 compared to $5.8 million in the same period of 2004.

 

Cash provided by financing activities was $.2 million for the nine months ended September 30, 2005 compared to cash provided by financing of $23.0 million for the nine months ended September 30, 2004. For the nine months ended September 30, 2005, proceeds from existing credit facilities with a bank syndication were $114.0 million and $57.0 million in the same period of 2004. Repayment of debt was $95.2 million for the nine months ended September 30, 2005 and $18.3 million in the same period of 2004. Proceeds from Class A shares issued in connection with the stock option plan and employee stock purchase plan were $3.7 million and $3.5 million for the nine months ended September 30, 2005 and 2004, respectively. The CIG business made a cash distribution to First American of $22.0 million prior to acquisition during 2005.

 

At September 30, 2005 the Company had unused lines of credit of $150.5 million.

 

First Advantage filed a Registration Statement with the Securities and Exchange Commission for the issuance of up to 4,000,000 shares of our Class A common stock, par value $.001 per share, from time to time as full or partial consideration for the acquisition of businesses, assets or securities of other business entities. The Registration Statement was declared effective on July 14, 2003. A total of 2,786,762 of the 4,000,000 shares were issued for acquisitions as of September 30, 2005.

 

First Advantage filed a Registration Statement with the Securities and Exchange Commission for the issuance of up to 2,000,000 shares of our Class A common stock, par value $.001 per share, from time to time for general corporate purposes. The Registration Statement was declared effective on January 3, 2005. No shares have been issued as of September 30, 2005.

 

On September 14, 2005, at the closing of the CIG Acquisition, the Company executed a $45 million unsecured subordinated promissory note in favor of First American. Under the note, First Advantage may borrow, repay and re-borrow for up to and including 90 days from closing. The note matures 135 days after September 14, 2005. The note bears interest at the rate payable under First Advantage’s line of credit with Bank of America, N.A. plus 0.5% per annum. Proceeds of the note may be used only for working capital of CIG. There is no outstanding balance at September 30, 2005.

 

On September 29, 2005, the Company executed a revolving credit agreement, with a bank syndication (the “Credit Agreement”). Borrowings available under the Credit Agreement total up to $225 million. The Credit Agreement includes a $10 million sub-facility for the issuance of letters of credit and up to a $5 million swing loan facility. The credit facility maturity date is September 28, 2010.

 

The interest rate is based on the one of two options consisting of 1) the higher of Federal Funds Rate plus  1/2% and Bank of America’s announced “Prime Rate” or 2) a “LIBOR based rate”. The “LIBOR based rate” is based on LIBOR plus a margin that can range from 1.125% to 1.75% (based on progressive levels of leverage). First Advantage management must elect the LIBOR based option up to three days prior to its utilization.

 

The agreement contains usual and customary negative covenants for transactions of this type including but not limited to those regarding liens, investments, creation of indebtedness and fundamental changes, as well as financial covenants of consolidated leverage ratio and minimum consolidated fixed charge coverage ratio.

 

The agreement contains usual and customary provisions regarding acceleration. In the event of a default by the Company under the credit facility, the lenders will have no further obligation to make loans or issue letters of credit and in some cases may, at the option of a majority of the lenders, declare all amounts owed by the Company immediately due and payable and require the Company to provide collateral, and in some cases any amounts owed by the Company under the credit facility will automatically become immediately due and payable.

 

At September 30, 2005, the Company was in compliance with the financial covenants of its loan agreement.

 

-32-


Table of Contents

In 2005, First Advantage seeks to acquire other businesses as part of its growth strategy. The Company will continue to evaluate acquisitions in order to achieve economies of scale, expand market share and enter new markets. The extent of future acquisitions, however, is dependent upon the availability of capital and liquidity to fund such acquisitions.

 

While uncertainties within the Company’s industry exist, management is not aware of any trends or events likely to have a material adverse effect on liquidity or the accompanying financial statements. The Company believes that, based on current levels of operations and anticipated growth, the Company’s cash flow from operations, together with available sources of liquidity, will be sufficient to fund operations, fund anticipated capital expenditures, make required payments of principal and interest on debt, and satisfy other long-term contractual commitments. However, any material adverse change in our operating results from our business plan or acceleration of existing debt obligations or in the amount of investment in acquisitions, technology or products could require the Company to seek other funding alternatives including raising additional capital.

 

The following is a schedule of long-term contractual commitments as of September 30, 2005 over the periods in which they are expected to be paid.

 

     2005

   2006

   2007

   2008

   2009

   Thereafter

   Total

Advertising commitments

   $ 230,000    $ 525,000    $ —      $ —      $ —      $ —      $ 755,000

Minimum contract purchase commitments

     568,000      1,587,000      1,029,000      1,040,000      290,000      —        4,514,000

Operating leases

     4,346,000      16,025,000      13,182,000      10,316,000      8,479,000      26,812,000      79,160,000

Long-term debt and capital leases

     5,631,000      30,189,000      9,787,000      6,764,000      20,000      74,502,000      126,893,000

Interest payments related to long-term debt (1)

     1,568,000      5,504,000      4,437,000      4,132,000      3,900,000      2,925,000      22,466,000
    

  

  

  

  

  

  

Total

   $ 12,343,000    $ 53,830,000    $ 28,435,000    $ 22,252,000    $ 12,689,000    $ 104,239,000    $ 233,788,000
    

  

  

  

  

  

  

 

(1) Estimated interest payments are calculated assuming current interest rates over minimum maturity periods specified in debt agreements.

 

-33-


Table of Contents
Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

There have been no material changes in the Company’s risk since filing its Form 10-K for the year ended December 31, 2004.

 

-34-


Table of Contents
Item 4. Controls and Procedures

 

The Company’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, have concluded that, as of the end of the fiscal quarter covered by this report on Form 10-Q, the Company’s disclosure controls and procedures were effective to provide reasonable assurances that information required to be disclosed in the reports filed or submitted under such Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

There was no change in the Company’s internal control over financial reporting during the quarter ended September 30, 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

First Advantage’s subsidiaries are involved in litigation from time to time in the ordinary course of their businesses. We do not believe that the outcome of any pending or threatened litigation involving these entities will have a material adverse effect on our financial position or operating results.

 

A subsidiary of the Company is a defendant in a class action lawsuit that is pending in federal court in New York. The plaintiffs allege that our subsidiary, directly and through its agents, violated the Fair Credit Reporting Act, New York’s Fair Credit Reporting Act and New York’s Deceptive Practices Act by failing to use reasonable procedures to ensure the maximum possible accuracy when issuing tenant reports. The action seeks injunctive and declaratory relief, compensatory, punitive and statutory damages, plus attorneys’ fees and costs.

 

Two subsidiaries are defendants in separate class action lawsuits that are pending in state court in California. The plaintiffs in both cases allege that our subsidiaries, directly and through their agents, violated the California Consumer Credit Reporting Agencies Act and California Business and Professions Code by failing to use reasonable procedures to ensure the maximum possible accuracy when issuing tenant reports. The actions seek injunctive relief, an accounting, restitution, statutory damages, interest, punitive damages and attorneys’ fees and costs.

 

A subsidiary of the Company is involved in a class action lawsuit that is pending in state court in California. The plaintiff in this case alleges that our subsidiary violated the California Consumer Credit Reporting Agencies Act by failing to use reasonable

 

-35-


Table of Contents

procedures to ensure the maximum possible accuracy when issuing a background report and, in particular, by failing to provide a written disclaimer on the background report regarding its accuracy. The action seeks statutory damages, actual damages, and attorney’s fees.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

In connection with the September 14, 2005 acquisition of Credit Information Group (CIG) of The First American Corporation, the Company amended its Certificate of Incorporation. Prior to the amendment, the Company was authorized to issue up to 75,000,000 shares of Class A common stock, 25,000,000 shares of Class B common stock, and 1,000,000 shares of preferred stock The amendment authorized the Company to issue up to 125,000,000 shares of Class A common stock, which is entitled to one vote per share, 75,000,000 shares of Class B common stock, which is entitled to ten votes per share, and up to 1,000,000 shares of preferred stock. On September 14, 2005, FADV Holdings LLC, a wholly-owned subsidiary of The First American Corporation (“First American”) received Class B shares representing approximately 80% of the total issued and outstanding common stock of the Company on such date.

 

Item 3. Defaults upon Senior Securities

 

None

 

Item 4. Submission of Matters to a Vote of Security Holders

 

On September 13, 2005, the Company held its annual shareholders meeting at which four matters were submitted to its shareholders for approval. Proposal one, approval of the acquisition of CIG, was approved by 3,025,310 shares of Class A common stock (without giving effect to common stock held by First American, and its affiliates, Don Robert or Company’s management) which constituted a majority of Class A shares voting by proxy or in person, and 19,089,552 shares of all Company common stock outstanding, which constituted a majority of all common stock voting by proxy or in person. Proposal two, approval of the amendment to the Company’s certificate of incorporation, was approved by 4,902,299 shares of Class A common, which constituted a majority of Class A shares issued and outstanding, of which 4,865,343 were comprised of a majority of Class A shares issued and outstanding (without giving effect to common stock held by First American, its affiliates, Don Robert or Company’s management), and 16,027,286 shares of Class B common stock, which constituted 100 percent of Class B shares issued and outstanding. The total number of common shares voting in favor of proposal two was 20,929,585, which constituted a majority of all common shares issued and outstanding. Proposal three, election of the directors nominated to serve for the ensuing year, was approved by a plurality of shareholders, and a tabulation of the results of voting with respect to each nominee is listed in the table below. Proposal four, approval of the amendment to the 2003 incentive plan was approved by 18,893,444 shares of Company common stockholders, voting together as one class, which constituted a majority of all common stock voting by proxy or in person.

 

-36-


Table of Contents
     Shares Voted

Name of Nominee


   Eligible
for Voting


   Voted

   YES

   Withhold

Parker Kennedy

   168,149,018    167,575,691    167,491,785    83,906

John Long

   168,149,018    167,575,691    167,563,586    12,105

J. David Chatham

   168,149,018    167,575,691    167,491,765    83,926

Barry Connelly

   168,149,018    167,575,691    167,491,765    83,926

Lawrence Lenihan

   168,149,018    167,575,691    167,522,782    52,909

Donald Nickelson

   168,149,018    167,575,691    167,563,646    12,045

Donald Robert

   168,149,018    167,575,691    166,407,072    1,168,619

Adelaide Sink

   168,149,018    167,575,691    167,563,666    12,025

David Walker

   168,149,018    167,575,691    167,422,493    153,198

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

(a) Exhibits

 

2.1    Amended and Restated Master Transfer Agreement among The First American Corporation, First American Real Estate Services, Inc., First American Real Estate Solutions, LLC, FADV Holdings LLC, and First Advantage Corporation, dated as of June 22, 2005
2.2    Contribution Agreement among The First American Corporation, First American Real Estate Services, Inc., FADV Holdings LLC, and First Advantage Corporation, dated as of September 14, 2005
2.3    Contribution Agreement among First American Real Estate Solutions, LLC, FADV Holdings LLC, and First Advantage Corporation, dated as of September 14, 2005
3.1    Certificate of Amendment to the First Amended and Restated Certificate of Incorporation of First Advantage Corporation
10.1    Amended and Restated Services Agreement between The First American Corporation and First Advantage Corporation, dated as of September 14, 2005
10.2    Outsourcing Agreement between First American Real Estate Solutions, LLC and First Advantage Corporation, dated as of September 14, 2005
10.3    First Advantage 2003 Incentive Compensation Plan, Amended and Restated as of September 14, 2005

 

-37-


Table of Contents
10.4    Subordinated Promissory Note, made September 14, 2005, by First Advantage Corporation to the order of The First American Corporation
10.5    Office Lease by and between First American Title Insurance Company and First Advantage Corporation, dated as of September 14, 2005
10.6    Credit Agreement, dated as of September 28, 2005, among First Advantage Corporation as the Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender And L/C Issuer, LaSalle Bank National Association, as Syndication Agent, Wachovia Bank, National Association and Suntrust Bank, as Co-Documentation Agents and the Other Lenders Party Hereto
10.7    Pledge Agreement, dated as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent
10.8    Security Agreement, dated as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent.
10.9    Subsidiary Guaranty Agreement as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent.
10.10    Note, dated September 28, 2005, made by First Advantage in favor of LaSalle Bank National Association
10.11    Note, dated September 28, 2005, made by First Advantage Corporation in favor of Wachovia Bank, National Association
10.12    Note, dated September 28, 2005, made by First Advantage Corporation in favor of Suntrust Bank
10.13    Note, dated September 28, 2005, made by First Advantage Corporation in favor of U.S. Bank National Association
10.14    Note, dated September 28, 2005, made by First Advantage Corporation in favor of Commerzbank AG, New York and Grand Cayman Branches
10.15    Note, dated September 28, 2005, made by First Advantage Corporation in favor Regions Bank

 

-38-


Table of Contents
31.1    Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2    Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1    Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2    Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1    Reimbursement Agreement entered into October 11. 2005 between The First American Corporation and First Advantage Corporation
99.2    Amendment to Registration Agreement, dated November 1, 2005 between First Advantage Corporation and Experian Information Solutions, Inc.

 

-39-


Table of Contents

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

FIRST ADVANTAGE CORPORATION

(Registrant)

 

Date: November 10, 2005       By:   /s/ JOHN LONG
                John Long
                Chief Executive Officer
Date: November 10, 2005       By:   /s/ JOHN LAMSON
                John Lamson
                Chief Financial Officer


Table of Contents

EXHIBIT INDEX

 

Exhibit No.

  

Description


2.1    Amended and Restated Master Transfer Agreement among The First American Corporation, First American Real Estate Services, Inc., First American Real Estate Solutions, LLC, FADV Holdings LLC, and First Advantage Corporation, dated as of June 22, 2005
2.2    Contribution Agreement among The First American Corporation, First American Real Estate Services, Inc., FADV Holdings LLC, and First Advantage Corporation, dated as of September 14, 2005
2.3    Contribution Agreement among First American Real Estate Solutions, LLC, FADV Holdings LLC, and First Advantage Corporation, dated as of September 14, 2005
3.1    Certificate of Amendment to the First Amended and Restated Certificate of Incorporation of First Advantage Corporation
10.1    Amended and Restated Services Agreement between The First American Corporation and First Advantage Corporation, dated as of September 14, 2005
10.2    Outsourcing Agreement between First American Real Estate Solutions, LLC and First Advantage Corporation, dated as of September 14, 2005
10.3    First Advantage 2003 Incentive Compensation Plan, Amended and Restated as of September 14, 2005
10.4    Subordinated Promissory Note, made September 14, 2005, by First Advantage Corporation to the order of The First American Corporation
10.5    Office Lease by and between First American Title Insurance Company and First Advantage Corporation, dated as of September 14, 2005
10.6    Credit Agreement, dated as of September 28, 2005, among First Advantage Corporation as the Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender And L/C Issuer, LaSalle Bank National Association, as Syndication Agent, Wachovia Bank, National Association and Suntrust Bank, as Co-Documentation Agents and the Other Lenders Party Hereto


Table of Contents
Exhibit No.

  

Description


10.7    Pledge Agreement, dated as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent
10.8    Security Agreement, dated as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent.
10.9    Subsidiary Guaranty Agreement as of September 28, 2005, made by First Advantage Corporation in favor of Bank of America, N.A., as administrative and collateral agent.
10.10    Note, dated September 28, 2005, made by First Advantage in favor of LaSalle Bank National Association
10.11    Note, dated September 28, 2005, made by First Advantage Corporation in favor of Wachovia Bank, National Association
10.12    Note, dated September 28, 2005, made by First Advantage Corporation in favor of Suntrust Bank
10.13    Note, dated September 28, 2005, made by First Advantage Corporation in favor of U.S. Bank National Association
10.14    Note, dated September 28, 2005, made by First Advantage Corporation in favor of Commerzbank AG, New York and Grand Cayman Branches
10.15    Note, dated September 28, 2005, made by First Advantage Corporation in favor of Regions Bank
10.16    Note, dated September 28, 2005, made by First Advantage Corporation in favor of Bank of America N.A.
31.1    Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2    Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1    Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2    Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1    Reimbursement Agreement entered into October 11. 2005 between The First American Corporation and First Advantage Corporation
99.2    Amendment to Registration Agreement, dated November 1, 2005 between First Advantage Corporation and Experian Information Solutions, Inc.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki