FIDELITY NATIONAL FINANCIAL INC /DE/ - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


(X)		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


( )		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2003

Commission File Number 1-9396

FIDELITY NATIONAL FINANCIAL, INC.

(Exact name of registrant as specified in its charter)


Delaware		86-0498599

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)


601 Riverside Avenue, Jacksonville, Florida			32204

(Address of principal executive offices)			(Zip Code)

(904) 854-8100

(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 (X) NO ( )

As of October 31, 2003, 148,252,203 shares of the Registrant’s Common Stock were outstanding

TABLE OF CONTENTS


Part I: FINANCIAL INFORMATION
	Item 1. Condensed Consolidated Financial Statements
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
		CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
		CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosure about Market Risk
	Item 4. Controls and Procedures
Part II: OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 4. Submission of Matters to Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Exhibit Index
EXHIBIT 3.1
EXHIBIT 10.83
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

FORM 10-Q
QUARTERLY REPORT
Quarter Ended September 30, 2003

INDEX


			Page

Part I: FINANCIAL INFORMATION
	Item 1. Condensed Consolidated Financial Statements
		A. Condensed Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002		3
		B. Condensed Consolidated Statements of Earnings for the three months and nine months ended September 30, 2003 and 2002		4
		C. Condensed Consolidated Statements of Comprehensive Earnings for the three months and nine months ended September 30, 2003 and 2002		5
		D. Condensed Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2003		6
		E. Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002		7
		F. Notes to Condensed Consolidated Financial Statements		9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
	Item 3. Quantitative and Qualitative Disclosure About Market Risk			22
	Item 4. Controls and Procedures			22
Part II: OTHER INFORMATION
	Item 1. Legal Proceedings			23
	Item 4. Submission of Matters to a Vote of Security Holders			23
	Item 6. Exhibits and Reports on Form 8-K			23

Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)


			September 30,			December 31,
			2003			2002

			(Unaudited)
ASSETS
Investments:
	Fixed maturities available for sale, at fair value at September 30, 2003 includes $270,978 and at December 31, 2002 includes $243,844 of pledged fixed maturity securities related to secured trust deposits		$	1,676,761		$	1,564,183
	Equity securities, at fair value			89,828			74,401
	Other long-term investments			33,483			38,368
	Settlement of investments			(26,022	)		(207	)
	Short-term investments, at September 30, 2003 includes $216,098 and at December 31, 2002 includes $231,080 of pledged short-term investments related to secured trust deposits			773,074			888,863

		Total investments		2,547,124			2,565,608
Cash and cash equivalents, at September 30, 2003 includes $403,316 and at December 31, 2002 includes $295,051 of pledged cash related to secured trust deposits				649,303			482,600
Leases and residual interests in securitizations				76,421			119,242
Trade receivables, net				561,965			220,842
Notes receivable, net (related party - $1,285 in 2003 and $2,804 in 2002)				9,259			12,363
Goodwill				1,908,628			996,613
Prepaid expenses and other assets				275,874			205,957
Capitalized software				277,663			98,034
Other intangible assets				492,133			47,357
Title plants				285,424			275,976
Property and equipment, net				313,566			165,595
Deferred tax assets				—			55,557

			$	7,397,360		$	5,245,744

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
	Accounts payable and accrued liabilities		$	832,676		$	633,140
	Deferred revenue			163,331			65,777
	Notes payable			688,377			493,458
	Reserve for claim losses			928,387			887,973
	Secured trust deposits			878,193			750,920
	Deferred tax liability			1,120			—
	Income taxes payable			192,012			28,743

				3,684,096			2,860,011
	Minority interests and preferred stock of subsidiary			16,213			131,797
Stockholders’ equity:
	Preferred stock, $.0001 par value; authorized, 3,000,000 shares; issued and outstanding, none			—			—
	Common stock, $.0001 par value; authorized, 250,000,000 shares as of September 30, 2003 and 150,000,000 shares as of December 31, 2002; issued 151,575,835 as of September 30, 2003 and 121,471,220 as of December 31, 2002			15			12
	Additional paid-in capital			2,438,840			1,551,637
	Retained earnings			1,347,491			738,522

				3,786,346			2,290,171
	Accumulated other comprehensive earnings			3,976			12,303
	Unearned compensation			(925	)		(1,628	)
	Less treasury stock, 3,453,500 shares as of September 30, 2003 and 1,839,500 shares as of December 31, 2002, at cost			(92,346	)		(46,910	)

				3,697,051			2,253,936

			$	7,397,360		$	5,245,744

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)


			Three months ended				Nine months ended
			September 30,				September 30,

			2003		2002		2003		2002

			(Unaudited)				(Unaudited)
REVENUE:
	Title insurance premiums		$	1,333,426	$	882,565	$	3,484,130	$	2,408,416
	Escrow and other title-related fees			400,379		229,093		1,036,097		617,916
	Information services revenue			217,006		—		426,384		—
	Real estate related services			213,891		141,784		581,225		379,285
	Interest and investment income			13,686		19,086		45,380		56,270
	Realized gains, net			49,023		4,263		88,910		11,948
	Other income			3,000		6,056		11,462		18,836

				2,230,411		1,282,847		5,673,588		3,492,671

EXPENSES:
	Personnel costs			715,333		371,842		1,829,974		1,037,722
	Other operating expenses			511,231		259,746		1,271,094		717,046
	Agent commissions			458,952		368,511		1,252,831		1,020,936
	Provision for claim losses			73,339		44,129		186,718		120,421
	Interest expense			11,268		8,371		30,199		25,999

		Total expenses		1,770,123		1,052,599		4,570,816		2,922,124

Earnings before income taxes and minority interest				460,288		230,248		1,102,772		570,547
Income tax expense				177,272		82,890		419,054		205,397

Earnings before minority interest				283,016		147,358		683,718		365,150
Minority interest				5,674		3,847		18,114		8,368

		Net earnings	$	277,342	$	143,511	$	665,604	$	356,782

	Basic earnings per share		$	2.05	$	1.20	$	5.11	$	3.00

	Weighted average shares outstanding, basic basis			135,013		119,587		130,140		119,095

	Diluted earnings per share		$	1.99	$	1.16	$	4.95	$	2.89

	Weighted average shares outstanding, diluted basis			139,389		123,971		134,400		123,453

	Cash dividends per share		$	0.18	$	0.10	$	0.42	$	0.25

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In thousands)


		Three months ended					Nine months ended
		September 30,					September 30,

		2003			2002		2003			2002

		(Unaudited)					(Unaudited)
Net earnings		$	277,342		$	143,511	$	665,604		$	356,782
Other comprehensive earnings (loss):
	Unrealized gains on investments, net (1)		12,543			2,952		51,063			12,223
	Reclassification adjustments for (gains) losses included in net earnings (2)		(36,926	)		1,119		(59,390	)		881

Other comprehensive earnings (loss)			(24,383	)		4,071		(8,327	)		13,104

Comprehensive earnings		$	252,959		$	147,582	$	657,277		$	369,886

(1) Net of income tax expense of $8.4 million and $2.0 million and $34.0 million and $8.1 million for the three months and nine months ended September 30, 2003 and 2002, respectively.

(2) Net of income tax expense (benefit) of $(24.6) million and $746,000 and $(39.6) million and $586,000 for the three months and nine months ended September 30, 2003 and 2002, respectively.

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(In thousands)


										Accumulated
	Common Stock				Additional					Other						Treasury Stock
					Paid-in		Retained			Comprehensive			Unearned
	Shares		Amount		Capital		Earnings			Earnings			Compensation			Shares		Amount

Balance, December 31, 2002		121,471	$	12	$	1,551,637	$	738,522		$	12,303		$	(1,628	)		1,840	$	(46,910	)
Purchase of treasury stock		—		—		—		—			—			—			1,614		(45,436	)
Exercise of stock options		2,211		—		26,393		—			—			—			—		—
Tax benefit associated with the exercise of options		—		—		15,129		—			—			—			—		—
Acquisition of ANFI		4,712		1		139,288		—			—			—			—		—
Acquisition of FIS		10,188		1		274,999		—			—			—			—		—
Acquisition of FNIS		12,994		1		420,424		—			—			1,628			—		—
Other comprehensive loss, net of tax— unrealized loss on investments and other financial instruments		—		—		—		—			(8,327	)		—			—		—
Amortization of unearned compensation		—		—		—		—			—			1,634			—		—
Unearned compensation – ANFI		—		—		—		—			—			(2,559	)		—		—
Capital transactions of investments accounted for under the equity method		—		—		5,028		—			—			—			—		—
Adoption of SFAS No. 123		—		—		5,942		—			—			—			—		—
Cash dividends declared ($0.42 per share)		—		—		—		(56,635	)		—			—			—		—
Net earnings		—		—		—		665,604			—			—			—		—

Balance, September 30, 2003		151,576	$	15	$	2,438,840	$	1,347,491		$	3,976		$	(925	)		3,454	$	(92,346	)

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


			Nine months ended
			September 30,

			2003			2002

			(Unaudited)
Cash flows from operating activities:
	Net earnings		$	665,604		$	356,782
	Reconciliation of net earnings to net cash provided by operating activities:
		Depreciation and amortization		160,458			52,745
		Net increase in reserve for claim losses		30,350			12,103
		Gain on sales of assets and investments		(88,910	)		(11,948	)
		Stock-based compensation cost		6,332			—
	Change in assets and liabilities, net of effects from acquisitions:
		Net decrease in leases and lease securitization residual interests		42,821			32,169
		Net increase in secured trust deposits		6,864			11,583
		Tax benefit associated with the exercise of stock options		15,129			12,863
		Net increase in trade receivables		(190,920	)		(14,272	)
		Net increase in prepaid expenses and other assets		(59,871	)		(1,605	)
		Net increase in accounts payable, accrued liabilities and minority interests		201,846			68,738
		Net increase in income taxes		194,181			86,284

Net cash provided by operating activities				983,884			605,442

Cash flows from investing activities:
	Proceeds from sales of investment securities available for sale			1,426,417			897,704
	Proceeds from maturities of investment securities available for sale			291,303			129,279
	Proceeds from sale of assets			3,550			9,175
	Collections of notes receivable			5,546			5,030
	Additions to title plants			(1,681	)		(512	)
	Additions to property and equipment			(106,796	)		(62,103	)
	Additions to capitalized software			(44,664	)		(36,558	)
	Additions to investments			(1,731,485	)		(978,163	)
	Net (additions) sales from short-term investment securities			145,986			(501,468	)
	Additions to notes receivable			(3,277	)		(4,181	)
	Sale of subsidiary, net of cash sold			—			15,500
	Acquisitions of businesses, net of cash acquired			(1,002,173	)		(20,724	)

Net cash used in investing activities				(1,017,274	)		(547,021	)

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


		Nine months ended
		September 30,

		2003			2002

		(Unaudited)
Cash flows from financing activities:
	Borrowings	$	24,442		$	21,537
	Net proceeds from issuance of notes		248,118			—
	Debt issuance costs		(1,881	)		—
	Debt service payments		(91,455	)		(78,843	)
	Dividends paid		(68,353	)		(26,907	)
	Purchase of treasury stock		(45,436	)		(28,150	)
	Stock options exercised		26,393			34,009

Net cash provided by (used in) financing activities			91,828			(78,354	)

Net increase (decrease) in cash and cash equivalents, excluding pledged cash related to secured trust deposits			58,438			(19,933	)
Cash and cash equivalents at beginning of period, excluding pledged cash related to secured trust deposits			187,549			174,713

Cash and cash equivalents at end of period, excluding pledged cash related to secured trust deposits		$	245,987		$	154,780

Supplemental cash flow information:
	Income taxes paid	$	195,300		$	92,500

	Interest paid	$	34,377		$	29,775

Noncash investing and financing activities:
	Dividends declared and unpaid	$	—		$	11,718

	Shares issued in connection with acquisitions	$	834,714		$	—

	Capital transactions of investments accounted for under the equity method	$	5,028		$	7,604

See Notes to Condensed Consolidated Financial Statements

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note A - Basis of Financial Statements

The financial information in this report includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, the “Company”) and was prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation are included. This report should be read in connection with the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Certain reclassifications were made in the 2002 Condensed Consolidated Financial Statements to conform to classifications used in 2003.

Note B – Acquisitions

The results of operations and financial position of the entities acquired during 2003 are included in the Condensed Consolidated Financial Statements from and after the date of acquisition.

Significant Transaction:

ALLTEL Information Services, Inc.

On January 28, 2003, the Company entered into a stock purchase agreement with ALLTEL Corporation, Inc., a Delaware corporation (“ALLTEL”), to acquire from ALLTEL its financial services division, ALLTEL Information Services, Inc. (“AIS”). On April 1, 2003, the Company closed the acquisition and subsequently renamed the division Fidelity Information Services (“FIS”). FIS is one of the largest providers of information-based technology solutions and processing services to the mortgage and financial services industries.

The Company acquired FIS for approximately $1,069.6 million (including the payment for certain working capital adjustments and estimated transaction costs), consisting of $794.6 million in cash and $275.0 million of the Company’s common stock. The Company funded the cash portion of the purchase price through the issuance of $250.0 million aggregate principal amount of 5.25% notes due March 15, 2013 (See Note D), and $544.6 million in available cash. The stock portion of the purchase price resulted in the issuance of 10,187,902 shares of the Company’s common stock to ALLTEL. Those shares are restricted from sale to the public until April 1, 2004. The acquisition was accounted for under the purchase method of accounting.

In connection with the closing of the acquisition, the Company entered into a stockholder’s agreement, a non-competition agreement and certain transition agreements with ALLTEL. The stockholder’s agreement: (1) restricts the sale by ALLTEL of the Company’s common stock received in the transaction until April 1, 2004, (2) grants ALLTEL the right to designate one nominee to the Company’s Board of Directors, so long as it continues to hold at least 50% of the shares of the Company’s common stock received in the transaction, and (3) grants ALLTEL certain registration rights with respect to the Company’s common stock it receives in the transaction. The non-competition agreement prohibits, with certain exceptions, ALLTEL and its affiliates from engaging in the business relating to the assets acquired by the Company for a period of two years after the transaction. The transaction was accounted for under the purchase method of accounting, and as a result, the Company has allocated $439.0 million to goodwill, $348.0 million to other intangible assets, namely acquired customer relationship intangibles, and $95.0 million to capitalized software based on studies and valuations that are currently being finalized. Such purchase accounting adjustments may be refined as additional information becomes available. The Company is amortizing the other intangible assets using an accelerated method which takes into consideration expected customer attrition rates over a 10-year period. The acquired software is amortized over a seven-year period using an accelerated method that contemplates the period of expected economic benefit and future enhancements to the underlying software.

The assets acquired and liabilities assumed in the FIS acquisition were as follows (dollars in thousands):


Tangible and amortizable intangible assets acquired at fair value		$	741,960
Goodwill			439,046
Liabilities assumed at fair value			(111,385	)

	Total purchase price	$	1,069,621

Selected unaudited pro forma combined results of operations for the nine-month periods ended September 30, 2003 and 2002, assuming the acquisition had occurred as of January 1, 2002, and using actual general and administrative expenses prior to the acquisition, are set forth below:


	Nine months ended
	September 30,

	2003		2002

	(In thousands, except per share data)
Total revenue	$	5,884,563	$	4,101,833
Net earnings	$	682,647	$	394,766
Basic earnings per share	$	5.11	$	3.05
Diluted earnings per share	$	4.96	$	2.95

All Other Insignificant Transactions:

The following acquisitions individually, and in the aggregate, are not significant to require pro forma presentation.

Fidelity National Information Solutions, Inc.

On September 30, 2003, the Company acquired the outstanding minority interest of Fidelity National Information Solutions, Inc. (“FNIS”), its majority-owned real estate related services public subsidiary, whereby FNIS became a wholly-owned subsidiary of the Company. In the acquisition, each share of FNIS common stock (other than FNIS common stock the Company already owned) was exchanged for 0.83 shares of the Company’s common stock. The Company issued 12,993,507 shares of its common stock to FNIS stockholders in the acquisition. The acquisition of the FNIS minority interest was accounted for under the purchase method of accounting, and as a result, the Company has allocated $235.5 million to goodwill and $26.3 million to other intangible assets and capitalized software based on preliminary studies and valuations that are being finalized. Such purchase accounting adjustments may be refined as additional information becomes available.

WebTone Technologies, Inc.

On September 2, 2003, the Company acquired WebTone Technologies, Inc. (“WebTone”) for approximately $90.0 million in cash. WebTone is the developer of the TouchPoint® suite of customer interactive management solutions for financial services organizations. The acquisition was accounted for under the purchase method of accounting.

Omaha Property and Casualty Insurance Company

On May 2, 2003, the Company acquired the flood insurance business of Mutual of Omaha’s subsidiary, Omaha Property and Casualty Insurance Company (“OPAC”), for approximately $18.0 million in cash. This acquisition, along with the Bankers Insurance Group acquisition (described below) expands the Company’s presence in the flood insurance business. The transaction was accounted for under the purchase method of accounting.

Key Title Company

On March 31, 2003, the Company acquired Key Title Company (“Key Title”) for approximately $22.5 million in cash. Key Title operates in 12 counties in the state of Oregon. The acquisition was accounted for as a purchase.

ANFI, Inc.

On March 26, 2003, the Company merged with ANFI, Inc. (“ANFI”), and ANFI became a wholly-owned subsidiary of the Company. In the merger, each share of ANFI common stock (other than ANFI common stock the Company already owned) was exchanged for 0.454 shares of the Company’s common stock. The Company issued 4,711,912 shares of its common stock to the ANFI stockholders in the merger. The acquisition was accounted for as a purchase.

Lenders Service, Inc.

On February 10, 2003, the Company acquired Lenders Service, Inc., a Delaware corporation (“LSI”), for approximately $75.0 million in cash. LSI is a leading provider of appraisal, title and closing services to residential mortgage originators. The acquisition was accounted for as a purchase.

Bankers Insurance Group

On January 9, 2003, the Company acquired certain assets of Bankers Insurance Group (“Bankers”) for approximately $41.6 million in cash. The assets include the right to issue new and renewal flood insurance policies underwritten by Bankers and its subsidiaries, Bankers Insurance Company, Bankers Security Insurance Company and First Community Insurance Company (“FCIC”). As part of the transaction, the Company also acquired FCIC, a fifty-state licensed insurance carrier, to act as the underwriter for the policies. The acquisition was accounted for as a purchase.

Acquisition of Micro General Corporation by FNIS

On July 9, 2002, FNIS acquired Micro General Corporation (“Micro General”), the Company’s majority-owned public subsidiary, through a tender offer and subsequent short-form merger. Under the terms of the tender offer and merger, each share of Micro General common stock was exchanged for 0.696 shares of FNIS common stock. FNIS issued approximately 12.9 million shares of common stock to Micro General stockholders. In the Company’s Condensed Consolidated Financial Statements, this transaction is accounted for in accordance with SFAS No. 141 and FASB Technical Bulletin 85-5. Accordingly, FNIS’s acquisition of the minority stockholders’ interest in Micro General (the “noncontrolled equity interest”) was recognized by the Company as the acquisition of shares from a minority interest, which is accounted for by the purchase method under SFAS No. 141. FNIS’s acquisition of the Company’s interest in Micro General (the “controlled equity interest”) is not considered a business combination and, therefore, the Company recognized the related assets and liabilities transferred from the controlled equity interest in Micro General to FNIS at their historical carrying values. The market price per share of FNIS common stock that was issued to Micro General minority stockholders in this transaction exceeded the Company’s carrying amount per share of FNIS common stock, resulting in an increase of $98.7 million to the Company’s consolidated equity and an increase in net assets, the majority of which was goodwill.

Homebuilders Financial Network, Inc.

On May 23, 2002, the Company acquired a 75% interest in Homebuilders Financial Network, Inc., a provider of outsource mortgage loan fulfillment services to homebuilders, for approximately $21.0 million in cash. The acquisition was accounted for as a purchase.

Note C – Costs Associated with Exit Activities and Impairment of Long-Lived Assets

The acquisition of FNIS on September 30, 2003 allowed the Company to more fully capitalize on the significant technology resources of FIS, which the Company acquired on April 1, 2003 (see Note B) by combining all technology resources within one integrated organization. The Company’s data center activities have historically been managed by FNIS. However, with the acquisition of FNIS, the Company has been able to successfully leverage FIS’ expertise in data center management by migrating all of its data center activities from FNIS to the existing FIS platforms as of September 30, 2003. As a result of this decision to transfer all data center operations and projects from FNIS to FIS, the Company incurred a pre-tax expense in accordance with Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”(“SFAS No. 146”), of $26.3 million relating to hardware/software and leasehold improvement write-offs and contract termination costs. $8.9 million of these expenses are included in realized gains, net and $17.4 million are included in other operating expenses in the Condensed Consolidated Statements of Earnings for the three and nine months ended September 30, 2003. As of September 30, 2003, the Company had a remaining payable of $10.0 million related to these costs, all of which were paid subsequent to quarter-end.

During the third quarter of 2003, the Company relocated its corporate headquarters to Jacksonville, Florida. As a result of the relocation the Company incurred a pre-tax expense in accordance with SFAS No. 146 of $12.9 million relating to relocation costs and lease abandonment costs. $7.9 million of these expenses are included in personnel costs and $5.0 million are included in other operating expenses in the Condensed Consolidated Statements of Earnings for the three and nine months ended September 30, 2003. As of September 30, 2003, the Company had a remaining payable of $5.0 million related to these costs, the majority of which will be paid in the fourth quarter of 2003.

In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long- Lived Assets” (“SFAS No. 144”), the Company incurred a pre-tax expense of $7.9 million relating to the write-off of intangible assets, software and license fees. These expenses are included in other operating expenses in the Condensed Consolidated Statements of Earnings for the three and nine months ended September 30, 2003.

Note D – Issuance of Notes

On March 11, 2003, the Company completed a public offering of $250.0 million aggregate principal amount of 5.25% notes due March 15, 2013. The notes were priced at 99.247% of par to yield 5.433% annual interest, and are unsecured. The Company received net proceeds of approximately $246.2 million, after expenses, which was used to pay a portion of the $1,069.6 million purchase price of FIS on April 1, 2003. See Note B.

Note E – Earnings Per Share

The Company presents “basic” earnings per share, representing net earnings divided by the weighted average shares outstanding (excluding all common stock equivalents), and “diluted” earnings per share, representing the dilutive effect of all common stock equivalents. The following table illustrates the computation of basic and diluted earnings per share:


	Three months ended				Nine months ended
	September 30,				September 30,

	2003		2002		2003		2002

	(In thousands, except per share amounts)
Net earnings basic and diluted basis	$	277,342	$	143,511	$	665,604	$	356,782

Weighted average shares outstanding during the period, basic basis		135,013		119,587		130,140		119,095
Plus: Common stock equivalent shares assumed from conversion of options		4,376		4,384		4,260		4,358

Weighted average shares outstanding during the period, diluted basis		139,389		123,971		134,400		123,453

Basic earnings per share	$	2.05	$	1.20	$	5.11	$	3.00

Diluted earnings per share	$	1.99	$	1.16	$	4.95	$	2.89

Options to purchase 745,591 shares and 1,537,558 shares for the three and nine months ended September 30, 2003, respectively, and 57,475 shares and 331,924 shares for the three and nine months ended September 30, 2002, respectively, of the Company’s common stock were not included in the computation of diluted earnings per share because they were anti-dilutive.

Note F- Stock-Based Compensation

At September 30, 2003, the Company has 14 stock-based employee compensation plans, including two stock option plans assumed in connection with the ANFI merger and four stock option plans assumed in connection with the FNIS merger. Prior to the third quarter of 2003, the Company accounted for those plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. All options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant; therefore no stock-based compensation cost had been reflected in net earnings.

During the third quarter of 2003, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation ” (“SFAS No. 123”), for stock-based employee compensation, effective as of the beginning of 2003. Under the fair value method of accounting, compensation cost is measured based on the fair value of the award at the grant date and recognized over the service period. The Company has elected to use the prospective method of transition, as permitted by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure” (“SFAS No. 148”). Under this method, stock-based employee compensation cost is recognized from the beginning of 2003 as if the fair value method of accounting had been used to account for all employee awards granted, modified, or settled in years beginning January 1, 2003. Prior period financial statements were not restated. Net income, as a result of the adoption of SFAS 123, for the three and nine months ended September 30, 2003 reflects an expense of $348,000 and $3.9 million, respectively, which is included in personnel costs in the reported financial results. The adoption of the fair value method of accounting for stock-based employee compensation plans increased compensation cost by $5.8 million for the three months ended March 31, 2003, which resulted in a reduction in net income of $3.6 million or $0.03 per diluted share. Compensation cost decreased by $47,000 for the three months ended June 30, 2003, which resulted in an increase in net income of $29,000, which had no change to diluted earnings per share.

The following table illustrates the effect on net income and earnings per share as if the fair value based method had been applied to all outstanding and unvested awards in each period.


		Three months ended						Nine months ended
		September 30,						September 30,

		2003			2002			2003			2002

		(In thousands, except per share amounts)
Net earnings, as reported		$	277,342		$	143,511		$	665,604		$	356,782
Add: Stock-based compensation expense included in reported net earnings, net of related tax effects			348			—			3,926			—
Deduct: Total stock-based compensation expense determined under fair value based methods for all awards, net of related tax effects			(2,112	)		(1,165	)		(10,069	)		(11,008	)

Pro forma net earnings		$	275,578		$	142,346		$	659,461		$	345,774

Earnings Per Share:
	Basic – as reported	$	2.05		$	1.20		$	5.11		$	3.00
	Basic – pro forma	$	2.04		$	1.19		$	5.07		$	2.90
	Diluted – as reported	$	1.99		$	1.16		$	4.95		$	2.89
	Diluted – pro forma	$	1.97		$	1.14		$	4.89		$	2.79

Note G – Segment Information

Summarized financial information concerning the Company’s reportable segments is shown in the following table.


						Real Estate
Three Months Ended:	Title		Information			Related		Corporate
September 30, 2003	Insurance		Services			Services		and Other			Total

	(In thousands)
Total revenue	$	1,796,784	$	216,931		$	214,898	$	1,798		$	2,230,411
Interest and investment income, including realized gains and (losses)		62,979		(75	)		1,007		(1,202	)		62,709
Depreciation and amortization expense		19,248		32,040			26,281		85			77,654
Interest expense		89		73			888		10,218			11,268
Earnings (loss) before income taxes and minority interest		409,615		34,036			36,303		(19,666	)		460,288
Income tax expense (benefit)		157,648		13,037			14,087		(7,500	)		177,272
Minority interest		346		—			5,335		(7	)		5,674
Net earnings (loss)		251,621		20,999			16,881		(12,159	)		277,342


						Real Estate
Nine Months Ended:	Title		Information			Related		Corporate
September 30, 2003	Insurance		Services			Services		and Other			Total

	(In thousands)
Total revenue	$	4,648,273	$	426,194		$	584,595	$	14,526		$	5,673,588
Interest and investment income, including realized gains and (losses)		128,046		(190	)		3,370		3,064			134,290
Depreciation and amortization expense		50,270		62,081			47,306		801			160,458
Interest expense		637		78			1,734		27,750			30,199
Earnings (loss) before income taxes and minority interest		955,405		62,807			117,273		(32,713	)		1,102,772
Income tax expense (benefit)		363,054		23,867			44,564		(12,431	)		419,054
Minority interest		1,315		—			16,781		18			18,114
Net earnings (loss)		591,036		38,940			55,928		(20,300	)		665,604
Assets		4,842,277		1,281,528			1,104,688		168,867			7,397,360
Goodwill		835,356		492,343			580,929		—			1,908,628


					Real Estate
Three Months Ended:	Title		Information		Related		Corporate
September 30, 2002	Insurance		Services		Services		and Other			Total

	(In thousands)
Total revenue	$	1,129,208	$	—	$	142,664	$	10,975		$	1,282,847
Interest and investment income, including realized gains and (losses)		17,550		—		880		4,919			23,349
Depreciation and amortization expense		12,296		—		6,255		158			18,709
Interest expense		351		—		356		7,664			8,371
Earnings (loss) before income taxes and minority interest		209,452		—		22,276		(1,480	)		230,248
Income tax expense (benefit)		75,403		—		8,020		(533	)		82,890
Minority interest		520		—		3,277		50			3,847
Net earnings (loss)		133,529		—		10,979		(997	)		143,511


					Real Estate
Nine Months Ended:	Title		Information		Related		Corporate
September 30, 2002	Insurance		Services		Services		and Other			Total

	(In thousands)
Total revenue	$	3,076,188	$	—	$	381,728	$	34,755		$	3,492,671
Interest and investment income, including realized gains and (losses)		49,856		—		2,443		15,919			68,218
Depreciation and amortization expense		36,037		—		16,047		661			52,745
Interest expense		1,122		—		1,073		23,804			25,999
Earnings (loss) before income taxes and minority interest		509,748		—		66,252		(5,453	)		570,547
Income tax expense (benefit)		183,509		—		23,851		(1,963	)		205,397
Minority interest		1,013		—		5,691		1,664			8,368
Net earnings (loss)		325,226		—		36,710		(5,154	)		356,782
Assets		4,070,147		—		722,292		404,346			5,196,785
Goodwill		676,470		—		270,805		—			947,275

The activities of the reportable segments include the following:

Title Insurance

This segment, consisting of title insurance underwriters and wholly-owned title insurance agencies, provides core title insurance and escrow services, including document preparation, collection and trust activities. This segment coordinates its activities with those of the real estate related services segment described below in order to offer the full range of real estate products and services required to execute and close a real estate transaction. Included in the Title Insurance segment for the three and nine months ended September 30, 2003 are $14.9 million in pre-tax expenses relating to the migration of data center operations from FNIS to FIS and $11.3 million related to the relocation of the Company’s corporate headquarters to Jacksonville, Florida pursuant to SFAS No. 146, and $2.0 million in asset impairment charges pursuant to SFAS No. 144. See Note C. In addition, the Title Insurance segment for 2003 includes a realized gain of $51.7 million as a result of InterActive Corp’s acquisition of Lending Tree Inc. and the subsequent sale of the Company’s InterActive Corp common stock.

Information Services

This segment consists of the operations of FIS, which was acquired on April 1, 2003 and the operations of WebTone, which was acquired on September 2, 2003 (see Notes B and I). FIS and WebTone provide information-based technology solutions and processing services to the mortgage and financial services industries.

Real Estate Related Services

This segment, consisting of various real estate related and ancillary service subsidiaries, offers the complementary specialized products and services required to execute and close a real estate transaction that are not offered by the title insurance segment described above. These services include property appraisal, credit reporting, exchange intermediary services, real estate tax services, home warranty insurance, foreclosure posting and publishing, loan portfolio services, flood certification, field services, property data and disclosure services, multiple listing services, mortgage loan fulfillment services, flood insurance, relocation services and homeowners insurance. These services require specialized expertise and have been centralized for efficiency and ease of management. Included in the Real Estate Related Services segment for the three and nine months ended September 30, 2003 are $11.4 million in pre-tax expenses relating to the migration of data center operations from FNIS to FIS pursuant to SFAS No. 146 and $5.9 million in asset impairment charges pursuant to SFAS No. 144. See Note C.

Corporate and Other

The corporate segment consists of the operations of the parent holding company and the operations of FNF Capital, Inc., as well as the issuance and repayment of corporate debt obligations. Included in the Corporate and Other segment for the three and nine months ended September 30, 2003 is $1.6 million in pre-tax expenses relating to the relocation of the Company’s corporate headquarters to Jacksonville, Florida, pursuant to SFAS No. 146. See Note C. Also included in the Corporate and Other segment for the three and nine months ended September 30, 2003 are $562,000 and $6.3 million, respectively, in compensation cost as a result of adopting SFAS No. 123 during the third quarter of 2003. See Note F.

The accounting policies of the segments are the same as those used in the Condensed Consolidated Financial Statements. Intersegment sales or transfers which occurred in the ordinary course of consolidated operations, have been eliminated from the segment information provided.

Note H – Dividends, Stock Repurchase Program and Share and Per Share Restatement

On January 22, 2003, the Company’s Board of Directors declared a cash dividend of $0.12 per share, payable on April 25, 2003, to stockholders of record as of April 11, 2003. On April 22, 2003, the Company’s Board of Directors declared a cash dividend of $0.12 per share, payable on June 16, 2003, to stockholders of record as of June 2, 2003. On July 22, 2003, the Company’s Board of Directors declared a cash dividend of $0.18 per share, payable on September 3, 2003, to stockholders of record as of August 19, 2003. On October 22, 2003, the Company’s Board of Directors declared a cash dividend of $0.18 per share, payable on December 4, 2003, to stockholders of record as of November 19, 2003.

On April 24, 2002, the Company’s Board of Directors approved a three-year systematic stock repurchase program. Purchases were made by the Company from time to time in the open market, in block purchases or in privately negotiated transactions. From May 15, 2002, through December 31, 2002, the Company repurchased a total of 2,543,962 shares of common stock for $61.2 million, or an average price of $24.06. The amount repurchased includes 549,587 shares of common stock purchased from certain of the Company’s officers and directors during the third quarter of 2002, of which 207,437 shares were accepted as full payment for certain notes receivable, including accrued interest. In December 2002, the Company retired 704,462 of these shares held as treasury stock, totaling $14.3 million. For the nine months ended September 30, 2003, the Company repurchased 1,614,000 shares

of common stock for $45.4 million, or an average price of $28.16. From May 15, 2002, through September 30, 2003, a total of 4,157,962 shares of common stock have been repurchased for $106.6 million, or an average price of $25.65. As a result of the increased cash dividend from $0.12 to $0.18 per share, as discussed above, the Company decided to suspend this systematic stock repurchase program effective July 23, 2003.

On April 22, 2003, the Company’s Board of Directors declared a five-for-four (5:4) stock split payable May 23, 2003, to stockholders of record as of May 9, 2003. On April 24, 2002, the Company’s Board of Directors declared a 10% stock dividend to stockholders of record as of May 9, 2002, payable on May 23, 2002. All data with respect to earnings per share, dividends per share and share information, including price per share where applicable, in the Condensed Consolidated Financial Statements has been retroactively adjusted to reflect the stock split and stock dividend.

Note I – Significant Accounting Policies of the Information Services Segment

The following describes the significant accounting policies directly relating to FIS, which was acquired by the Company on April 1, 2003 and WebTone, which was acquired by the Company on September 2, 2003 (see Note B). FIS and WebTone provide information-based technology solutions and processing services to the mortgage and financial services industries.

The Company recognizes software maintenance and license fees in accordance with the American Institute of Certified Public Accountants’ Statement of Position (“SOP”) 97-2, entitled “Software Revenue Recognition” and SOP 98-9, entitled “Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions.” Initial license fees are recognized when a contract exists, the fee is fixed or determinable, software delivery has occurred and collection of the receivable is deemed probable. Software licensed with post-contract customer support includes rights to upgrades, when and if available, telephone support, updates and bug fixes. SOP 97-2, as amended, generally requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair value of the elements. The Company determines the fair value of each element in multi-element arrangements based on vendor-specific objective evidence (“VSOE”). VSOE for each element is based on the price charged when the same element is sold separately. If evidence of fair value of all undelivered elements exists but evidence does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue. Revenue allocated to maintenance and support is recognized ratably over the term of the agreement. The Company records deferred revenue for maintenance amounts invoiced prior to revenue recognition.

Many of the Company’s contracts include a software license and one or more of the following services: development and implementation, conversion, programming, maintenance, application management and data processing. The Company uses contract accounting, as required by SOP 97-2, when the arrangement with the customer includes significant customization, modification, or production of software. The Company uses multiple element accounting required by SOP 97-2 and accounts for certain elements of the arrangement separately as the services are performed based on the element’s VSOE of fair value (i.e., maintenance and certain other services). For the one or more elements accounted for under SOP 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts,” the Company uses the percentage-of-completion method since reasonably dependable estimates of revenue and contract hours applicable to various elements of a contract can be made. Changes in estimates for revenues, costs and profits are recognized in the period in which they are determinable. When the Company’s estimates indicate that the entire contract will be performed at a loss, a provision for the entire loss is recorded in that accounting period.

Data processing revenue is recognized as services are performed. Revenue and incremental direct costs related to professional services implementation associated with the Company’s data processing service agreements are deferred during the implementation phase and subsequently recognized over the term of the data processing agreement. Revenue in excess of billings on service contracts is recorded as unbilled receivables and is included in accounts receivable. Billings in excess of revenue recognized on service contracts are recorded as deferred revenue until revenue recognition criteria are met.

Computer software development costs are accounted for in accordance with either SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed,” or with SOP No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” After the technological feasibility of the software has been established, material software development costs, which include salaries and related payroll costs incurred during development, are capitalized. Purchased software is recorded at cost. Research and development costs incurred prior to the establishment of the technological feasibility of a product are expensed as incurred. The cost of capitalized software is amortized on a product-by-product basis commencing on the date of general release of the products for internally developed software and the date of purchase for purchased software.

Note J – Legal Proceedings

In the ordinary course of business, the Company is involved in various pending and threatened litigation matters related to its operations, some of which include claims for punitive or exemplary damages. The Company believes that no actions, other than

those listed below, depart from customary litigation incidental to its business and that the resolution of all pending and threatened litigation will not have a material effect on the Company’s results of operations, financial position or liquidity.

As previously disclosed in the Company’s prior Securities and Exchange Commission filings, the Company was named in five class action lawsuits alleging irregularities and violations of law in connection with title and escrow practices. All of these lawsuits are currently pending, although three of them have been conditionally settled, subject only to verification of certain factual representations made during settlement negotiations. The remaining two lawsuits have been stayed pending final disposition of the conditionally settled lawsuits. The company believes that the two stayed lawsuits will be dismissed upon the final disposition of the three conditionally settled lawsuits.

Three class action lawsuits were filed in June 2003 alleging breach of FNIS’ fiduciary duties in connection with the Company’s acquisition of the outstanding minority interest of FNIS. These actions have recently been consolidated and are pending in the Chancery Court of Delaware. FNIS has retained counsel to represent them and the named members of their board of directors, three of whom are also directors of the Company. The Company and FNIS believe the lawsuits are without merit.

Three class action cases, Werter v. Chicago Title, Williams v. Fidelity National Title, and Lawlor v. National Title were filed in New York and have been consolidated in the Supreme Court of New York, Nassau County for further proceedings. The cases allege that the named defendant companies failed to provide notice of premium discounts to consumers refinancing their mortgages, and failed to give discounts in refinancing transactions in violation of the filed rates. The actions seek refunds of the premiums charged and punitive damages. The Company intends to vigorously defend these actions.

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

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our expectations, hopes, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results could vary materially from those forward-looking statements contained herein due to many factors, including, but not limited to: general economic and business conditions, including interest rate fluctuations and general volatility in the capital markets; changes in the performance of the real estate markets; the impact of competitive products and pricing; success of operating initiatives and integration of acquired businesses; adverse publicity; the ability to identify businesses to be acquired; availability of qualified personnel; employee benefits costs and changes in, or the failure to comply, with government regulations and other risks detailed in our filings with the Securities and Exchange Commission.

Factors Affecting Comparability

Our Condensed Consolidated Statements of Earnings for 2003 include the results of operations of various entities acquired on various dates during 2003, as discussed in Note B of Notes to Condensed Consolidated Financial Statements. As a result, quarter-over-quarter and year-over-year comparisons may not be meaningful.

During the third quarter of 2003, we adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), for stock-based employee compensation, effective as of the beginning of 2003, as discussed in Note F of Notes to Condensed Consolidated Financial Statements. Under this method, stock-based employee compensation cost is recognized from the beginning of 2003 as if the fair value method of accounting had been used to account for all employee awards granted, modified, or settled in years beginning after January 1, 2003. Prior period financial statements were not restated. Net income, as a result of the adoption of SFAS No. 123, for the three and nine months ended September 30, 2003 reflects an expense of $348,000 and $3.9 million, respectively, which is included in the reported financial results.

During the third quarter of 2003, in accordance with Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS No. 146”), we recorded $26.3 million in pre-tax expenses relating to the migration of data center operations from FNIS to FIS and $12.9 million in pre-tax expenses relating to the relocation of our corporate headquarters to Jacksonville, Florida. In addition, in the third quarter of 2003, in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), we recorded a pre-tax expense of $7.9 million relating to the write-off of intangible assets, software and license fees. See Note C of Notes to Condensed Consolidated Financial Statements.

The three months ended September 30, 2003 includes a realized gain of $51.7 million as a result of InterActive Corp’s acquisition of Lending Tree Inc. and the subsequent sale of our InterActive Corp common stock.

Results of Operations

Net earnings for the third quarter of 2003 were $277.3 million, or $1.99 per diluted share, as compared with net earnings of $143.5 million, or $1.16 per diluted share, for the third quarter of 2002.

Net earnings for the nine months ended September 30, 2003 were $665.6 million, or $4.95 per diluted share compared with net earnings for the nine months ended September 30, 2002, of $356.8 million, or $2.89 per diluted share.

Title insurance revenue is closely related to the level of real estate activity and the average price of real estate sales on both a national and local basis. Real estate sales are directly affected by changes in the cost of financing purchases of real estate, predominately mortgage interest rates. Other macroeconomic factors affecting real estate activity include, but are not limited to, demand for housing, employment levels, family income levels and general economic conditions. Because these factors can change dramatically, revenue levels in the title insurance industry can also change dramatically. For example, beginning in the second half of 1999 and through 2000, steady interest rate increases caused by actions taken by the Federal Reserve Board resulted in a significant decline in refinancing transactions. As a result, the market shifted from a refinance-driven market in 1998 to a more traditional market driven by new home purchases and resales in 1999 and 2000. However, beginning in January 2001 and continuing through June of 2003, the Federal Reserve Board reduced interest rates by 550 basis points, bringing mortgage interest rates down to their lowest level in recent history, which again has significantly increased the volume of refinance activity. Beginning in mid-June 2003 and continuing through September 2003, the ten-year treasury bond yield steadily increased from a low of nearly 3.0% to more than 4.5%, causing mortgage interest rates to rise, which has decreased the volume of refinance activity.

Title insurance premiums increased 51.1% to $1.3 billion in the third quarter of 2003 as compared with the third quarter of 2002, and have increased 44.7% to $3.5 billion in the nine months ended September 30, 2003, as compared with the corresponding period of the prior year. These increases are due to the increases in resale and refinance activity as a result of the prolonged period of low interest rates. During the third quarter of 2003, our closed order volumes for our direct operations increased 103.8% as compared with the prior year quarter. As mortgage interest rates increased during the third quarter of 2003, open orders on refinance transactions have declined from the second quarter of 2003 and we have been closing orders that were building in the late second quarter and early third quarter of 2003.

The following table presents information regarding the components of title premiums:


		Three months ended										Nine months ended
		September 30,										September 30,

				% of					% of					% of					% of
		2003		Total			2002		Total			2003		Total			2002		Total

		(Dollars in thousands)										(Dollars in thousands)
Title premiums from direct Operations		$	741,546		55.6	%	$	413,936		46.9	%	$	1,874,377		53.8	%	$	1,108,255		46.0	%
Title premiums from agency Operations			591,880		44.4	%		468,629		53.1	%		1,609,753		46.2	%		1,300,161		54.0	%

	Total	$	1,333,426		100.0	%	$	882,565		100.0	%	$	3,484,130		100.0	%	$	2,408,416		100.0	%

The increase in resale and refinance activity for the three and nine months ended September 30, 2003 and 2002 has been partially offset by a decrease in the average fee per file. The decrease in fee per file is consistent with the overall increased levels of refinance activity experienced during both years.

Escrow and other title-related fees for the three and nine month periods ended September 30, 2003 were $400.4 million and $1.0 billion, respectively, as compared with $229.1 million and $617.9 million, respectively, for the corresponding periods of the prior year. The trend in escrow and title-related fees is generally consistent with that of our direct title premiums.

Information services revenue was $217.0 million and $426.4 million, respectively, for the three and nine months ended September 30, 2003. The Company acquired FIS on April 1, 2003. As such, the results of operations of FIS are included in the Condensed Consolidated Financial Statements of Earnings from the period April 1, 2003, through September 30, 2003.

Revenue from real estate related services was $213.9 million in the third quarter of 2003 as compared with $141.8 million for the prior year quarter. On a year-to-date basis, revenues were $581.2 million in 2003 and $379.3 million in 2002. The increase in revenue for the three- and nine-month periods is primarily the result of increases in revenue from our real estate tax services, flood services, default management services, home warranty services, mortgage loan fulfillment services, collateral risk assessment and valuation services, and insurance services, primarily from our flood insurance processing business (Bankers/FCIC), which was acquired in January 2003.

Interest and investment income was $13.7 million in the third quarter of 2003 as compared with $19.1 million in the third quarter of 2002. Interest and investment income for the nine months ended September 30, 2003, was $45.4 million compared with $56.3 million for the corresponding 2002 period. The decrease in interest and investment income in the 2003 periods is primarily due to a decrease in interest income reflecting lower interest rates in 2003 as compared with 2002.

Net realized gains for the third quarter of 2003 were $49.0 million, as compared with net realized gains of $4.3 million for the third quarter of 2002. The increase in realized gains during the third quarter of 2003 was primarily due to a realized gain of $51.7 million as a result of InterActive Corp’s acquisition of Lending Tree Inc. and the subsequent sale of our InterActive Corp common stock. Also included in net realized gains for the third quarter of 2003 is an $8.9 million loss as a result of the disposal of assets in connection with the migration of the data center operations from FNIS to FIS. See Note C of Notes to Condensed Consolidated Financial Statements. For the nine months ended September 30, 2003, we recorded net realized gains of $88.9 million, as compared with net realized gains of $11.9 million for the corresponding 2002 period. Net realized gains for the nine months ended September 30, 2002, includes a $3.1 million gain recognized on our investment in Santa Barbara Restaurant Group, Inc. (“SBRG”) common stock as a result of the merger between SBRG and CKE Restaurants, Inc (“CKE”), and a $3.4 million gain on the sale of a portion of our CKE common stock in the second quarter of 2002.

Other income represents revenue generated by FNF Capital, Inc., our equipment leasing subsidiary. Other income for the three- and nine-month periods ended September 30, 2003, was $3.0 million and $11.5 million, respectively, as compared with $6.1 million and $18.8 million, respectively, for the corresponding periods of the prior year. The decrease is attributable to the discontinuation of FNF Capital’s small-ticket lease origination business.

Our operating expenses consist primarily of personnel costs, other operating expenses and agent commissions, which are incurred as orders are received and processed. Title insurance premiums and escrow and other title-related fees are generally recognized as income at the time the underlying transaction closes. As a result, revenue lags approximately 60-90 days behind expenses and therefore gross margins may fluctuate. The changes in the market environment, mix of business between direct and agency operations and the contributions from our various business units have impacted margins and net earnings. We have implemented programs and have taken necessary actions to maintain expense levels consistent with revenue streams. However, a short time lag does exist in reducing variable costs and certain fixed costs are incurred regardless of revenue levels.

Personnel costs include base salaries, commissions and bonuses paid to employees, and are one of our most significant operating expenses. These costs generally fluctuate with the level of orders opened and closed and with the mix of revenue. We have taken significant measures to maintain appropriate personnel levels and costs relative to the volume and mix of business while maintaining customer service standards and quality controls. With the decline in open orders on refinance transactions resulting from the increase in mortgage interest rates during the third quarter of 2003, we began reducing personnel costs in August and September 2003 with the reduction of approximately 14.5% of the title and escrow workforce over that two-month period. For the third quarter of 2003 personnel costs were $715.3 million, or 32.1% of total revenue, compared with $371.8 million, or 29.0% of total revenue, for the corresponding 2002 quarter. For the nine-month periods ended September 30, 2003 and 2002, personnel costs were $1.8 billion, or 32.3% of total revenue, and $1.0 billion, or 29.7% of total revenue, respectively. The increase in personnel costs as a percentage of total revenue in 2003 can be attributed to the substantial increase in open order volumes and the incremental personnel costs associated with the acquisition of FIS and our various other acquisitions made during 2003, which have higher personnel costs as a percentage of revenue. In addition, during the third quarter of 2003, personnel costs include $7.9 million of relocation expenses incurred in accordance with SFAS No. 146. See Note C of Notes to Condensed Consolidated Financial Statements. Also during the third quarter of 2003, we adopted SFAS No. 123. As such, included in personnel costs for the three and nine months ended September 30, 2003 are $562,000 and $6.3 million, respectively, in compensation cost. See Note F of Notes to Condensed Consolidated Financial Statements.

Other operating expenses consist primarily of facilities expenses, title plant maintenance, premium taxes (which insurance underwriters are required to pay on title premiums in lieu of franchise and other state taxes), postage and courier services, computer services (including personnel costs associated with information technology support), professional services, advertising expenses, general insurance, depreciation expense, amortization expense of intangible assets and trade and notes receivable allowances. Total other operating expenses were $511.2 million, or 22.9% of total revenue, for the third quarter of 2003 as compared with $259.7 million, or 20.3% of total revenue, for the third quarter of 2002. For the nine-month periods ended September 30, 2003 and 2002, these expenses were $1.3 billion and $717.0 million, respectively. As a percentage of total revenue, other operating expenses for the 2003 period were 22.4% as compared with 20.5% for the 2002 period. As a percentage of total revenue, operating expenses have increased in 2003 as compared with 2002, consistent with the increase in personnel costs as a percentage of total revenue. In addition, during the third quarter of 2003, other operating expenses include $17.4 million and $5.0 million of data center migration costs and relocation expenses, respectively, incurred in accordance with SFAS No. 146, and $7.9 million in expenses relating to the write-off of assets in accordance with SFAS No. 144. See Note C of Notes to Condensed Consolidated Financial Statements.

Agent commissions represent the portion of policy premiums retained by agents pursuant to the terms of their respective agency contracts. Agent commissions were 77.5% of agent title premiums in the third quarter of 2003 as compared with 78.6% of agent title premiums for the third quarter of 2002. Agent commissions, as a percentage of agent title premiums, for the nine-month periods ended September 30, 2003 and 2002 were 77.8% and 78.5%, respectively. Agent commissions and the resulting percentage of agent title premiums retained by us vary according to regional differences in real estate closing practices and state regulations.

The provision for claim losses includes an estimate of anticipated title claims. The estimate of anticipated title and title related claims is accrued as a percentage of title premium revenue based on our historical loss experience and other relevant factors. We monitor our claims loss experience on a continual basis and adjust the provision for claim losses accordingly. During the second quarter of 2003 we increased our claim loss provision as a percentage of total title premiums to 5.5% to cover the expanded variety of title insurance products we offer. During the third quarter of 2002 our claim loss provision as a percentage of total title premiums was 5.0%. On a year-to-date basis, our provision for claim losses as a percentage of total title premiums was 5.4% in 2003 and 5.0% in 2002.

Interest expense for the three- and nine-month periods ended September 30, 2003, was $11.3 million and $30.2 million, respectively. Interest expense for the three- and nine-month periods ended September 30, 2002, was $8.4 million and $26.0 million, respectively. The increase in interest expense for the 2003 periods is attributable to the increase in outstanding notes payable as a result of the issuance of $250.0 million, 5.25% notes in March 2003 (see Note D of Notes to Condensed Consolidated Financial Statements), which was partially offset by the decline in interest rates.

Income tax expense, as a percentage of earnings before income taxes, was 38.5% and 36.0% for the third quarter of 2003 and 2002, respectively. For the nine months ended September 30, 2003 and 2002, income tax expense, as a percentage of earnings before income taxes, was 38.0% and 36.0%, respectively. The fluctuation in income tax expense as a percentage of earnings before income taxes is attributable to our estimate of ultimate income tax liability and the characteristics of pretax earnings- i.e. operating income versus investment income and the acquisition of FIS.

Minority interest for the three- and nine-month periods ended September 30, 2003, was $5.7 million and $18.1 million, respectively. Minority interest for the three- and nine-month periods ended September 30, 2002, was $3.8 million and $8.4 million, respectively. The increase in minority interest for the 2003 periods is primarily attributable to increased earnings of our majority-owned subsidiaries. We expect our minority interest to decrease in future periods as a result of our September 30, 2003 acquisition of the remainder of the FNIS common stock that we did not previously own.

Liquidity and Capital Resources

Cash Flows. Our cash requirements include debt service, operating expenses, taxes, capital expenditures, systems development, treasury stock repurchases, lease securitizations, business acquisitions and dividends on our common stock. We believe that all anticipated cash requirements for current operations will be met from internally generated funds, through cash dividends from subsidiaries, cash generated by investment securities and bank borrowings through existing credit facilities. Our short- and long-term liquidity requirements are monitored regularly to match cash inflows with cash requirements. We forecast the daily needs of all of our subsidiaries and periodically review their short- and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying these projections.

Our two significant sources of internally generated funds are dividends and distributions from our subsidiaries. As a holding company, we receive cash from our subsidiaries in the form of dividends and as reimbursement for operating and other administrative expenses we incur. The reimbursements are executed within the guidelines of management agreements among our subsidiaries and us. Our insurance subsidiaries are restricted by state regulation in their ability to pay dividends and make distributions. Each state of domicile regulates the extent to which our title underwriters can pay dividends or make other distributions to us. During 2003, our title insurance subsidiaries can pay dividends or make other distributions to us of $114.9 million. Through September 30, 2003, $43.5 million in dividend payments have been made. Our underwritten title companies, real estate related service companies and information services companies collect revenue and pay operating expenses. However, they are not regulated to the same extent as our insurance subsidiaries. Positive cash flow from these subsidiaries is invested primarily in cash and cash equivalents.

Seasonality. Historically, real estate transactions have produced seasonal revenue levels for title insurers. The first calendar quarter is typically the weakest quarter in terms of revenue due to the generally low volume of home sales during January and February. The fourth calendar quarter is typically the strongest in terms of revenue due to commercial entities desiring to complete transactions by year-end. Significant changes in interest rates may alter these traditional seasonal patterns due to the effect the cost of financing has on the volume of real estate transactions.

Financing. On November 5, 2003 we entered into a new credit agreement providing for a $700.0 million, 5 year revolving credit facility due November 4, 2008. The new credit agreement bears interest at a variable rate based on the debt ratings assigned to us by certain independent agencies, and is unsecured. The current interest rate under the new credit agreement is LIBOR plus 0.65%. As of the date of this filing, we had not made any draws on our new facility, leaving us with $700.0 million in borrowing capacity. Our new credit agreement imposes certain affirmative and negative covenants on us relating to current debt ratings, certain financial ratios related to liquidity, net worth, capitalization, investments, acquisitions and restricted payments, and certain dividend restrictions. As of the date of this filing, we are in compliance with all of our debt covenants.

On November 5, 2003, we terminated our prior credit agreement, which provided for two distinct credit facilities:

• $250.0 million, 6 year revolving credit facility due March 19, 2006; and

• $450.0 million term loan facility with a 6 year amortization period, due March 19, 2006.

The prior credit agreement bore interest at a variable rate of interest based on the debt ratings assigned to us by certain independent agencies, and was unsecured. The interest rate on the prior credit agreement was LIBOR plus 1.00%. As of September 30, 2003, $95.8 million was outstanding under our prior term loan facility, which was paid in full on October 31, 2003. As of September 30, 2003, we were in compliance with all of our debt covenants under our prior credit agreement

On March 11, 2003, we issued $250.0 million aggregate principal amount of 5.25% notes, which are unsecured. We received net proceeds of approximately $246.2 million, after expenses, which was used to pay a portion of the $1,069.6 million purchase price for FIS (see Note B of Notes to Condensed Consolidated Financial Statements). Interest is payable semiannually and the notes are due in March 2013.

Contractual Obligations. There have been no material changes in our annual financing obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2002.

Capital Stock Transactions. On April 24, 2002, our Board of Directors approved a three-year systematic stock repurchase program. Purchases were made by us from time to time in the open market, in block purchases or in privately negotiated transactions. From May 15, 2002, through December 31, 2002, we repurchased a total of 2,543,962 shares of common stock for $61.2 million, or an average price of $24.06. The amount repurchased includes 549,587 shares of common stock purchased from certain of our officers and directors during the third quarter of 2002, of which 207,437 shares were accepted as full payment for certain notes receivable, including accrued interest. In December 2002, we retired 704,462 of these shares held as treasury stock, totaling $14.3 million. For the nine months ended September 30, 2003, we repurchased 1,614,000 shares of common stock for $45.4 million, or an average price of $28.16. From May 15, 2002, through September 30, 2003, a total of 4,157,962 shares of common stock have been repurchased for $106.6 million, or an average price of $25.65. As a result of an increase in our cash dividend, as discussed below, we decided to suspend this systematic stock repurchase program effective July 23, 2003.

On March 26, 2003, we issued 4,711,912 shares of our common stock in connection with the acquisition of ANFI, Inc. See Note B of Notes to Condensed Consolidated Financial Statements.

On April 1, 2003, we issued 10,187,902 shares of our common stock to ALLTEL in connection with our acquisition of FIS. The common stock issued to ALLTEL is restricted for resale until April 1, 2004. See Note B of Notes to Condensed Consolidated Financial Statements.

On September 30, 2003, we issued 12,993,507 shares of our common stock in connection with the acquisition of FNIS. See Note B of Notes to Condensed Consolidated Financial Statements.

On April 22, 2003, our Board of Directors declared a five-for-four (5:4) stock split payable May 23, 2003 to stockholders of record as of May 9, 2003. On April 24, 2002, our Board of Directors declared a 10% stock dividend to stockholders of record as of May 9, 2002, payable on May 23, 2002. On October 22, 2003, our Board of Directors declared a cash dividend of $0.18 per share, payable on December 4, 2003, to stockholders of record as of November 19, 2003. All data with respect to earnings per share, dividends per share and share information, including price per share where applicable, in the Condensed Consolidated Financial Statements and Notes thereto have been retroactively adjusted to reflect the stock split and stock dividend.

Additional Minimum Pension Liability Adjustment. Discount rates that will be used for determining our December 31, 2003 projected benefit obligation and 2003 net periodic pension costs will be based on prevailing interest rates as of December 31, 2003. Similar to prior years, we will look at the Moody’s Aa corporate bond index at that date as an appropriate basis in determining the discount rate. Based on the current interest rate environment, we anticipate a decrease in the discount rate from the prior year when obligations are measured at December 31, 2003, which will result in an additional minimum pension liability adjustment. As such, we estimate a net-of-tax charge of approximately $13 - $16 million to accumulated other comprehensive earnings in 2003 in accordance with Statement of Financial Accountings Standards No. 87, “Employers’ Accounting for Pensions”.

Equity Investments. Our equity investments are in public companies whose security prices are subject to significant volatility. Should the fair value of these investments fall below our cost bases and/or the financial condition or prospects of these companies deteriorate, we may determine in a future period that a decline in fair value is other-than-temporary, requiring that an impairment loss be recognized in the period such a determination is made.

Critical Accounting Policies. There have been no material changes in our critical accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2002. However, due to our acquisition of FIS on April 1, 2003, we have

disclosed in Note I of Notes to Condensed Consolidated Financial Statements, the significant accounting policies associated with FIS.

Recent Accounting Pronouncements. In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS No. 146”). This standard is effective for exit or disposal activities that are initiated after December 31, 2002. See Note C of Notes to Condensed Consolidated Financial Statements.

In November 2002, the Financial Accounting Standards Board issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others” (“FIN 45”), an interpretation of Financial Accounting Standards Board Statements Nos. 5, 57 and 107 and a rescission of Financial Accounting Standards Board Interpretation No. 34. FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The adoption of FIN 45 did not have a material effect on our financial statements.

In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an Amendment of Statement of Financial Accounting Standard No. 123” (“SFAS No. 148”). This statement provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. This statement also amends the disclosure requirements of Statement of Financial Accounting Standard No. 123 and Accounting Principles Board Opinion No. 28, “Interim Financial Reporting,” to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. In the third quarter of 2003, we have voluntarily adopted the fair value recognition provisions of SFAS No. 123, under the prospective method of transition as permitted by SFAS No. 148. See Note F of Notes to Condensed Consolidated Financial Statements.

During 2002, the FASB Emerging Issues Task Force reached a consensus on Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”). EITF 00-21 provides an accounting model for an approach to determine whether a vendor should divide an arrangement with multiple deliverables into separate units of accounting. EITF 00-21 requires an analysis of whether a delivered item has stand-alone value to the customer, whether there is subjective and reliable evidence of fair value for the undelivered items, and whether delivery of the undelivered items is probable and substantially in control of the vendor if the arrangement includes a general right of return relative to the delivered item. Companies are required to adopt EITF 00-21 for fiscal periods beginning after June 15, 2003. Companies may apply EITF 00-21 prospectively to new arrangements initiated after the date of adoption or as a cumulative-effect adjustment. The adoption of EITF 00-21 did not have a material effect on our financial statements.

In February 2003, the Financial Accounting Standards Board issued Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities.” This interpretation requires consolidation of existing noncontrolled affiliates if the affiliate is unable to finance its operations without investor support, or where the other investors do not have exposure to the significant risks and rewards of ownership. FIN 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. FIN 46 may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated. We believe that the adoption of FIN 46 will not have a significant impact on our financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

There have been no material changes in the market risks described in our Annual Report on Form 10-K for the year ended December 31, 2002.

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that our disclosure controls and procedures will timely alert them to material information required to be included in our periodic SEC reports.

There has been no significant changes in our internal controls over financial reporting identified in connection with the evaluation referred to above that occurred during the last quarter and that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Part II: OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, we are involved in various pending and threatened litigation matters related to our operations, some of which include claims for punitive or exemplary damages. We believe that no actions, other than those listed below, depart from customary litigation incidental to our business and that the resolution of all pending and threatened litigation will not have a material effect on our results of operations, financial position or liquidity.

As previously disclosed in our prior Securities and Exchange Commission filings, we were named in five class action lawsuits alleging irregularities and violations of law in connection with title and escrow practices. All of these lawsuits are currently pending, although three of them have been conditionally settled, subject only to verification of certain factual representations made during settlement negotiations. The remaining two lawsuits have been stayed pending final disposition of the conditionally settled lawsuits. We believe that the two stayed lawsuits will be dismissed upon the final disposition of the three conditionally settled lawsuits.

Three class action lawsuits were filed in June 2003 alleging breach of FNIS’ fiduciary duties in connection with our pending acquisition of the outstanding minority interest of FNIS. These actions have recently been consolidated and are pending in the Chancery Court in Delaware. FNIS has retained counsel to represent them and the named members of their Board of Directors, three of whom are also directors of the Company. The Company and FNIS believe the lawsuits are without merit.

Item 4. Submission of Matters to Vote of Security Holders

Our Annual Meeting of Stockholders was held on September 29, 2003 for the purpose of electing certain members of the board of directors and to approve an amendment to our Restated Certificate of Incorporation to increase the authorized shares of common stock from 150,000,000 to 250,000,000.

Nominees for directors were elected by the following vote:


	Shares Voted		Authority to Vote
	“For”		“Withheld”

John F. Farrell, Jr.		113,275,221		5,962,369
Philip G. Heasley		113,921,132		5,316,458
Daniel D. (Ron) Lane		113,848,855		5,388,735
Terry N. Christensen		112,916,136		6,326,454

Directors, whose term of office as a director continued after the meeting, are as follows: William P. Foley, II; Frank P. Willey, Patrick F. Stone; William A. Imparato; Donald M. Koll; General William Lyon and Cary H. Thompson.

The proposal to increase the authorized shares of common stock from 150,000,000 to 250,000,000 received the following votes:


	Votes		Percentage

Shares Voted “For”		100,873,117		98.04	%
Shares Voted “Against”		1,753,989		1.70	%
Shares Voted “Abstain”		262,559		0.26	%

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:


3.1		Amended and Restated Certificate of Incorporation of Fidelity National Financial, Inc.

10.83		Credit Agreement dated as of November 4, 2003 among Fidelity National Financial, Inc., as Borrower and various financial institutions

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


32.1		Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

32.2		Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

(b) Reports on Form 8-K:

A Current Report on Form 8-K, dated July 11, 2003, was filed during the third quarter of 2003 to announce the execution of a merger agreement to acquire FNIS.

A Current Report on Form 8-K, dated July 23, 2003, was filed during the third quarter of 2003 to announce our preliminary operating results for the three-month period ended June 30, 2003.

A Current Report on Form 8-K, dated September 22, 2003, was filed during the third quarter of 2003 to announce the resignation of J. Thomas Talbot from our Board of Directors.

A Current Report on Form 8-K, dated September 30, 2003, was filed during the third quarter of 2003 to announce the closing of the acquisition of FNIS.

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.

FIDELITY NATIONAL FINANCIAL, INC.
(Registrant)


By:	/s/ Alan L. Stinson

	Alan L. Stinson
	Executive Vice President, Chief Financial Officer
	(Principal Financial and Accounting Officer)	Date: November 12, 2003

Exhibit Index


Exhibit No.		Description

3.	1	Amended and Restated Certificate of Incorporation of Fidelity National Financial, Inc.

10.	83	Credit Agreement dated as of November 4, 2003 among Fidelity National Financial, Inc., as Borrower and various financial institutions

31.	1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.	2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.	1	Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

32.	2	Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

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	(1)		Net of income tax expense of $8.4 million and $2.0 million and $34.0 million and $8.1 million for the three months and nine months ended September 30, 2003 and 2002, respectively.

	(2)		Net of income tax expense (benefit) of $(24.6) million and $746,000 and $(39.6) million and $586,000 for the three months and nine months ended September 30, 2003 and 2002, respectively.

	•		$250.0 million, 6 year revolving credit facility due March 19, 2006; and

	•		$450.0 million term loan facility with a 6 year amortization period, due March 19, 2006.

		Our Annual Meeting of Stockholders was held on September 29, 2003 for the purpose of electing certain members of the board of directors and to approve an amendment to our Restated Certificate of Incorporation to increase the authorized shares of common stock from 150,000,000 to 250,000,000.

		Nominees for directors were elected by the following vote:

		Directors, whose term of office as a director continued after the meeting, are as follows: William P. Foley, II; Frank P. Willey, Patrick F. Stone; William A. Imparato; Donald M. Koll; General William Lyon and Cary H. Thompson.

		The proposal to increase the authorized shares of common stock from 150,000,000 to 250,000,000 received the following votes:

		A Current Report on Form 8-K, dated July 11, 2003, was filed during the third quarter of 2003 to announce the execution of a merger agreement to acquire FNIS.

		A Current Report on Form 8-K, dated July 23, 2003, was filed during the third quarter of 2003 to announce our preliminary operating results for the three-month period ended June 30, 2003.

		A Current Report on Form 8-K, dated September 22, 2003, was filed during the third quarter of 2003 to announce the resignation of J. Thomas Talbot from our Board of Directors.

		A Current Report on Form 8-K, dated September 30, 2003, was filed during the third quarter of 2003 to announce the closing of the acquisition of FNIS.