SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities and Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2000
----------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________________ to _________________
Commission file number 0-3658
A. Full title of the Plan and the address of the Plan, if different from that of
the issuer named below:
The First American Corporation
401(k) Savings Plan
B. Name of issuer of the securities held pursuant to the Plan and the address of
its principal executive office:
The First American Corporation
1 First American Way
Santa Ana, California 92707
Page 1 of 14
The First American Corporation
401(k) Savings Plan
________________________________________________________________________________________________
Page
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Consent of Independent Accountants 3
Signature 4
Report of Independent Accountants 6
Financial Statements:
Statements of Net Assets Available for Benefits, as of December 31, 2000 and 1999 7
Statements of Changes in Net Assets Available for Benefits, for the Years Ended
December 31, 2000 and 1999 8
Notes to Financial Statements 9-12
Supplemental Schedule:
Schedule of Assets (Held at End of Year) 14
Supplemental schedules required by the Employee Retirement Income Security Act
of 1974 that are omitted are not applicable to The First American Corporation
401(k) Savings Plan.
Page 2 of 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 333-32871 and 333-80179) of The First American
Corporation of our report dated June 22, 2001, relating to the financial
statements of The First American Corporation 401(k) Savings Plan, which appears
in this Form 11-K.
June 27, 2001
Page 3 of 14
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Committee administering the Plan has duly caused this annual report to
be signed on its behalf by the undersigned hereunto duly authorized.
The First American Corporation
401(k) Savings Plan
Date: June 28, 2001 By: /s/ Thomas A. Klemens
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Page 4 of 14
The First American Corporation
401(k) Savings Plan
Report on Audited Financial Statements
and Supplemental Schedule
As of December 31, 2000 and 1999, and for the
Years Ended December 31, 2000 and 1999
Page 5 of 14
Report of Independent Accountants
To the Participants and Administrator of
The First American Corporation 401(k) Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of The First American Corporation 401(k) Savings Plan (the "Plan") at December
31, 2000 and 1999, and the changes in the net assets available for benefits for
the years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial of statements taken as a whole. The supplemental schedule, assets
held for investment purposes, is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
June 22, 2001
Page 6 of 14
The First American Corporation
401(k) Savings Plan
Statements of Net Assets Available for Benefits
________________________________________________________________________________
As of
December 31,
2000 1999
Assets
Investments, at fair value $237,344,236 $140,800,296
Cash 3,435 71,521
Receivables:
Interest 129,628 69,605
Dividends 239,770 147,575
Participant contributions 157,240 250,538
Employer contributions 8,889,130 9,835,896
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Total receivables 9,415,768 10,303,614
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Total assets 246,763,439 151,175,431
Liabilities
Administrative expenses payable 169,528 183,037
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Net assets available for benefits $246,593,911 $150,992,394
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The accompanying notes are an integral part of these financial statements.
Page 7 of 14
The First American Corporation
401(k) Savings Plan
Statements of Changes in Net Assets Available for Benefits
________________________________________________________________________________
Years Ended
December 31,
2000 1999
Additions
Net appreciation (depreciation) in fair
value of instruments $ 61,820,452 $(23,051,972)
Interest income 1,103,389 614,445
Dividend income 2,072,574 1,666,708
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Total investment income (loss) 64,996,415 (20,770,819)
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Contributions:
Participants 51,111,360 55,101,115
Employer 21,500,286 20,541,812
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Total contributions 72,611,646 75,642,927
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Total additions 137,608,061 54,872,108
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Deductions
Benefits paid to participants (39,911,503) (34,007,732)
Administrative expenses (2,095,041) (1,399,157)
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Total deductions (42,006,544) (35,406,889)
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Increase in net assets 95,601,517 19,465,219
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Net Assets Available for Benefits
Beginning of year 150,992,394 131,527,175
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End of year $246,593,911 $150,992,394
============ ============
The accompanying notes are an integral part of these financial statements.
Page 8 of 14
The First American Corporation
401(k) Savings Plan
Notes to Financial Statements
________________________________________________________________________________
1. Description of the Plan
The following description of The First American Corporation 401(k) Savings
Plan (the "Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution profit sharing plan covering all U.S.
employees of The First American Corporation (the "Company"). An employee is
eligible to participate in the Plan if the employee is at least 21 years of
age and has been employed by the Company for at least 30 days. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974 ("ERISA").
Upon enrollment in the Plan a participant may direct contributions in 5%
increments to any of six investment options, one of which is the option to
invest in shares of the Company. Participants may change their investment
options as of the first day of each calendar month, depending upon the
completion of an appropriate form by a specified date.
Contributions
Participants may contribute from 1% to 12% of pretax annual compensation, as
defined by the Plan. Contributions are subject to certain limitations. The
Company matches 50% of the first $500 of a participant's contribution.
Additional amounts may be contributed by the Company at the option of the
Company's Board of Directors and are based on the pretax profitability of the
Company for the year. Discretionary profit sharing contributions were
$8,882,924 and $9,817,498 for the years ending December 31, 2000 and 1999,
respectively. Participants may also contribute amounts representing
distributions from other qualified defined benefit or contribution plans.
Participant Accounts
Each participant's account is credited with the participant's contributions
and allocations of (a) the Company's contributions and (b) the earnings or
losses, and charged with an allocation of administrative expenses.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account.
Vesting
Participants are immediately vested in their contributions, the Company's
contributions plus actual earnings thereon.
Payment of Benefits
The plan allows for participant withdrawals in lump sum upon retirement,
death, disability, termination or attainment of the eligible age as defined
by the Plan. Participants may also withdraw up to 70% of their account
balances, as defined by the Plan, in the event of financial hardship, which
is determined pursuant to the provisions of the Internal Revenue Code
("IRC").
Page 9 of 14
The First American Corporation
401(k) Savings Plan
Notes to Financial Statements
________________________________________________________________________________
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis
of accounting in accordance with accounting principles generally accepted in
the United States of America.
Investment Valuation and Income Recognition
Investments in mutual funds and common stock are stated at quoted market
prices (except for the Money Market Fund, which is recorded at amortized cost
which approximates market value). Security transactions are accounted for on
the date securities are purchased or sold (trade date). Dividend income is
recorded on the ex-dividend date. Interest income is recognized on an accrual
basis as earned. Gains or losses from securities' transactions are computed
based on average cost. The Plan presents in the statement of changes in net
assets available for benefits the net appreciation (depreciation) in the fair
value of its investments which consists of the realized gains (losses) and
the unrealized appreciation (depreciation) on those investments.
Payment of Benefits
Benefits are recorded when paid.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Plan's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
in the statement of changes in net assets available for benefits during the
reporting period. Actual results could differ from those estimates.
Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, mutual funds and other investment securities. Investment securities
are exposed to various risks such as interest rate, market and credit. Due
to the level of risk associated with certain investment securities and the
level of uncertainty related to changes in the value of investment
securities, it is at least reasonably possible that changes in risk in the
near term would materially affect participants' account balances and the
amounts reported in the statements of net assets available for benefits and
the statement of changes in net assets available for benefits.
Page 10 of 14
The First American Corporation
401(k) Savings Plan
Notes to Financial Statements
________________________________________________________________________________
Investments
The following presents investments that represent 5% or more of the Plan's
net assets available for benefits:
December 31,
2000 1999
Mutual funds:
Templeton Foreign Fund $ 22,055,292 $ 18,398,383
Schroder U.S. Smaller Companies Fund 32,849,970 21,474,883
Performance Equity Fund Institutional Class 47,029,878 45,000,929
T. Rowe Price U.S. Treasury Intermediate Fund 13,263,602 9,661,493
First Choice Cash Reserve Fund Institutional Class 23,273,471 15,670,175
Common stock:
The First American Corporation 98,872,023 30,594,433
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$237,344,236 $140,800,296
============ ============
During 2000 and 1999, the Plan's investments (including gains and losses on
investments sold as held during the year) appreciated (depreciated) in value
by $61,820,452 and $(23,051,972), respectively, as follows:
2000 1999
Mutual funds $ 441,094 $ 11,399,035
Company common stock 61,379,358 (34,451,007)
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$61,820,452 $(23,051,972)
=========== ============
3. Related Party Transactions
Certain plan investments are shares of mutual funds managed by First American
Trust Company, a wholly owned subsidiary of the Company. First American
Trust Company is the trustee of the Plan and, therefore, these transactions
qualify as party-in-interest transactions for which a statutory exemption
exists. Fees paid by the Plan for the investment management services were
$2,095,041 and $1,399,157 for the years ended December 31, 2000 and 1999,
respectively.
The Company, which also qualifies as a party-in-interest, absorbs certain
administrative expenses of the Plan. Such transactions qualify for a
statutory exemption. Total expenses paid by the Company were $733,373 and
$620,385 for the years ended December 31, 2000 and 1999, respectively.
Page 11 of 14
The First American Corporation
401(k) Savings Plan
Notes to Financial Statements
________________________________________________________________________________
4. Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
the net assets of the Plan will be distributed to the participants in
accordance with the provisions of ERISA.
5. Federal Income Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated February 11, 1997, that the Plan is designated in accordance
with applicable section s of the IRC and is, therefore, exempt from federal
income taxes. The Plan has been amended since receiving the determination
letter. However, the Plan administrator believes that the Plan is designed
and is currently being operated in compliance with the applicable
requirements of the IRC.
6. Subsequent Event
On January 1, 2001, the assets of the Plan were transferred to Fidelity
Investments Institutional Operations Company, Inc. Per the new Plan
agreement, Fidelity Management Trust Company became the new Plan trustee.
Page 12 of 14
Supplemental Schedule
The First American Corporation
401(k) Savings Plan
Schedule of Assets (Held At End of Year)
As of December 31, 2000
________________________________________________________________________________
Identity of Issue Current Value
The First American Corporation Common Stock $ 98,872,023
Templeton Foreign Fund 22,055,292
Schroder U.S. Small Companies Fund 32,849,970
Performance Equity Fund Institutional Class 47,029,878
T. Rowe Price U.S. Treasury Intermediate Bond Fund 13,263,602
First Choice Cash Reserve Fund Institutional Class 23,273,471
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$237,344,236
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Page 14 of 14