UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 28, 2009
FIRST ADVANTAGE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 001-31666 | 61-1437565 | ||
| (State or Other Jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification Number) |
12395 First American Way
Poway, CA 92064
(Address of principal executive offices)
(727) 214-3411
(Registrant’s telephone number)
Not Applicable.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2 below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On October 28, 2009, First Advantage Corporation, a Delaware corporation, (the “Company” or “FADV”) announced financial results for the third quarter year ended September 30, 2009. The full text of the press release issued in connection with the announcement is attached hereto as Exhibit 99.1.
The Company’s earnings release contains financial measures that are not considered generally accepted accounting principles (“GAAP”). Pursuant to the requirements of Regulation G, the Company has provided reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures in the text of the press release.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is presented in the earnings release. EBITDA was determined by adjusting net income attributable to FADV for income taxes, interest expense, depreciation and amortization, impairment loss and loss from discontinued operations.
Although EBITDA is not a financial measure prepared in accordance with GAAP, they are calculated and communicated by the Company because management believes it is of interest to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds.
The Company’s calculation of EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view EBITDA as an alternative to the GAAP measures of net income as a measure of performance, or cash flows from operating, investing and financing activities as a measure of liquidity. In addition, EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. Management does not intend the presentation of to be considered in isolation or as a substitute for results prepared in accordance with GAAP.
The information in this current report and the exhibit hereto is being “furnished” pursuant to Item 2.02 of Form 8-K. As such, this information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any filings with the SEC unless it shall be explicitly so incorporated into such filings.
| Item 9.01. | Financial Statements and Exhibits |
(c) Exhibits
| 99.1 | Earnings Press Release dated October 28, 2009 | |
2
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 hereunto duly authorized.
| FIRST ADVANTAGE CORPORATION | ||||
| Date: October 30, 2009 | By: | /s/ John Lamson | ||
| Name: | John Lamson | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
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Exhibit 99.1
12395 First American Way Ÿ Poway, CA 92064
| NEWS FOR IMMEDIATE RELEASE | ||
| Contacts: | ||
| Henri Van Parys | Cindy Williams | |
| Corporate Communications Manager | Director – Investor Relations | |
| 727.214.1072 | 727.214.3438 | |
| henri.vanparys@FADV.com | cindy.williams@FADV.com |
FIRST ADVANTAGE CORPORATION REPORTS
OPERATING RESULTS FOR THE THIRD QUARTER OF 2009
POWAY, Calif., Oct. 28, 2009—First Advantage Corporation (NASDAQ: FADV) (“the Company”), a global risk mitigation and business solutions provider, today announced operating results for the third quarter ended Sept. 30, 2009.
First Advantage reported income from continuing operations of $11.4 million for the quarter ended Sept. 30, 2009, compared to $12.3 million for the quarter ended Sept. 30, 2008. Net income attributable to First Advantage shareholders was $11.5 million (19 cents per share) in the quarter ended Sept. 30, 2009, compared to $12.6 million in the quarter ended Sept. 30, 2008 (21 cents per share). Results of operations for the quarter ended Sept. 30, 2008 included a restructuring charge of $2.8 million ($1.6 million after tax or 3 cents per diluted share), primarily relating to consolidation of facilities in the Credit Services segment.
Service revenue for the Company was $156 million and $174.7 million for the quarters ended Sept. 30, 2009 and 2008, respectively.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $29.5 million and $34.7 million for the quarters ended Sept. 30, 2009 and 2008, respectively.
“Despite lackluster auto sales, Credit Services posted improved results compared to a year ago, driven by stronger performance in the Mortgage and Direct to Consumer businesses. Current macro-economic conditions continued to pose challenges for our Employer Services and Investigative and Litigation Support Services segments during the third quarter. Service revenues and operating margins were negatively impacted,” stated Anand Nallathambi, president and chief executive officer. “We continue to emphasize operating efficiencies and enhancing market share in our major business lines.”
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First Advantage Corporation Reports Operating Results for the Third Quarter of 2009
Page 2
Summary Consolidated Income Statement (Unaudited)
| (In thousands, except per share amounts) | Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Service revenue |
$ | 155,980 | $ | 174,664 | $ | 510,688 | $ | 545,341 | ||||||||
| Reimbursed government fee revenue |
13,586 | 13,633 | 39,905 | 40,780 | ||||||||||||
| Total revenue |
169,566 | 188,297 | 550,593 | 586,121 | ||||||||||||
| Cost of service revenue |
51,429 | 53,520 | 191,030 | 160,723 | ||||||||||||
| Government fees paid |
13,586 | 13,633 | 39,905 | 40,780 | ||||||||||||
| Total cost of service |
65,015 | 67,153 | 230,935 | 201,503 | ||||||||||||
| Gross margin |
104,551 | 121,144 | 319,658 | 384,618 | ||||||||||||
| Salaries and benefits |
49,920 | 59,113 | 151,217 | 188,489 | ||||||||||||
| Facilities and telecommunications |
6,741 | 7,789 | 20,265 | 24,073 | ||||||||||||
| Other operating expenses |
18,453 | 19,899 | 56,397 | 65,642 | ||||||||||||
| Depreciation and amortization |
10,993 | 10,898 | 32,574 | 31,520 | ||||||||||||
| Impairment loss |
— | 1,720 | — | 2,017 | ||||||||||||
| Total operating expenses |
86,107 | 99,419 | 260,453 | 311,741 | ||||||||||||
| Income from operations |
18,444 | 21,725 | 59,205 | 72,877 | ||||||||||||
| Other (expense) income: |
||||||||||||||||
| Interest expense |
(234 | ) | (640 | ) | (903 | ) | (2,140 | ) | ||||||||
| Interest income |
103 | 155 | 387 | 746 | ||||||||||||
| Total other (expense), net |
(131 | ) | (485 | ) | (516 | ) | (1,394 | ) | ||||||||
| Income from continuing operations before income taxes |
18,313 | 21,240 | 58,689 | 71,483 | ||||||||||||
| Provision for income taxes |
6,898 | 8,932 | 23,856 | 29,582 | ||||||||||||
| Income from continuing operations |
11,415 | 12,308 | 34,833 | 41,901 | ||||||||||||
| Loss from discontinued operations, net of tax |
— | — | — | (4,241 | ) | |||||||||||
| Net income |
$ | 11,415 | $ | 12,308 | $ | 34,833 | $ | 37,660 | ||||||||
| Less: Net loss attributable to non-controlling interest |
(35 | ) | (323 | ) | (202 | ) | (648 | ) | ||||||||
| Net income attributable to First Advantage Corporation (“FADV”) |
$ | 11,450 | $ | 12,631 | $ | 35,035 | $ | 38,308 | ||||||||
| Basic earnings per share: |
||||||||||||||||
| Income from continuing operations attributable to FADV shareholders |
$ | 0.19 | $ | 0.21 | $ | 0.59 | $ | 0.72 | ||||||||
| Loss from discontinued operations, attributable to FADV shareholders, net of tax |
— | — | — | (0.07 | ) | |||||||||||
| Net income attributable to FADV shareholders |
$ | 0.19 | $ | 0.21 | $ | 0.59 | $ | 0.65 | ||||||||
| Diluted income per share: |
||||||||||||||||
| Income from continuing operations attributable to FADV shareholders |
$ | 0.19 | $ | 0.21 | $ | 0.59 | $ | 0.72 | ||||||||
| Loss from discontinued operations attributable to FADV shareholders, net of tax |
— | — | — | (0.08 | ) | |||||||||||
| Net income attributable to FADV shareholders |
$ | 0.19 | $ | 0.21 | $ | 0.59 | $ | 0.64 | ||||||||
| Weighted-average common shares outstanding: |
||||||||||||||||
| Basic |
59,803 | 59,478 | 59,722 | 59,358 | ||||||||||||
| Diluted |
60,086 | 59,529 | 59,867 | 59,446 | ||||||||||||
| Amounts attributable to FADV shareholders: |
||||||||||||||||
| Income from continuing operations, net of tax |
$ | 11,450 | $ | 12,631 | $ | 35,035 | $ | 42,549 | ||||||||
| Loss from discontinued operations, net of tax |
— | — | — | (4,241 | ) | |||||||||||
| Net income |
$ | 11,450 | $ | 12,631 | $ | 35,035 | $ | 38,308 | ||||||||
| EBITDA calculation: |
||||||||||||||||
| Net income attributable to First Advantage Corporation |
$ | 11,450 | $ | 12,631 | $ | 35,035 | $ | 38,308 | ||||||||
| Provision for income taxes |
6,898 | 8,932 | 23,856 | 29,582 | ||||||||||||
| Interest expense |
131 | 485 | 516 | 1,394 | ||||||||||||
| Loss from discontinued operations, net of tax |
— | — | — | 4,241 | ||||||||||||
| Depreciation and amortization |
10,993 | 10,898 | 32,574 | 31,520 | ||||||||||||
| Impairment loss |
— | 1,720 | — | 2,017 | ||||||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA)* |
$ | 29,472 | $ | 34,666 | $ | 91,981 | $ | 107,062 | ||||||||
| * | EBITDA is not a measure of financial performance under generally accepted accounting principles. EBITDA is used by certain investors to analyze and compare companies. |
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First Advantage Corporation Reports Operating Results for the Third Quarter of 2009
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Segment Financial Information (Unaudited)
| Three Months Ended Sept. 30, |
Nine Months Ended Sept. 30, |
|||||||||||||||
| (In thousands, except percentages) |
2009 | 2008 | 2009 | 2008 | ||||||||||||
| Service revenue |
||||||||||||||||
| Credit Services |
$ | 59,443 | $ | 60,837 | $ | 191,567 | $ | 202,723 | ||||||||
| Data Services |
25,514 | 21,922 | 113,456 | 60,422 | ||||||||||||
| Employer Services |
41,731 | 54,199 | 119,350 | 163,397 | ||||||||||||
| Multifamily Services |
19,879 | 19,702 | 57,467 | 58,037 | ||||||||||||
| Investigative & Litigation Support Services |
9,804 | 18,600 | 30,224 | 63,281 | ||||||||||||
| Corporate |
(391 | ) | (596 | ) | (1,376 | ) | (2,519 | ) | ||||||||
| Consolidated |
$ | 155,980 | $ | 174,664 | $ | 510,688 | $ | 545,341 | ||||||||
| Income (Loss) from operations |
||||||||||||||||
| Credit Services |
$ | 12,489 | $ | 7,063 | $ | 44,820 | $ | 35,371 | ||||||||
| Data Services |
3,590 | 3,680 | 11,389 | 11,214 | ||||||||||||
| Employer Services |
3,929 | 6,644 | 6,110 | 13,119 | ||||||||||||
| Multifamily Services |
7,268 | 6,654 | 20,521 | 17,995 | ||||||||||||
| Investigative & Litigation Support Services |
1,337 | 6,347 | 2,753 | 23,407 | ||||||||||||
| Corporate |
(10,169 | ) | (8,663 | ) | (26,388 | ) | (28,229 | ) | ||||||||
| Consolidated |
$ | 18,444 | $ | 21,725 | $ | 59,205 | $ | 72,877 | ||||||||
| Operating margin percentage of service revenue |
||||||||||||||||
| Credit Services |
21.01 | % | 11.61 | % | 23.40 | % | 17.45 | % | ||||||||
| Data Services |
14.07 | % | 16.79 | % | 10.04 | % | 18.56 | % | ||||||||
| Employer Services |
9.42 | % | 12.26 | % | 5.12 | % | 8.03 | % | ||||||||
| Multifamily Services |
36.56 | % | 33.77 | % | 35.71 | % | 31.01 | % | ||||||||
| Investigative & Litigation Support Services |
13.64 | % | 34.12 | % | 9.11 | % | 36.99 | % | ||||||||
| Corporate |
N/A | N/A | N/A | N/A | ||||||||||||
| Consolidated |
11.82 | % | 12.44 | % | 11.59 | % | 13.36 | % | ||||||||
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First Advantage Corporation Reports Operating Results for the Third Quarter of 2009
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About First Advantage Corporation
First Advantage Corporation (NASDAQ: FADV) combines industry expertise with information to create products and services that organizations worldwide use to make smarter business decisions. First Advantage is a leading provider of consumer credit information in the mortgage, automotive and specialty finance markets; business credit information in the transportation industry; lead generation services; motor vehicle record reports; employment background screening; occupational health services; applicant tracking systems; recruiting solutions; skills and behavioral assessments; business tax consulting services; corporate and litigation investigations; computer forensics; electronic discovery; data recovery; due diligence reporting; resident screening; property management software and renters insurance. First Advantage ranks among the top companies in all of its major business lines. First Advantage is headquartered in Poway, Calif., and has offices throughout the United States and abroad. More information about First Advantage can be found at www.FADV.com.
First Advantage is a majority-owned subsidiary of The First American Corporation (NYSE: FAF), a FORTUNE 500® company that traces its history to 1889. First American is America’s largest provider of business information, supplying businesses and consumers with valuable information products to support the major economic events of people’s lives. Additional information about the First American Family of Companies can be found at www.firstam.com.
Certain statements in this press release including those related to cost reduction initiatives and impact on improved efficiencies in the future quarters, product expansion and enhanced operational efficiencies are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: risks relating to the First American Corporation’s (“First American”) exchange offer (the “Offer”) to acquire all of the outstanding shares of the Company’s Class A common stock (“Class A Shares”) not owned or controlled by First American at an exchange ratio of 0.58 of a First American common share per Class A Share, including the risks described in the Offer to Exchange and related materials filed by First American on a Registration Statement on Form S-4 with the Securities and Exchange Commission and which may be amended from time to time by First American; general volatility of the capital markets and the market price of the Company’s Class A common stock; interest rate fluctuations; changes in the real estate market; changes in employment trends; limit on access to public records; the Company’s ability to successfully raise capital; the Company’s ability to identify and complete acquisitions and successfully integrate businesses it acquires; changes in applicable government regulations; heightened regulations and regulatory scrutiny; the degree and nature of the Company’s competition; increases in the Company’s expenses; inability to realize the benefits of offshore strategy; continued consolidation among the Company’s competitors and customers; unanticipated technological changes and requirements; the Company’s ability to identify suppliers of quality and cost-effective data; and other risks identified from time-to-time in the Company’s SEC filings. The forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Investors are advised to consult the Company’s filings with the SEC, including its 2008 Annual Report on Form 10-K, 2008 Third Quarter Report on Form 10-Q and any subsequent amendments, for a further discussion of these and other risks.
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First Advantage Corporation Reports Operating Results for the Third Quarter of 2009
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Notice to Stockholders of Exchange Offer by First American:
On October 8, 2009, The First American Corporation (“First American”) commenced an exchange offer (the “Offer”) to acquire all of the outstanding shares of the Company’s Class A common stock (“Class A Shares”) not owned or controlled by First American at an exchange ratio of 0.58 of a First American common share per Class A Share. In connection with the Offer, First American filed an Offer to Exchange and related materials with the Securities and Exchange Commission (“SEC”) on a Registration Statement on Form S-4. On October 8, 2009, the Company filed with the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9 pursuant to which the Special Committee of the Board of Directors of the Company (the “Special Committee”) recommended, on behalf of the Board of Directors of the Company, that the stockholders of the Company accept the Offer and tender their shares pursuant to the Offer.
Stockholders are urged to read the Offer to Exchange and related materials and the Solicitation/ Recommendation Statement and any amendments thereto filed from time to time, because they will contain important information. Stockholders will be able to obtain a free copy of the Offer to Exchange and related materials and the Solicitation/Recommendation Statement at the SEC’s Web site at www.sec.gov . In addition, the Solicitation/Recommendation Statement, as well as the Company’s other public SEC filings, can be obtained at www.FADV.com. You may also read and copy any reports, statements and other information filed by First American or the Company with the SEC at the SEC public reference room at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 800.732.0330 or visit the SEC’s Web site for further information on its public reference room.
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