The Registrant leases offices at approximately 444 locations. The average term for all such leases is approximately four years. The leases expire from 2001 to 2009. The Registrant believes it will not have any difficulty obtaining renewals of leases as they expire or, alternatively, leasing comparable property. The aggregate annual rental expense under all leases was approximately $32,667,000 in 2000.
(1) Prior to 1995, segment operations for real estate information services were not reported separately from title operations and were less significant. (2) Includes a fresh start tax credit of $1.3 million, or $.11 per share, in 1991. (3) Includes unrealized gains and losses upon adoption of FAS 115 in 1993. (4) Restated for a two-for-one stock split in May 1999 and a three-for-two stock split in April 1994, effected as stock dividends.
According to published industry data, interest rates for 30-year fixed mortgages, excluding points, for the year 2000 averaged 8.1% as compared to 7.4% in 1999. Rates averaged 6.9% in 1998.
TITLE REVENUES. The Company's revenues from premiums, fees and other revenues decreased 13.2% in 2000 over 1999, while increasing 10.2% in 1999 over 1998.
The number of direct closings handled by the Company decreased 7.4% in 2000 and 10.1% in 1999. The average revenue per closing increased 8.8% in 2000 and 14.7% in 1999 because of higher home prices, increased commercial transactions, and due to the significant drop in 1999 in the number of refinancings with their lower premiums. A 3% reduction in Texas title premium rates became effective August 1, 1998. There were no other major revenue rate changes in 2000, 1999 or 1998.
Premiums from agents decreased 20.6% to $494.6 million in 2000 and increased 14.4% to $623.3 million in 1999 from $545.1 in 1998. The decrease in 2000 resulted primarily from declining refinancings and regular transactions handled by agents nationwide. While premiums in nearly all states declined in 2000, the largest decreases were in California, Florida and Oregon. The increase in 1999 was primarily attributable to the same factors affecting direct operations mentioned above, along with the inherent delay in agents reporting policies on 1998 transactions. At the end of 1998, refinancing transactions were unusually high.
AGENT RETENTION. The amounts retained by agents, as a percentage of premiums from agents, were 81.2%, 80.9% and 80.4% in the years 2000, 1999 and 1998, respectively. Amounts retained by title agents are based on contracts between agents and the title underwriters of the Company. The percentage that amounts retained by agents bears to agent revenues may vary from year to year because of the geographical mix of agent operations and the volume of title revenues.
EMPLOYEE COSTS. Employee costs for the combined business segments increased 3.3% in 2000 and 12.8% in 1999. The number of persons employed by the Company at December 31, 2000, 1999 and 1998 was 5,627, 5,751 and 5,638, respectively. The decrease in staff in 2000 was primarily the result of reductions in existing operations in response to decreased volumes. These reductions were offset by acquisitions and expansion in national marketing and technology operations. In 1999 the increase was primarily the result of acquisitions, increased REI volume and the expansion of the Company's technology and national marketing operations.
THE YEAR 2000 ISSUE. Information technology is a crucial part of the Company's business. Accordingly, the Company completed a comprehensive Year 2000 ("Y2K") readiness program that addressed challenges associated with the Y2K issue. The Company encountered no major automation or business disruption due to Y2K issues and continues to operate normally across all business units and geographies.