First Advantage Corporation Reports Operating Results for the Fourth Quarter of and Full Year 2007

POWAY, Calif., Feb. 20 /PRNewswire-FirstCall/ -- First Advantage Corporation (Nasdaq: FADV), a global risk mitigation and business solutions provider, today announced operating results for the fourth quarter and full year ended Dec. 31, 2007 .

First Advantage reported income from continuing operations of $77.4 million ($1.30 per diluted share) for the quarter ended Dec. 31, 2007 , compared to $17.6 million (30 cents per diluted share) for the quarter ended Dec. 31, 2006 . Income from continuing operations for the quarter and year ended Dec. 31, 2007 , includes a pretax investment gain of $97.4 million ($58.4 million after tax or 99 cents per diluted share) related to the sale of common stock of DealerTrack Holdings, Inc. and a $7.0 million gain ($4.1 million after tax or 7 cents per diluted share) related to DealerTrack in the quarter and year ended Dec. 31, 2006 . Excluding these gains, diluted earnings per share from continuing operations was 31 cents in the fourth quarter of 2007, compared to 23 cents in the fourth quarter of 2006, a 35 percent increase.

Income from continuing operations was $124.0 million or $2.10 per diluted share for the year ended Dec. 31, 2007 , compared to $65.6 million or $1.13 per diluted share for the year ended Dec. 31, 2006 . Excluding the impact of the investment gains recognized in the fourth quarter of 2007 and 2006, earnings per diluted share from continuing operations was $1.11 in 2007, compared to $1.06 in 2006. Results of operations for 2007 include $8.0 million of severance costs incurred in the first quarter of 2007 ($4.7 million after tax or 8 cents per share) and $1.7 million of restructuring charges related to our Employer Services segment ($1.0 million after tax or 2 cents per share) recognized in the third quarter of 2007. Excluding these two items and the investment gains, diluted earnings per share from continuing operations increased from $1.06 in 2006 to $1.21 in 2007, an increase of 14 percent.

Income from discontinued operations for the quarter and year ended Dec. 31, 2007 , was $12.2 million (21 cents per diluted share) and $14.1 million (24 cents per diluted share), respectively, which includes a gain of $12.1 million net of tax (21 cents per diluted share) for the sale of US SEARCH.com, our consumer location business.

Service revenue for the company was $192.1 million and $788.1 million for the quarter and year ended Dec. 31, 2007 , respectively. Service revenue was $187.2 million and $745.1 million for the quarter and year ended Dec. 31, 2006 , respectively.

Earnings before interest, taxes, depreciation and amortization, minority interest, gain on investment and share-based compensation expense (adjusted EBITDA) were $43.9 million and $175.9 million for the quarter and year ended Dec. 31, 2007 , respectively. Adjusted EBITDA was $38.6 million and $170.4 million for the quarter and year ended Dec. 31, 2006 .

"Considering the stiff headwinds encountered due to the economic environment, particularly in the mortgage credit and lead generation areas, we are pleased with our financial performance for the year 2007," said Anand Nallathambi, First Advantage president and chief executive officer. "The diversity in our business segments combined with the broader set of industry verticals we serve helped deliver results that exceeded expectations.

"Our Employer Services segment reported solid sales growth with improved operating margins during the fourth quarter and full year, and accounted for almost one-third of our total service revenue in the fourth quarter of 2007. This segment benefits from a strong market position, especially in the middle market sector, across many industry verticals. In 2007, the cross-selling of products and services increased by 30 percent over the previous year. Our international operations, more specifically in foreign background screening and hiring management systems, have seen significant organic growth, 38 percent year-over-year. The outlook for further growth internationally is very promising.

"We are also pleased with the results of our Investigative and Litigation Support Services segment. Our e-discovery and professional services business, which includes computer forensics and data recovery, grew 67 percent year-over-year with significant margin improvements.

"While the uncertainty over the economic turnaround in the housing market and lead generation is still there, our 2008 business plan assumes recovery in those markets in the second half of the year. We expect service revenue for 2008 to be in the $825 million to $845 million range with diluted earnings per share of $1.27 to $1.32."

Recently, First Advantage announced the acquisition of CredStar and Verify Ltd.

CredStar, the mortgage credit reporting business of Fiserv, Inc., is a strategic fit for the Lender Services segment. The unit adds scale and product feature functionality to the existing product mix and enhances First Advantage's ability to penetrate adjacent markets for mortgage credit services.

The February purchase of Verify Ltd., a fast growing background screening company in Asia, extends the Employer Services segment's reach into China , Malaysia , Hong Kong , Singapore and India . Specifically, Verify's client base adds top-tier financial services institutions to First Advantage's growing international client base, as well as adding operational scale, management bench strength and new products to build a sustainable competitive advantage in a key global growth market, Asia Pacific.

First Advantage's fourth quarter and full year 2007 results will be discussed in more detail on Wednesday, Feb. 20, 2008 , at 5:00 p.m. EST , via teleconference and webcast. The teleconference dial-in number is 888.889.1652 within the U.S. and 210.795.9764 outside the U.S., and the passcode is "Advantage." The live audio webcast of the call will be accessible from the Investor Relations section of First Advantage's Web site at www.FADV.com. An audio replay of the teleconference call will be available through March 5, 2008 , by dialing 800.294.9511 within the U.S., or 203.369.3236 outside the U.S. An audio archive of the webcast will also be available for replay on First Advantage's Web site following the call.

Summary Consolidated Income Statement (Unaudited) (In thousands, except per Three Months Ended Twelve Months Ended share amounts) Dec. 31, Dec. 31, 2007 2006 2007 2006 Service revenue $192,051 $187,190 $788,135 $745,078 Reimbursed government fee revenue 12,841 12,780 54,767 52,723 Total revenue 204,892 199,970 842,902 797,801 Cost of service revenue 49,783 60,492 226,984 237,021 Government fees paid 12,841 12,780 54,767 52,723 Total cost of sales 62,624 73,272 281,751 289,744 Gross margin 142,268 126,698 561,151 508,057 Salaries and benefits 68,334 59,058 274,237 234,916 Facilities and telecommunications 7,999 7,716 32,420 29,548 Other operating expenses 24,930 24,621 94,802 86,403 Depreciation and amortization 11,097 10,436 42,118 37,774 Income from operations 29,908 24,867 117,574 119,416 Interest (expense) income: Interest expense (1,368) (3,257) (10,637) (13,319) Interest income 1,061 356 2,036 909 Interest (expense) income, net (307) (2,901) (8,601) (12,410) Equity in earnings of investee 624 892 2,939 2,299 Gain on investment 97,380 6,993 97,380 6,993 Income from continuing operations before income taxes and minority interest 127,605 29,851 209,292 116,298 Provision for income taxes 50,324 11,360 84,080 47,383 Income from continuing operations before minority interest 77,281 18,491 125,212 68,915 Minority interest (83) 875 1,177 3,314 Income from continuing operations 77,364 17,616 124,035 65,601 Income from discontinued operations, net of tax 63 539 1,935 560 Gain on sale of discontinued operations, net of tax 12,137 --- 12,137 --- Net income $89,564 $18,155 $138,107 $66,161 Per share amounts, basic: Income from continuing operations $1.31 $0.30 $2.11 $1 .14 Income from discontinued operations, net of tax --- 0.01 0.03 0.01 Gain on sale of discontinued operations, net of tax 0.21 --- 0.21 --- Net Income $1.52 $0.31 $2.35 $1.15 Basic weighted-average shares outstanding 59,084 58,155 58,871 57,502 Per share amounts, diluted Income from continuing operations $1.30 $0.30 $2.10 $1.13 Income from discontinued operations, net of tax --- 0.01 0.03 0.01 Gain on sale of discontinued operations, net of tax 0.21 --- 0.21 --- Net income $1.51 $0.31 $2.34 $1.14 Diluted weighted-average shares outstanding 59,188 58,294 59,121 58,079 EBITDA calculation: Net income $89,564 $18,155 $138,107 $66,161 Provision for income taxes 50,324 11,360 84,080 47,383 Minority interest (83) 875 1,177 3,314 Interest expense 307 2,901 8,601 12,410 Depreciation and amortization 11,097 10,436 42,118 37,774 Gain on investment (97,380) (6,993) (97,380) (6,993) Income from discontinued operations, net of tax (63) (539) (1,935) (560) Gain on sale of discontinued operations, net of tax (12,137) --- (12,137) --- Earnings before interest, taxes, depreciation and amortization (EBITDA)* $41,629 $36,195 $162,631 $159,489 Share based compensation expense 2,316 2,435 13,258 10,919 Adjusted EBITDA $43,945 $38,630 $175,889 $170,408

*EBITDA and adjusted EBITDA are not measures of financial performance under generally accepted accounting principles. EBITDA and adjusted EBITDA are used by certain investors to analyze and compare companies.

Segment Financial Information (Unaudited) Three Months Ended Twelve Months Ended Dec. 31, Dec. 31, (In thousands, except percentages) 2007 2006 2007 2006 Service revenue Lender Services $27,583 $40,968 $151,163 $175,991 Data Services 26,352 34,325 121,788 128,961 Dealer Services 25,084 27,990 113,448 120,780 Employer Services 61,629 55,279 233,163 195,180 Multifamily Services 15,296 14,743 72,276 68,811 Investigative & Litigation Support Services 36,666 14,711 98,955 59,162 Corporate (559) (826) (2,658) (3,807) Consolidated $192,051 $187,190 $788,135 $745,078 Income (Loss) from operations Lender Services $2,107 $11,802 $33,109 $54,271 Data Services 4,914 10,963 33,687 40,113 Dealer Services 3,272 2,299 14,510 16,113 Employer Services 10,666 5,871 29,126 19,832 Multifamily Services 2,365 2,105 18,621 15,128 Investigative & Litigation Support Services 16,482 2,555 34,154 11,377 Corporate (9,898) (10,728) (45,633) (37,418) Consolidated $29,908 $24,867 $117,574 $119,416 Operating margin percentage of service revenue Lender Services 7.64 % 28.81 % 21.90 % 30.84 % Data Services 18.65 % 31.94 % 27.66 % 31.10 % Dealer Services 13.04 % 8.21 % 12.79 % 13.34 % Employer Services 17.31 % 10.62 % 12.49 % 10.16 % Multifamily Services 15.46 % 14.28 % 25.76 % 21.98 % Investigative & Litigation Support Services 44.95 % 17.37 % 34.51 % 19.23 % Corporate N/A N/A N/A N/A Consolidated 15.57 % 13.28 % 14.92 % 16.03 %

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; supply chain security consulting; employment background verifications; occupational health services; applicant tracking systems; recruiting solutions; skills and behavioral assessments; business tax consulting services; insurance fraud, corporate and litigation investigations; surveillance; 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 4,700 employees in 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(R) 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 are forward looking, including those related to earnings per share in 2008 and 2008 service revenue. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: general volatility of the capital markets and the market price of the company's Class A common stock; the company's ability to successfully raise capital; the company's ability to identify and complete acquisitions and successfully integrate businesses it acquires; changes in applicable government regulations; the degree and nature of the company's competition; increases in the company's expenses; continued consolidation among the company's competitors and customers; unanticipated technological changes and requirements; the company's ability to identify suppliers of quality and cost-effective data; and other 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 2006 Annual Report on Form 10-K and subsequent amendments, for a further discussion of these and other risks.

Contacts: Henri Van Parys Cindy Williams Corporate Communications Manager Investor Relations Manager 727.214.3411, ext. 4136 727.214.3411, ext. 4160 [email protected] [email protected]

SOURCE First Advantage Corporation

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