What changed in this filing

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Item 1. Financial Statements

2009-04-30 compared with 2008-10-30 · 454 added, 960 removed, 344 unchanged (80% of the section changed)

1 unchanged sentence

First Advantage Corporation

Consolidated Financial Statements

For the Three and

Nine Months Ended

September 30, 2008 and 2007

Consolidated Financial Statements (Unaudited)

the Three Months Ended

March 31, 2009 and 2008

First Advantage Corporation

Consolidated Balance Sheets (Unaudited)

(in thousands, except par value)

September 30,

(in thousands)

Current assets:

2 unchanged sentences

Prepaid expenses and other current assets

Income tax receivable

Due from affiliates

Deferred income tax asset

Assets of discontinued operations (Note 4)

Total current assets

4 unchanged sentences

Marketable equity securities

Liabilities and Stockholders Equity

Liabilities and Equity

Current liabilities:

6 unchanged sentences

Current portion of long-term debt and capital leases

Liabilities of discontinued operations (Note 4)

Total current liabilities

3 unchanged sentences

Total liabilities

Minority interest

Stockholders equity:

First Advantage Corporations stockholders equity:

Preferred stock, $.001 par value;

2 unchanged sentences

125,000 shares authorized;

11,757 and 11,368 shares issued and outstanding as of

September 30, 2008 and December 31, 2007, respectively

12,022 and 11,772 shares issued and outstanding as of March 31,

2009 and December 31, 2008, respectively

Class B common stock, $.001 par value;

75,000 shares authorized;

47,727 shares issued and outstanding as of September 30, 2008 and

December 31, 2007

47,727 shares issued and outstanding as of March 31, 2009 and

December 31, 2008, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income

Total stockholders equity

Total liabilities and stockholders equity

Accumulated other comprehensive income (loss)

Total First Advantage Corporations stockholders equity

Noncontrolling interests

Total liabilities and equity

The accompanying notes are an integral part of these consolidated financial statements.

First Advantage Corporation

Consolidated Statements of Income and Comprehensive Income (Unaudited)

Consolidated Statements of Income (Unaudited)

(in thousands, except per share amounts)

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Service revenue

8 unchanged sentences

Depreciation and amortization

Impairment loss

Total operating expenses

4 unchanged sentences

Total other (expense), net

Equity in earnings of investee

Income from continuing operations before income taxes and minority interest

Income from continuing operations before income taxes

Provision for income taxes

Income from continuing operations before minority interest

Minority interest

Income from continuing operations

Income (loss) from discontinued operations, net of tax

Other comprehensive income, net of tax:

Foreign currency translation adjustments

Unrealized gain (loss) on investment

Comprehensive income

Loss from discontinued operations, net of tax

Net income (loss) attributable to noncontrolling interest

Net income attributable to First Advantage Corporation (FADV)

Basic income per share:

Income from continuing operations

(Loss) income from discontinued operations, net of tax

Income from continuing operations attributable to FADV shareholders

Loss from discontinued operations attributable to FADV shareholders, net of tax

Net income attributable to FADV shareholders

Diluted income per share:

Income from continuing operations

(Loss) income from discontinued operations, net of tax

Income from continuing operations attributable to FADV shareholders

Loss from discontinued operations attributable to FADV shareholders, net of tax

Net income attributable to FADV shareholders

Weighted-average common shares outstanding:

Amounts attributable to FADV shareholders:

Income from continuing operations, net of tax

Loss from discontinued operations, net of tax

The accompanying notes are an integral part of these consolidated financial statements.

First Advantage Corporation

Consolidated Statement of Changes in Stockholders Equity

For the Nine Months Ended September 30, 2008

Consolidated Statements of Comprehensive Income (Loss)

For the Three Months Ended March 31, 2009 and 2008

Three Months Ended

(in thousands)

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments

Unrealized gain (loss) on investment, net of tax

Total other comprehensive income (loss) , net of tax

Comprehensive income (loss)

Comprehensive income (loss) attributable to the noncontrolling interest

Comprehensive income (loss) attributable to FADV

The accompanying notes are an integral part of these consolidated financial statements.

First Advantage Corporation

Consolidated Statement of Changes in Equity

For the Three Months

Ended March 31, 2009 (Unaudited)

(in thousands)

Comprehensive

(Loss) Income

Noncontrolling

Balance at December 31, 2008

Purchase of subsidiary shares from noncontrolling interest

Class A Shares issued in connection with share-based compensation

Tax expense related to stock options

Share-based compensation

Foreign currency translation

Exercise put on a warrant

Unrealized loss on investment, net of tax

Balance at September 30, 2008

Unrealized gain on investment, net of tax

Balance at March 31, 2009

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2008 and 2007 (Unaudited)

For the Three Months Ended

March 31, 2009 and 2008 (Unaudited)

(in thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash flows from operating activities:

(Loss) income from discontinued operations

Loss from discontinued operations

Income from continuing operations

Adjustments to reconcile income from continuing operations to net cash provided by operating activities:

Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities:

Depreciation and amortization

Impairment loss

Bad debt expense

Share based compensation

Minority interests in net (loss) income

Equity in earnings of investee

Deferred income tax

6 unchanged sentences

Due from affiliates

Net change in income tax accounts

Income tax accounts

Accrued compensation and other liabilities

Net cash provided by operating activitiescontinuing operations

Net cash provided by (used in) operating activitiescontinuing operations

Net cash provided by operating activitiesdiscontinued operations

5 unchanged sentences

Net cash used in investing activitiescontinuing operations

Net cash provided by (used in) investing activitiesdiscontinued operations

Net cash used in investing activitiesdiscontinued operations

Cash flows from financing activities:

1 unchanged sentence

Repayment of long-term debt

Cash contributions from First American to Leadclick LLC

Cash contributions from First American to Leadclick Holdings, LLC

Proceeds from class A shares issued in connection with stock option plan and employee stock purchase plan

Distribution to minority interest shareholders

Tax (expense) benefit related to stock options

Net cash provided by (used in) financing activities

Cash paid for acquisition of noncontrolling interests

Distribution to noncontrolling interests

Tax expense related to stock options

Net cash provided by financing activities

Effect of exchange rates on cash

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Decrease in cash and cash equivalents of discontinued operations

Change in cash and cash equivalents of discontinued operations

Cash and cash equivalents at end of period

2 unchanged sentences

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2008 and 2007 (Unaudited)

For the Nine Months Ended

September 30,

For the Three Months Ended March 31, 2009 and 2008 (Unaudited)

For the Three Months Ended

(in thousands)

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash received for income tax refunds

Cash received for income tax refund

Cash paid for income taxes

Non-cash investing and financing activities:

Class A shares issued in connection with acquisitions

Notes issued in connection with acquisitions

Class A shares issued for restricted stock

Unrealized loss on investment, net of tax

Class A shares issued for compensation

Unrealized gain (loss) on investment, net of tax

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

Organization and Nature of Business

Advantage Corporation (the Company or First Advantage) is a global risk mitigation and business solutions provider and operates in six primary business segments:

Lender Services, Data Services, Dealer Services, Employer

Services, Multifamily Services, and Investigative and Litigation Support Services.

The First American Corporation and affiliates

(First American) own approximately 80% of the shares of capital stock of the Company as of September 30, 2008.

The Class B common stock owned by First American is entitled to ten votes per share on all matters presented to the

stockholders for vote.

As part of the Companys streamlining initiative, in the second quarter of 2008, First Advantage sold First

Advantage Investigative Services (FAIS), which was included in our Investigative and Litigation Support Services segment, and Credit Management Solutions Inc.

(CMSI), which was included in our Dealer Services segment.

businesses are presented in discontinued operations at September 30, 2008.

The results of these businesses operations in the prior periods have been reclassified to conform to the 2008 classification.

In October 2007, the Company completed the sale of its US SEARCH.com (US Search).

US Search was included in the Companys Data Services

With the growth of First Advantage, a consumer-driven people locator service no longer fit into the Companys core business strategy.

The results of this business prior periods operations are presented as discontinued operations.

In October 2007, the Company sold 2,875,000 shares of DealerTrack Holdings, Inc.

(DealerTrack) common stock.

The sale resulted

in a pretax investment gain of approximately $97.4 million or $58.4 million after tax and $0.99 per diluted share.

The Company discontinued using the equity method of accounting for its remaining investment in DealerTrack.

After the sale, First

Advantage continues to own approximately 2,553,000 shares of DealerTrack common stock, which is approximately 6% of the outstanding shares.

On March 1, 2007, John Long submitted his resignation as the Chief Executive Officer (CEO) and as a director of the Company, effective as of March 30, 2007.

In connection with his resignation from the Company,

Long and First Advantage entered into a Transition Agreement dated as of March 2, 2007.

The Transition Agreement provides that Mr.

Long will receive cash severance of $4.4 million;

$2.2 million was paid in March 2007 with the

remaining payment of $2.2 million paid in March 2008.

In addition, Mr.

Long received an acceleration of his unvested options and two restricted stock awards, effective March 30, 2007.

An additional restricted stock award made to

Long will vest during the term of restrictive covenants set forth in the Transition Agreement.

Restricted stock units, previously granted to Mr.

Long, will continue to vest according to the terms of First Advantages 2003

First Advantage Corporation

Notes to Consolidated Financial Statements

Incentive Compensation Plan.

Based on the recommendation of the Compensation Committee, the Transition Agreement was approved by First Advantages board

of directors on March 1, 2007.

In connection with the Transition Agreement, First Advantage recorded compensation expense of $8.0 million in the quarter ending March 31, 2007 (included in salaries and benefits in the accompanying

Consolidated Statements of Income and Comprehensive Income) for the nine months ended September 30, 2007, reflecting the value of the cash severance payment of $4.4 million and the value of the previously unvested restricted stock, restricted

stock units and stock options.

The $8.0 million of compensation expense reduced net income for the nine months ended September 30, 2007 by $4.7 million or 8 cents per diluted share.

Advantage Corporation (the Company or First Advantage) is a global risk mitigation and business solutions provider and operates in five primary business segments:

Credit Services, Data Services, Employer Services, Multifamily

Services, and Investigative and Litigation Support Services.

The Company consolidated the previous Lender Services and Dealer Services segments and moved the consumer credit business from the Data Services segment to create the Credit Services

The prior periods have been recast to reflect the changed segments.

The First American Corporation and affiliates (First

American) own approximately 80% of the shares of capital stock of the Company as of March 31, 2009.

The Class B common stock owned by First American is entitled to ten votes per share on all matters presented to the stockholders for vote.

As part of the Companys streamlining initiative, in the second quarter of 2008, First Advantage sold First Advantage Investigative

Services (FAIS), which was included in our Investigative and Litigation Support Services segment, and Credit Management Solutions Inc.

(CMSI), which was included in our Credit Services segment.

The results of these

businesses operations in the prior period are presented in discontinued operations in the Companys Consolidated Statements of Income.

Summary of Significant Accounting Policies

1 unchanged sentence

The consolidated financial information included in this report has been prepared in accordance with

the instructions to Form 10-Q and does not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements.

In the opinion of management, all adjustments are of a

normal recurring nature and are considered necessary for a fair statement of the results for the interim period.

The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

the instructions to Form 10-Q and does not include all of the information and notes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments are of a normal recurring

nature and are considered necessary for a fair statement of the results for the interim period.

The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted

accounting principles.

This report should be read in conjunction with the Companys Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission.

Recent market conditions and economic events have had an overall negative impact on the

Companys operations and related financial results.

As a result of acquisitions, the Company has goodwill of approximately $753.1 million at September 30, 2008.

In accordance with SFAS No.

142 Goodwill and other Intangible Assets

and consistent with prior years, the Companys policy is to perform an annual impairment test for each reporting unit in the fourth quarter.

The valuation of goodwill requires assumptions and estimates of many critical factors including revenue

growth, cash flows, market multiples and discount rates.

Forecasts of future operations are based, in part, on operating results and managements expectations as to future market conditions.

Many of the factors used in assessing fair value are

outside the control of management including future economic and market conditions.

If the fair value of a reporting unit exceeds its carrying value, then its goodwill is not considered impaired.

In the event that the carrying value of a reporting

unit exceeds its fair value, then further testing must be performed to determine if the carrying value of goodwill exceeds the fair value of goodwill.

Due to significant volatility in the current markets, the Companys operations may be

negatively impacted in the future to the extent that exposure to impairment charges may be increased.

First Advantage Corporation

Notes to Consolidated Financial Statements

First Advantage completed one acquisition during the nine months ended September 30, 2008.

Companys operating results for the three and nine months ended September 30, 2008 include results for the acquired entity from the date of acquisition.

Operating results for the three and nine months ended September 30, 2008 and 2007 are not necessarily indicative of the results that may be expected for the entire fiscal year.

As of September 30, 2008, the Companys significant accounting polices and estimates, which are detailed in the Companys Annual Report on

Form 10-K for the year ended December 31, 2007, have not changed from December 31, 2007, except for the adoption of Statement of Financial Accounting Standards (SFAS) No.

157, Fair Value Measurements, and SFAS

No.159, The Fair Value Option for Financial Assets and Liabilities (SFAS 159).

Fair Value Accounting

In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS 159 The Fair Value Option for Financial

Assets and Liabilities. SFAS 159 allows companies to report selected financial assets and liabilities at fair value at their discretion.

SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons

between companies that choose different measurement attributes for similar types of assets and liabilities.

SFAS 159 was effective at the beginning of a companys first fiscal year after November 15, 2007.

The Company adopted SFAS 159 on

January 1, 2008.

The Company did not apply the fair value option and, therefore, SFAS 159 does not have an impact on our Consolidated Financial Statements.

In September 2006, the FASB issued SFAS No.

157 Fair Value Measurements (SFAS 157).

SFAS 157 defines fair value, establishes a framework for measuring fair value within GAAP, and expands

disclosure requirements regarding fair value measurements.

The Company has adopted FASB Staff Position 157-2, Effective Date of FASB Statement No.

157, (FSP 157-2), issued February 2008, and as a result the Company has

partially applied the provisions of SFAS 157 as of January 1, 2008, which had no material effect on its consolidated financial statements.

FSP 157-2 delays the effective date of SFAS 157 for non-financial assets and liabilities until

January 1, 2009, except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).

First Advantage Corporation

Notes to Consolidated Financial Statements

SFAS 157 clarifies that fair value is an exit price, representing the amount that would be received

to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

SFAS 157 also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these

assets and liabilities must be grouped, based on significant levels of inputs as follows:

Level 1 quoted prices in active markets

for identical assets or liabilities;

Level 2 quoted prices in active markets for similar assets and liabilities and inputs that are

observable for the asset or liability;

Level 3 unobservable inputs, such as discounted cash flow models or valuations.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to

the fair value measurement.

At September 30, 2008, the Companys marketable equity securities, $43.0 million, are valued using quoted market prices multiplied by the number of shares owned (Level 1).

For additional information about our

marketable equity securities, refer to Note 8 of the Notes to Consolidated Financial Statements in our Form 10-K.

Recent Accounting

Pronouncements

In December 2007, the FASB issued SFAS No.

141 (revised 2007) Business Combinations (SFAS

This replaces SFAS 141, Business Combinations, and requires an acquirer to recognize the assets acquired, the liabilities assumed, including those arising from contractual contingencies, any contingent consideration, and

any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the statement.

SFAS 141(R) also requires the acquirer in a business combination achieved in

stages (sometimes referred to as a step acquisition) to recognize the identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance

with SFAS 141(R)).

In addition, SFAS 141(R)s requirement to measure the noncontrolling interest in the acquiree at fair value will result in recognizing the goodwill attributable to the noncontrolling interest in addition to that attributable

to the acquirer.

SFAS 141(R) amends SFAS 109, Accounting for Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income

from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances.

SFAS 141(R) is effective at the beginning of a companys first fiscal year after December 15, 2008.

is currently evaluating the effects of adoption on its consolidated financial statements and the impact, if any, is not known at this time.

First Advantage Corporation

Notes to Consolidated Financial Statements

In December 2007, the FASB issued SFAS No.

160 Noncontrolling Interests in Consolidated

Financial Statements (SFAS 160).

SFAS 160 amends Accounting Research Bulletin 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and

for the deconsolidation of a subsidiary.

It also clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.

SFAS 160 also

changes the way the consolidated income statement is presented by requiring consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest.

It also requires disclosure, on

the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest.

SFAS 160 is effective at the beginning of a companys first fiscal year after

December 15, 2008.

The Company is currently evaluating the effects of adoption on its consolidated financial statements and the impact, if any, is not known at this time.

In May 2008, the FASB issued SFAS No.

162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162).

statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in accordance with GAAP.

With the issuance of

this statement, the FASB concluded that the GAAP hierarchy should be directed toward the entity and not its auditor, and reside in the accounting literature established by the FASB as opposed to the American Institute of Certified Public Accountants

Statement on Auditing Standards No.

69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. This statement is effective 60 days following the Securities and Exchange Commissions approval

of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We have evaluated the new statement and have determined that

it will not have a significant impact on the determination or reporting of our financial results.

During the nine months ended

September 30, 2008, the Company completed one acquisition for approximately $16.3 million in cash.

In addition, the Company paid consideration of approximately $42.9 million in cash and approximately $3.0 million in debt related to earnout

provisions from prior year acquisitions and an additional purchase of a portion of minority interests in LeadClick Media Inc.

Operating results for the three months ended March 31, 2009 and 2008 are not necessarily indicative of the results that may be expected for the

entire fiscal year.

As of March 31, 2009, the Companys significant accounting polices and estimates, which are detailed in the

Companys Annual Report on Form 10-K for the year ended December 31, 2008, have not changed from December 31, 2008, except for the adoption of Statement of Financial Accounting Standards (SFAS) No.

141 (revised 2007),

Business Combinations and SFAS No.

160, Noncontrolling Interests in Consolidated Financial Statements.

Purchase Accounting

In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.

(revised 2007), Business Combinations (SFAS No.

141(R) retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used

for all business combinations and for an acquirer to be identified for each business combination.

In general, the statement 1) broadens the guidance of SFAS No.

141, extending its applicability to all events where one entity obtains control over one

or more other businesses, 2) broadens the use of fair value measurements used to recognize the assets acquired and liabilities assumed, 3) changes the accounting for acquisition related fees and restructuring costs incurred in connection with an

acquisition, and 4) increases required disclosures.

The Company will apply the provisions of this statement prospectively to business combinations for which the acquisition date is on or after January 1, 2009.

Noncontrolling Interest

2007, the FASB issued SFAS No.

160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No.

51 (SFAS 160).

SFAS 160 requires that a noncontrolling interest in a subsidiary be reported as

equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements.

It also requires consistency in the manner of reporting changes in the parents

ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation.

The Company has applied the provisions of this statement effective on January 1, 2009 and the adoption did not have a

material effect on its consolidated financial statements.

First Advantage Corporation

Notes to Consolidated Financial Statements

The allocation of the aggregate purchase price of this acquisition and the earnouts are as follows:

(in thousands)

Identifiable intangible assets

Net assets acquired

The changes in the carrying amount of goodwill, by operating segment, are as follows for the nine

months ended September 30, 2008:

During the first quarter of 2009, the

Company paid consideration of approximately $18.1 million in cash related to earnout provisions from prior year acquisitions and approximately $5.1 million for the final purchase of a portion of noncontrolling interest in LeadClick Media, Inc.

The changes in the carrying amount of goodwill, by operating segment, are as follows for the three months ended March 31, 2009:

(in thousands)

2 unchanged sentences

assets acquired

September 30, 2008

Lender Services

March 31, 2009

Credit Services

Data Services

Dealer Services

Employer Services

3 unchanged sentences

not acquired in the period.

Discontinued Operations

As discussed in Note 1, as

part of the Companys streamlining initiative, First Advantage sold FAIS in April 2008, which was included in our Investigative and Litigation Support Services segment, and sold CMSI in June 2008, which was included in our Dealer Services

These businesses are presented in discontinued operations at September 30, 2008.

The results of these businesses operations in the prior periods have been reclassified to conform to the 2008 classification.

During 2008, the Company recorded a pre-tax charge of approximately $5.5 million, or $3.3 million after income taxes, in discontinued operations to reduce

the carrying value of goodwill and other assets related to these businesses in order to reflect the net proceeds realized from selling these two businesses.

In October 2007, the Company completed the sale of its consumer business, US Search.

US Search was included in the Companys Data Services segment.

With the growth of First Advantage, a consumer-driven people

locator service no longer fit into the Companys core business strategy.

The results of this business prior periods operations are presented as discontinued operations.

First Advantage Corporation

Notes to Consolidated Financial Statements

The following amounts have been segregated from continuing operations and are reflected as

discontinued operations for the three and nine months ended September 30, 2008 and 2007.

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Discontinued Operations

As discussed in Note 1, as

part of the Companys streamlining initiative, in the second quarter of 2008, the Company sold FAIS, which was included in our Investigative and Litigation Support Services segment, and CMSI, which was included in our Credit Services segment.

The results of these businesses operations in the prior period are presented in discontinued operations in the Companys Consolidated Statements of Income.

The following amounts have been segregated from continuing operations and are reflected as discontinued operations for the three months ended March 31, 2008.

(in thousands, except per share amounts)

Total revenue

Income (loss) from discontinued operations before income taxes

Income tax expense (benefit)

Income (loss) from discontinued operations, net of tax

(Loss) income per share:

Loss from discontinued operations before income taxes

Loss on sale of discontinued operations before income taxes

Income tax benefit

Loss from discontinued operations, net of tax

Loss per share:

Weighted-average common shares outstanding:

At December 31, 2007, the Company classified certain assets and liabilities associated with

the discontinued operations as assets of discontinued operations and liabilities of discontinued operations in the Consolidated Balance Sheet in accordance with the guidance in the SFAS No.

144 Accounting for the Impairment or Disposal of

Long Lived Assets.

(in thousands)

December 31, 2007

Current assets

Long term assets

Total assets of discontinued operations

Total liabilities of discontinued operations

Net assets of discontinued operations

Goodwill and Intangible Assets

In accordance with

SFAS 142, Goodwill and Other Intangible Assets, the Company will perform the annual goodwill impairment test for all reporting units in the fourth quarter of 2009.

There have been no impairments of goodwill during the three months ended

March 31, 2009.

Given the current economic environment and the uncertainties regarding the impact on the Companys business,

there can be no assurance that the Companys estimates and assumptions regarding the duration of the ongoing economic downturn, or the period or strength of recovery, made for purposes of the Companys goodwill impairment testing during

the year ended December 31, 2008 will prove to be accurate predictions of the future.

If the Companys assumptions regarding forecasted revenue or margin growth rates of certain reporting units are not achieved, the Company may be required

to record additional goodwill impairment losses in future periods, whether in connection with the Companys next annual impairment testing in the

First Advantage Corporation

Notes to Consolidated Financial Statements

Goodwill and Intangible Assets

Goodwill and other

identifiable intangible assets as of September 30, 2008 and December 31, 2007 are as follows:

fourth quarter of 2009 or prior to that, if any such change constitutes a triggering event in other than the quarter in which the annual goodwill impairment

test is performed.

It is not possible at this time to determine if any such future impairment loss would result or, if it does, whether such charge would be material.

Goodwill and other intangible assets as of March 31, 2009 and December 31, 2008 are as follows:

(in thousands)

September 30, 2008

March 31, 2009

December 31, 2008

Customer lists

Less impairment loss

Less accumulated amortization

Customer lists, net

Other identifiable intangible assets:

Other intangible assets:

Noncompete agreements

Less impairment loss

Less accumulated amortization

Other identifiable intangible assets, net

Amortization of customer lists and other identifiable intangible assets totaled approximately $5.3

million and $4.0 million for the three months ended September 30, 2008 and 2007, respectively, and $13.8 million and $12.0 million for the nine months ended September 30, 2008 and 2007, respectively.

An impairment loss of $1.3 million was recorded for the three and nine months ended September 30, 2008 in the Dealer Services segment.

The charge is

related to the write-off of the net book value of the automotive lead generation business identifiable intangible assets and customer list.

The impairment loss was incurred due to the challenging credit market and the negative impact to the

automotive lead generation business.

Estimated amortization expense relating to identifiable intangible asset balances as of

September 30, 2008, is expected to be as follows over the next five years and thereafter:

Nine months ending September 30,

Other intangible assets, net

Amortization of customer lists and other intangible assets totaled approximately $3.7 million and

$4.1 million for the three months ended March 31, 2009 and 2008, respectively.

Estimated amortization expense relating to intangible

asset balances as of March 31, 2009, is expected to be as follows over the next five years:

Three months ending March 31,

(in thousands)

2 unchanged sentences

Notes to Consolidated Financial Statements

The changes in the carrying amount of identifiable intangible assets are as follows for the nine

months ended September 30, 2008:

The changes in the carrying amount of identifiable intangible assets are as follows for the three

months ended March 31, 2009:

(in thousands)

Balance, at December 31, 2008

Impairment loss

Balance, at September 30, 2008

Long-term debt and capital leases consists of

the following at September 30, 2008:

Balance, at March 31, 2009

Long-term debt consists of the following at

March 31, 2009:

(in thousands, except percentages)

1 unchanged sentence

Weighted average interest rate of 3.70% with maturities through 2011

$225 million Secured Credit Facility, interest at 30-day LIBOR plus 1.25% (4.05% at September 30, 2008) matures September

$225 million Secured Credit Facility, interest at 30-day LIBOR plus 1.13% (1.67% at March 31, 2009) matures September

Capital leases and other debt:

3 unchanged sentences

Long-term debt and capital leases, net of current portion

At September 30, 2008, the Company was in compliance with the covenants of its loan agreement.

At March 31, 2009, the Company was in compliance with the financial covenants of its loan

First Advantage Corporation

5 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Income from continuing operations

Income (loss) from discontinued operations, net of tax

Net Income - numerator for basic and fully diluted earnings per share

Income from continuing operations attributable to FADV shareholders

Loss from discontinued operations attributable to FADV shareholders, net of tax

Net income attributable to FADV shareholders

Weighted-average shares for basic earnings per share

3 unchanged sentences

Earnings per share:

Income from continuing operations

(Loss) income from discontinued operations, net of tax

Income from continuing operations

(Loss) income from discontinued operations, net of tax

For the three months ended September 30, 2008 and 2007, options and warrants totaling

Income from continuing operations attributable to FADV shareholders

Loss from discontinued operations attributable to FADV shareholders, net of tax

Net income attributable to FADV shareholders

Income from continuing operations attributable to FADV shareholders

Loss from discontinued operations attributable to FADV shareholders, net of tax

Net income attributable to FADV shareholders

For the three months ended March 31, 2009 and 2008, options and warrants totaling 3,427,803

and 4,097,041, respectively, were excluded from the weighted average diluted shares outstanding, as they were antidilutive.

For the nine months ended September 30, 2008 and 2007, options and warrants totaling 3,895,234 and 2,092,430,

respectively, were excluded from the weighted average diluted shares outstanding, as they were antidilutive.

Share-Based Compensation

7 unchanged sentences

Restricted stock activity since December 31, 2008 is summarized as follows:

(in thousands, except weighted average fair value prices)

(in thousands, except exercise prices)

Nonvested restricted stock outstanding at December 31, 2008

2 unchanged sentences

Restricted stock vested

Nonvested restricted stock outstanding at September 30, 2008

The following table illustrates the share-based compensation expense recognized for the three and

nine months ended September 30, 2008 and 2007.

Approximately $3.4 million of the nine months ended September 30, 2007 share-based compensation expense is related to the former CEOs 2007 transition agreement.

Nonvested restricted stock outstanding at March 31, 2009

The following table illustrates the share-based compensation expense recognized for the three

months ended March 31, 2009 and 2008.

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

9 unchanged sentences

Options forfeited

Options outstanding at September 30, 2008

Options outstanding at March 31, 2009

Options exercisable, end of the quarter

1 unchanged sentence

Notes to Consolidated Financial Statements

The following table summarizes information about stock options outstanding at September 30,

The following table summarizes information about stock options outstanding at March 31, 2009:

(in thousands, except for exercise prices, years and weighted average amounts)

10 unchanged sentences

$50.01 - $242.25

The Company had outstanding warrants to purchase up to 41,462 shares of its common stock at an

exercise price of $12.05 per share as of September 30, 2008.

The Company had outstanding warrants to purchase up to 41,462 shares of its common stock at

exercise prices of $12.05 per share as of March 31, 2009.

The weighted average remaining contractual life in years for the warrants outstanding is 2.18.

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income tax examinations by tax authorities before 2003.

The Internal Revenue Service is conducting an examination of First Advantage Corporations 2005 consolidated federal income tax return.

does not anticipate material adjustments as a result of this examination.

The Company adopted the provisions of FASB Interpretation

48 (FIN 48), Accounting for Uncertainty in Income Taxes, on January 1, 2007.

As a result of the implementation of FIN 48, the Company recognized approximately a $0.2 million increase in the liability for

uncertain tax benefits as well as approximately $0.7 million increase in the liability for related penalties and interest, which was accounted for as a reduction to the January 1, 2007 retained earnings.

As of September 30, 2008, the Company has a $4.0 million total liability recorded for unrecognized tax benefits as well as a $0.3 million total

liability for income tax related interest.

In April 2009, the Internal Revenue Service (IRS) concluded an examination of First Advantages consolidated 2005 federal income tax

return without any material adjustments.

In March 2009, the IRS initiated an examination of First Advantages consolidated 2006 and 2007 federal income tax returns, which the Company does not anticipate will result in material adjustments.

As of March 31, 2009, the Company has a $4.0 million total liability recorded for unrecognized tax benefits as well as a $0.4 million

total liability for income tax related interest.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2.4 million.

The majority of the unrecognized tax benefits that would affect the effective tax rate

and associated interest relates to foreign operations.

The majority of the unrecognized tax benefits that would affect the effective

tax rate and associated interest relates to foreign operations.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

The Company does not currently anticipate that the total

amount of unrecognized tax benefits will significantly increase or decrease by the end of 2008.

The Company does not currently anticipate that the

total amount of unrecognized tax benefits will significantly increase or decrease by the end of 2009.

First Advantage Corporation

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Segment Information

The Company operates in six

The Company operates in five

primary business segments:

Lender Services, Data Services, Dealer Services, Employer Services, Multifamily Services, and Investigative and Litigation Support Services.

The Lender Services segment offers lenders credit reporting solutions for mortgage and home equity needs.

The Data Services segment includes business lines that provide transportation credit reporting, motor vehicle record reporting, fleet management, criminal records reselling, specialty credit reporting, consumer credit reporting services,

and lead generation services.

Revenue for the Data Services segment includes $1.2 million of inter-segment sales for the three months ended September 30, 2008 and 2007, and $4.0 million and $3.7 million of inter-segment sales for the nine

months ended September 30, 2008 and 2007, respectively.

The Dealer Services business segment serves the automotive dealer marketplace

by delivering consolidated consumer credit reports and automotive lead generation services.

The Employer Services segment includes

employment background screening, occupational health services, tax incentive services and hiring solutions.

Products and services relating to employment background screening include criminal records searches, employment and education verification,

social security number verification and credit reporting.

Occupational health services include drug-free workplace programs, physical examinations and employee assistance programs.

Hiring solutions include applicant tracking software, recruiting

services and outsourced management of payroll and human resource functions.

Tax incentive services include services related to the administration of employment-based and location-based tax credit and incentive programs, and fleet asset management

Revenue for the Employer Services segment includes $0.1 million of inter-segment sales for the three month period ended September 30, 2007.

Revenue for the Employer Services segment includes $0.6 million and $0.7 million of

inter-segment sales for the nine month periods ended September 30, 2008 and 2007, respectively.

Credit Services, Data Services, Employer Services, Multifamily Services, and Investigative and Litigation Support Services.

The Company consolidated the previous Lender Services and Dealer Services segments and moved the

consumer credit business from the Data Services segment to create the Credit Services segment.

The prior periods have been recast to reflect the changed segments.

The Credit Services segment includes business lines that offer credit reporting solutions for mortgage and home equity needs, that provide consumer credit reporting services and that serve the automotive dealer

marketplace by delivering consolidated consumer credit reports and automotive lead generation services.

The Data Services segment includes

business lines that provide transportation credit reporting, motor vehicle record reporting, fleet management, supply chain theft and damage mitigation consulting, criminal records reselling, specialty finance credit reporting, and lead generation

Revenue for the Data Services segment includes $1.0 million and $1.5 million of inter-segment sales for the three months ended March 31, 2009 and 2008, respectively.

The Employer Services segment includes employment background screening, occupational health services, tax incentive services and hiring solutions.

Products and services relating to employment background screening include criminal records searches, employment and education verification, social security number verification and credit reporting.

Occupational health services include drug-free

workplace programs, physical examinations and employee assistance programs.

Hiring solutions include applicant tracking software, recruiting services and outsourced management of payroll and human resource functions.

Tax incentive services include

services related to the administration of employment-based and location-based tax credit and incentive programs, sales and use tax programs and fleet asset management programs.

Revenue for the Employer Services segment includes $0.2 million and $0.4

million of inter-segment sales for the three months ended March 31, 2009 and 2008, respectively.

The Multifamily Services segment

2 unchanged sentences

Revenue for the Multifamily

Services segment includes $0.2 million and $0.1 million of inter-segment sales for the three months ended September 30, 2008 and 2007, respectively.

Revenue for the Multifamily Services segment includes $0.5 million and $0.4 million of

inter-segment sales for the nine months ended September 30, 2008 and 2007, respectively.

Services segment includes $0.1 million and $0.2 million of inter-segment sales for each of the three months ended March 31, 2009 and 2008, respectively.

First Advantage Corporation

1 unchanged sentence

The Investigative and Litigation Support Services segment includes all investigative services.

Products and services offered by the Investigative and Litigation Support Services segment include computer forensics, electronic discovery, due diligence reports and other high level investigations.

The impairment losses for the three and nine months ended September 30, 2008 and 2007 are included in the respective segments depreciation and

amortization.

Products and services offered by the Investigative and Litigation Support Services segment includes computer forensics, electronic discovery, due diligence reports and other high level investigations.

The elimination of intra-segment revenue and cost of service revenue is included in Corporate.

These transactions are

recorded at cost.

Service revenue for international operations included in the Employer Services segment was $11.9 million and $12.5

million for the three months ended September 30, 2008 and 2007, respectively and $35.3 million and $30.9 million for the nine months ended September 30, 2008 and 2007, respectively.

Service revenue for international operations included in

the Investigative and Litigation Support Services segment was $7.6 million and $14.4 million for the three months ended September 30, 2008 and 2007, respectively and $32.3 million and $20.5 million for the nine months ended September 30,

2008 and 2007.

First Advantage Corporation

Notes to Consolidated Financial Statements

The following table sets forth segment information for the three and nine months ended

September 30, 2008 and 2007.

These transactions are recorded at cost.

Service revenue for international operations included in the Employer Services segment was $6.5 million and $11.1 million for the three months ended

March 31, 2009 and 2008, respectively.

Service revenue for international operations included in the Investigative and Litigation Support Services segment was $5.4 million and $12.9 million for the three months ended March 31, 2009 and

2008, respectively.

The following table sets forth segment information for the three months ended March 31, 2009 and 2008.

(in thousands)

and Amortization

Income (Loss)

and Amortization

From Operations

Three Months Ended September 30, 2008

Lender Services

Data Services

Dealer Services

Employer Services

Multifamily Services

Investigative and Litigation Support Services

Corporate and Eliminations

Three Months Ended September 30, 2007

Lender Services

Data Services

Dealer Services

Employer Services

Multifamily Services

Investigative and Litigation Support Services

Corporate and Eliminations

Consolidated (excluding Assets of Discontinued Operations)

Nine Months Ended September 30, 2008

Lender Services

Three Months Ended March 31, 2009

Credit Services

Data Services

Dealer Services

Employer Services

2 unchanged sentences

Corporate and Eliminations

Nine Months Ended September 30, 2007

Lender Services

Three Months Ended March 31, 2008

Credit Services

Data Services

Dealer Services

Employer Services

2 unchanged sentences

Corporate and Eliminations

Consolidated (excluding Assets of Discontinued Operations)

Consolidated (excluding assets for discontinued operations)

Managements Discussion and Analysis of Financial Condition and Results of Operations

36 unchanged sentences

and credit reporting to enterprise and consumer customers.

The Company operates in six primary business segments:

Lender Services, Data Services, Dealer Services, Employer Services, Multifamily Services, and Investigative & Litigation

Support Services.

The Company operates in five primary business segments:

Credit Services, Data Services, Employer Services, Multifamily Services, and Investigative & Litigation Support Services.

Company consolidated the previous Lender Services and Dealer Services segments and moved the consumer credit business from the Data Services segment to create the Credit Services segment.

The prior periods have been recast to reflect the changed

First Advantage is headquartered in Poway, California and has approximately 3,800 employees in offices throughout the United States and abroad.

During the nine months ended September 30, 2008, First Advantage acquired one

company, which is included in the Employer Services segment.

Operating results for the three and nine months ended September 30, 2008

included total service revenue of $174.7 million and $545.3 million, respectively.

This represents a decrease of 10.3% and 6.4% over the same periods in 2007, offset by $4.8 million and $15.5 million increases in service revenue related to

acquisitions.

Operating income for the three and nine months ended September 30, 2008 was $21.7 million and $72.9 million, respectively.

Operating income decreased $12.5 million for the three months ended September 30, 2008 in comparison

to the same period in 2007.

Results of operations for the three months ended September 30, 2008 include approximately $2.8 million ($1.6 million after taxes or $0.03 per diluted share) of costs related to the consolidation of operations,

including approximately $1.3 million ($0.7 million after taxes or $0.01 per diluted share) for impairment charge related to the write-off of identifiable intangible assets in our Dealer Services segment.

Operating income decreased $17.2 million for

the nine months ended September 30, 2008 in comparison to the same period in 2007.

In connection with the former CEOs Transition Agreement, First Advantage recorded compensation expense of $8.0 million in the nine months ended

September 30, 2007 (included in salaries and benefits in the accompanying Consolidated Statements of Income and Comprehensive Income), reflecting the value of the cash severance payment of $4.4 million and the value of the previously unvested

restricted stock, restricted stock units and stock options.

The $8.0 million of compensation expense reduced net income for the nine months ended September 30, 2007 by $4.7 million or 8 cents per diluted share.

As part of the Companys streamlining initiative, in the second quarter of 2008, First Advantage sold FAIS, which was included in our Investigative

and Litigation Support Services segment, and CMSI, which was included in our Dealer Services segment.

These businesses are presented in discontinued operations during the nine months ended September 30, 2008.

The results of these

businesses operations in the prior periods have been reclassified to conform to the 2008 classification.

In October 2007, the

Company completed the sale of its US Search business.

US Search was included in the Companys Data Services segment.

With the growth of First Advantage, a consumer-driven people locator service no longer fit into the Companys core

business strategy.

The results of this business operations in the prior periods are reflected in the Companys Consolidated Statements of Income and Comprehensive Income as discontinued operations.

Recent market conditions and economic events have had an overall negative impact on the

Companys operations and related financial results.

As a result of acquisitions, the Company has goodwill of approximately $753.1 million at September 30, 2008.

In accordance with SFAS No.

142 Goodwill and other Intangible Assets

and consistent with prior years, the Companys policy is to perform an annual impairment test for each reporting unit in the fourth quarter.

The valuation of goodwill requires assumptions and estimates of many critical factors including revenue

growth, cash flows, market multiples and discount rates.

Forecasts of future operations are based, in part, on operating results and

managements expectations as to future market conditions.

Many of the factors used in assessing fair value are outside the control of management including future economic and market conditions.

If the fair value of a reporting unit exceeds its

carrying value, then its goodwill is not considered impaired.

In the event that the carrying value of a reporting unit exceeds its fair value, then further testing must be performed to determine if the carrying value of goodwill exceeds the fair

value of goodwill.

Due to significant volatility in the current markets, the Companys operations may be negatively impacted in the future to the extent that exposure to impairment charges may be increased.

Management expects continued weakness in the real estate and mortgage markets to continue impacting the

Companys Lender Services segment and the lead generation, transportation and specialty credit businesses in the Data Services segment.

In addition, the effect of the issues in the real estate and related credit markets together with the recent

escalation in energy costs and other macroeconomic matters has resulted in higher unemployment rates negatively impacting the volumes in the Employer Services segment.

Given this outlook, management is focusing on expense reductions, operating

efficiencies, and increasing market share throughout the Company.

Critical Accounting Estimates

Critical accounting policies are those policies used in the preparation of the companys financial statements that require management to make

estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosure of contingencies.

A summary of these policies can be found in Managements Discussion and Analysis in the

Companys Annual Report on Form 10-K for year ended December 31, 2007.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS 141 (revised 2007) Business Combinations. This replaces SFAS 141, Business Combinations,

and requires an acquirer to recognize the assets acquired, the liabilities assumed, including those arising from contractual contingencies, any contingent consideration, and any noncontrolling interest in the acquiree at the acquisition date,

measured at their fair values as of that date, with limited exceptions specified in the statement.

SFAS 141(R) also requires the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) to recognize the

identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with SFAS 141(R)).

In addition, SFAS 141(R)s requirement to

measure the noncontrolling interest in the acquiree at fair value will result in recognizing the goodwill attributable to the noncontrolling interest in addition to that attributable to the acquirer.

SFAS 141(R) amends SFAS 109, Accounting for

Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or

directly in contributed capital, depending on the circumstances.

SFAS 141(R) is effective at the beginning of a companys first fiscal year after December 15, 2008.

The Company is currently evaluating the effects of adoption on its

consolidated financial statements and the impact, if any, is not known at this time.

In December 2007, the FASB issued SFAS 160

Noncontrolling Interests in Consolidated Financial Statements. SFAS 160 amends Accounting Research Bulletin 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a

subsidiary and for the deconsolidation of a subsidiary.

It also clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.

SFAS 160 also changes the way the consolidated income statement is presented by requiring consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest.

It also requires

disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest.

SFAS 160 is effective at the beginning of a companys first fiscal year

after December 15, 2008.

The Company is currently evaluating the effects of adoption on its consolidated financial statements and the impact, if any, is not known at this time.

In May 2008, the FASB issued SFAS 162, The Hierarchy of Generally Accepted Accounting

Principles. This statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in accordance with

generally accepted accounting principles (GAAP).

With the issuance of this statement, the FASB concluded that the GAAP hierarchy should be directed toward the entity and not its auditor, and reside in the accounting literature

established by the FASB as opposed to the American Institute of Certified Public Accountants Statement on Auditing Standards No.

69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. This

statement is effective 60 days following the Securities and Exchange Commissions approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally

Accepted Accounting Principles. We have evaluated the new statement and have determined that it will not have a significant impact on the determination or reporting of our financial results.

The following is a summary of the operating results by the Companys business segments for the three and nine months ended September 30, 2008

The current economic downturn has caused decreased service revenue in the Credit Services segment related to the mortgage and auto industries and the Data Services segment related to the transportation and specialty

finance businesses.

Management expects continued weakness in the real estate and mortgage markets to continue impacting the Companys Credit Services segment and the transportation and specialty credit businesses in the Data Services segment.

In addition, the effect of the issues in the real estate and related credit markets together with the other macroeconomic matters has resulted in higher unemployment rates negatively impacting the volumes in the Employer Services segment.

outlook, management is focusing on expense reductions, operating efficiencies, and increasing market share throughout the Company.

the current economic environment and the uncertainties regarding the impact on the Companys business, there can be no assurance that the Companys estimates and assumptions regarding the duration of the ongoing economic downturn, or the

period or strength of recovery, made for purposes of the Companys goodwill impairment testing during the year ended December 31, 2008 will prove to be accurate predictions of the future.

If the Companys assumptions regarding

forecasted revenue or margin growth rates of certain reporting units are not achieved, the Company may be required to record additional goodwill impairment losses in future periods, whether in connection with the Companys next annual

impairment testing in the fourth quarter of 2009 or prior to that, if any such change constitutes a triggering event in other than the quarter in which the annual goodwill impairment test is performed.

It is not possible at this time to determine if

any such future impairment loss would result or, if it does, whether such charge would be material.

Operating results for the three months

ended March 31, 2009 included total service revenue of $190.0 million, representing an increase of 1.0% over the same period in 2008.

Operating income for the three months ended March 31, 2009 was $18.8 million.

Operating income decreased

$8.3 million for the three months ended March 31, 2009 in comparison to the same period in 2008.

As part of the Companys

streamlining initiative, in the second quarter of 2008, First Advantage sold First Advantage Investigative Services (FAIS), which was included in our Investigative and Litigation Support Services segment, and Credit Management Solutions

(CMSI), which was included in our Credit Services segment.

The results of these businesses operations in the prior period are presented in discontinued operations in the Companys Consolidated Statements of Income.

The following is a summary of the operating results by the Companys business segments for the three

months ended March 31, 2009 and March 31, 2008.

(in thousands, except percentages)

Three Months Ended September 30, 2008

Invest/Litigation

Support Services

Service revenue

Reimbursed government fee revenue

Total revenue

Cost of service revenue

Government fees paid

Total cost of service

Salaries and benefits

Facilities and telecommunications

Other operating expenses

Depreciation and amortization

Income (loss) from operations

Operating margin percentage

Three Months Ended September 30, 2007

Invest/Litigation

Support Services

Service revenue

Reimbursed government fee revenue

Total revenue

Cost of service revenue

Government fees paid

Total cost of service

Salaries and benefits

Facilities and telecommunications

Other operating expenses

Depreciation and amortization

Income (loss) from operations

Operating margin percentage

Nine Months Ended September 30, 2008

Three Months Ended March 31, 2009

Invest/Litigation

12 unchanged sentences

Operating margin percentage

Nine Months Ended September 30, 2007

Three Months Ended March 31, 2008

Invest/Litigation

12 unchanged sentences

Operating margin percentage

Lender Services Segment

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

Service revenue was $29.9 million for the three months ended September 30, 2008, a decrease of $5.9 million compared to service revenue of $35.8 million for the three months ended September 30, 2007.

Service revenue from existing

businesses decreased by $8.9 million, offset by the acquisition of a mortgage credit reporting business during the fourth quarter of 2007 which increased service revenue by $3.0 million.

A decrease in transactions related to the decline in the

mortgage industry resulted in an overall decrease in service revenue.

Gross margin was $18.1 million for the three months ended

September 30, 2008, a decrease of $5.8 million compared to gross margin of $23.9 million in the same period of 2007.

The acquisition of a mortgage credit reporting business during the fourth quarter of 2007 increased gross margin by $1.4

million, while gross margin from existing businesses decreased by $7.2 million.

The impact of the decrease in transactions, product mix, and an increase in credit data costs resulted in an overall decrease in gross margin.

Gross margin was 60.4% for

the three months ended September 30, 2008 as compared to 66.6% for the three months ended September 30, 2007.

benefits decreased by $1.1 million.

Salaries and benefits were 35.5% of service revenue in the third quarter of 2008 compared to 32.6% during the same period in 2007.

The cost savings initiative created a $2.1 million decrease due to the segment

reducing employees in line with the decrease in service revenue.

This is offset by an acquisition during the fourth quarter of 2007 which increased salaries and benefits expense by $0.5 million and severance expense of $0.5 million that was recorded

for the three months ended September 30, 2008.

Facilities and telecommunication expenses for the third quarter of 2008 were comparable to the same

period in 2007.

Facilities and telecommunication expenses were 6.1% of service revenue in the third quarter of 2008 compared to 5.4% in the third quarter of 2007.

Other operating expenses decreased by $1.0 million.

Other operating expenses were 2.8% of service revenue in the third quarter of 2008 compared to 5.2% for the same period of 2007.

The decrease in other operating

expense was due to a reduction in temporary labor costs, international operations, and bad debt expense.

This is offset by the acquisition of a mortgage credit reporting business during the fourth quarter of 2007 which increased other operating

expenses by $0.3 million during the three months ended September 30, 2008.

Depreciation and amortization decreased by $0.5 million.

Depreciation and amortization was 4.0% of service revenue during the third quarter of 2008 compared to 4.7% in the same period in 2007.

The decrease is primarily due to certain fixed assets and intangibles becoming fully depreciated offset by $0.3

million related to office consolidations.

Income from operations was $3.6 million for the three months ended September 2008 compared to

$6.7 million in the same period of 2007.

Income from operations from existing businesses decreased by $3.5 million, offset by the acquisition of a mortgage credit reporting business during the fourth quarter of 2007 which increased income from

operations by $0.4 million.

The operating margin percentage decreased from 18.6% to 12.0% primarily due to the overall decrease in service revenue and $0.8 million in additional expense related to severance and office consolidations.

Credit Services Segment

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

revenue was $64.4 million for the three months ended March 31, 2009, a decrease of $10.5 million compared to service revenue of $74.9 million for the three months ended March 31, 2008.

A decrease in transactions due to the decline in the

mortgage and auto industries resulted in an overall decrease in service revenue.

A 40% decrease in revenue at the dealer services division and an approximately 6% decrease in revenue at the lender services division resulted in an overall decrease in

service revenue, which is partially offset by an increase in revenue from the consumer credit division.

The challenging credit markets and overall economy continues to affect our credit reporting businesses, compared to the first quarter of 2008.

Gross margin was $35.4 million for the three months ended March 31, 2009, a decrease of $6.7 million

compared to gross margin of $42.1 million in the same period of 2008.

The impact of the decrease in transactions and an increase in credit data costs resulted in an overall decrease in gross margin.

Gross margin was 54.9% for the three months ended

March 31, 2009 as compared to 56.3% for the three months ended March 31, 2008.

Salaries and benefits decreased by $3.6 million.

Salaries and benefits were 18.9% of service revenue in the first quarter of 2009 compared to 21.1% during the same period in 2008.

Salaries and benefits expense decreased due to operational efficiencies and reduced staffing.

Facilities and telecommunication expenses decreased $0.5 million.

Facilities and telecommunication expense were 2.7% of service revenue in the first

quarter of 2009 compared to 2.9% in the first quarter of 2008.

The decrease is due to the consolidation of operations.

Other operating

expenses decreased by $1.4 million.

Other operating expenses were 8.1% of service revenue in the first quarter of 2009 compared to 8.8% for the same period of 2008.

The decrease in 2009 is due to a decrease in temporary employees, professional

service fees, lease expense, marketing expense, and travel expense, offset by an increase in bad debt expense.

Depreciation and

amortization increased by $0.3 million.

Depreciation and amortization was 2.2% of service revenue during the first quarter of 2009 compared to 1.6% in the same period in 2008.

The increase is primarily due to the rollout of new software projects.

Income from operations was $14.7 million for the three months ended March 2009 compared to $16.3 million in the same period of 2008.

operating margin percentage increased from 21.8% to 22.9% primarily due operational efficiencies gained related to the segments cost reduction measures in 2008.

Data Services Segment

Three Months Ended September 30, 2008

Compared to Three Months Ended September 30, 2007

Service revenue was $31.0 million for the three months ended September 30,

2008, an increase of $1.9 million compared to service revenue of $29.1 million in the same period of 2007.

The increase in service revenue is primarily due to an increase in revenue in our lead generation business and new product offerings in our

consumer credit business, offset by reduced volumes in the specialty credit and transportation businesses as a result of the economic slowdown in the housing market and auto industry.

Cost of service revenue was $12.8 million for the three months ended September 30, 2008, an increase of $4.1 million compared to cost of service

revenue of $8.7 million in the same period of 2007.

Cost of service revenue was 41.4% of service revenue during the third quarter of 2008 compared to 29.8% in the same period in 2007.

The increase is primarily due to the change in revenue mix.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Total service revenue was $59.1 million for the three months ended March 31, 2009, an increase of $40.1 million compared to

service revenue of $19.0 million in the same period of 2008.

This segment has experienced a significant increase in service revenue primarily due to the lead generation eAdvertising business, offset by reduced volumes in the specialty credit and

transportation businesses as a result of the overall economic downturn.

Gross margin was $18.1 million for the three months ended

March 31, 2009, an increase of $4.3 million compared to gross margin of $13.8 million in the same period of 2008.

Gross margin as a percentage of service revenue was 30.7% for the three months ended March 31, 2009 as compared to 73% for

the three months ended March 31, 2008.

The decrease in the gross margin as a percentage of service revenue is primarily due to the revenue mix.

The lead generation eAdvertising business has relatively lower margins.

Salaries and benefits increased by $0.3 million.

Salaries and benefits were approximately 21.0% of service revenue in the third quarter of

2008 compared to 19.6% of service revenue in the third quarter of 2007.

The increase is primarily due to an increase in salaries and benefits for technology personnel, previously outsourced, to gain cost efficiencies.

Facilities and telecommunication expenses for the third quarter of 2008 were comparable to the same period in 2007.

Facilities and telecommunication

expenses were approximately 2.8% of service revenue in the third quarter of 2008 and 2007.

Other operating expenses decreased by $0.7

Other operating expenses were 7.9% of service revenue in the third quarter of 2008 compared to 11.0% in the third quarter of 2007.

The decrease is primarily due to the decrease of technology related shared services fees.

Depreciation and amortization increased by $0.2 million.

Depreciation and amortization was 9.0% of

service revenue during the third quarter of 2008 compared to 8.9% in the same period in 2007.

Income from operations was $5.6 million for

the third quarter of 2008, a decrease of $2.5 million compared to $8.1 million in the third quarter of 2007.

The operating margin percentage decreased from 27.9% to 17.9% in comparing the third quarter of 2007 to the third quarter of 2008.

decrease is primarily driven by the lead generation business where margins have declined due to change in gross margins in the revenue mix and an increase in expenses to support future growth.

Dealer Services Segment

Three Months Ended September 30,

2008 Compared to Three Months Ended September 30, 2007

Service revenue was $21.8 million for the three months ended

September 30, 2008, a decrease of $4.6 million compared to service revenue of $26.4 million for the three months ended September 30, 2007.

The decrease in service revenue is primarily due to the decrease in transactions related to the

challenging credit markets and reduced auto sales.

Gross margin was $8.9 million for the three months ended September 30, 2008, a

decrease of $2.4 million compared to gross margin of $11.3 million in the same period of 2007.

The impact of the decrease in service revenue resulted in an overall decrease in gross margin.

Gross margin was 40.7% for the three months ended

September 30, 2008 as compared to 42.8% for the three months ended September 30, 2007.

Salaries and benefits decreased by $0.3

Salaries and benefits were 8.7% of service revenue in the third quarter of 2008 compared to 8.2% during the same period in 2007.

Salaries and benefits expense decreased due to office consolidations and operational efficiencies, offset by

$0.3 million in severance recorded.

Facilities and telecommunication expenses for the third quarter of 2008 were comparable to the same

Salaries and benefits were approximately 9.1% of service revenue in the first quarter of 2009 compared

to 26.9% of service revenue in the first quarter of 2008.

The increase in expense is related to the growth of the lead generation business.

The decrease, as a percentage of revenue, is due to the significant increase in service revenue.

Facilities and telecommunication expenses for the first quarter of 2009 were comparable to the same

period in 2008.

Facilities and telecommunication expenses were approximately 0.7% of service revenue in the third quarter of 2008 compared to 0.5% of service revenue in the third quarter of 2007.

Other operating expenses decreased by $1.3 million.

Other operating expenses were 14.6% of service revenue in the third quarter of 2008 compared to 16.8%

for the same period in 2007.

The decrease is primarily due to a decrease in the amounts from shared services, offset by $0.3 million in expense related to office consolidation.

Depreciation and amortization increased $1.8 million.

The increase is primarily due to the $1.3 million impairment charge related to the write-off of

identifiable intangible assets and $0.4 million related to office consolidation offset by assets becoming fully depreciated.

Depreciation and amortization were 9.3% of service revenue in the third quarter of 2008 compared to 0.9% for the same period

Income from operations was $1.6 million for the three months ended September 2008 compared to $4.3 million in the same period in

The results for the three months ended September 2008 includes an impairment charge of $1.3 million.

The operating margin percentage decreased from 16.4% to 7.3%.

Without the impairment and restructuring charges, the operating margin for the

three months ended September 30, 2008 would have been 18.6%.

Facilities and telecommunication expenses were approximately 0.9% of service revenue in the first quarter of 2009 compared to 3.4% of service revenue in the first quarter of 2008.

Other operating expenses increased by $2.2 million.

Other operating expenses were 6.8% of service revenue in the first quarter of 2009 and 9.7% in the

first quarter of 2008.

The expense increase is primarily due to the increase in bad debt expense at the lead generation business.

Depreciation and amortization for the first quarter of 2009 was comparable to the same period in 2008.

Depreciation and amortization was 4.2% of service revenue during the first quarter of 2009 compared to 13.2% in the same period in 2008.

The operating margin percentage decreased from 19.9% to 9.6% in comparing the first quarter of 2008 to the first quarter of 2009.

decrease in the operating margin is primarily due to a change in the revenue mix of the businesses in the first quarter of 2009 compared to the same period in 2008.

Income from operations was $5.6 million for the first quarter of 2009, an increase of $1.9 million compared to $3.8 million in the first quarter of 2008.

The increase is primarily driven by the lead generation

business where revenue has increased, offset by increased cost of service and operating expenses.

Employer Services Segment

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

Service revenue was $54.2

million for the three months ended September 30, 2008, a decrease of $5.0 million compared to service revenue of $59.2 million in the same period of 2007.

The decrease was a result of a decline of $6.8 million of revenue from existing

businesses offset by the addition of $1.8 million of revenue from the acquisition in the first quarter of 2008.

The decline in service revenue from existing businesses is primarily due to the hiring solutions group, the occupational health division

and tax incentive revenue related to the Katrina tax credit program expiring August 2007.

The Katrina credit was extended with the passing of the Emergency Economic Stabilization Act of 2008 in October 2008.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Total service revenue was $37.5 million for the three months ended March 31, 2009, a decrease of $16.2 million compared to service revenue of $53.7

million in the same period of 2008.

The decrease was a result of a decrease in hiring in the United States and abroad.

The recession has caused increased unemployment, which directly affects this segment.

Salaries and benefits decreased by $3.1 million.

Salaries and benefits were 34.2% of service revenue in the third quarter of 2008 compared to 37.4% in

Salaries and benefits were 45.7% of service revenue in the first quarter of 2009 compared to 37.7% in

the same period of 2008.

The decrease is a related to severance of $0.9 recorded in third quarter 2007, the shift of personnel to shared services, and managements cost containment efforts, offset by an increase for acquisitions and

international expansion.

Facilities and telecommunication decreased $0.6 million.

Facilities and telecommunication expenses were 4.2% of

service revenue in the third quarter of 2008 and 4.8% in the third quarter of 2007.

The decrease is due to $0.3 million of future lease expense for office consolidations recorded in third quarter 2007.

Other operating expenses increased by $0.9 million.

Other operating expenses were 17.1% of service revenue in the third quarter of 2008 and 14.1% for the

same period of 2007.

The increase in other operating expenses is primarily due to an increase of in bad debt expense.

The expense decrease is a direct effect of office consolidations and reduction in staffing, offset by an increase in expense related to moving technology personnel from Corporate to Employer Services.

Facilities and telecommunication expenses decreased by $0.4 million.

Facilities and telecommunication expenses were 5.6% of service revenue in the first

quarter of 2009 and 4.6% in the first quarter of 2008.

The expense decrease is a direct effect of office consolidations.

Other operating

expenses decreased by $4.5 million.

Other operating expenses were 13.8% and 18.0% of service revenue in the first quarter of 2009 and 2008, respectively.

The expense decrease in other operating expenses is primarily due to moving technology

personnel from Corporate to Employer Services, a decrease in bad debt expense and decreased foreign currency losses.

Depreciation and

amortization increased by $0.6 million primarily due to the addition of intangible assets related the 2008 acquisition and the rollout of new software projects.

Income from operations was $6.6 million for the three months ended September 30, 2008 and 2007.

The operating margin percentage increased from 11.1% to 12.3%.

The increase in the operating margin is primarily due

to managements focus on cost containment on decreased revenue.

amortization increased by $0.4 million primarily due to the rollout of new software projects.

The operating margin percentage decreased

from 6.5% to (1.3)% primarily due to the decline in service revenue.

Loss from operations was $0.5 million for the three months ended

March 31, 2009, a decrease of $4.0 million compared to income from operations of $3.5 million in the same period of 2008.

The decrease is due to the decline in service revenue, offset by a 21% decrease in operating expenses.

Multifamily Services Segment

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

Total service revenue was $19.7 million for the three months ended September 30, 2008 and 2007.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Total service revenue was $17.9

million for the three months ended March 31, 2009, a decrease of $0.4 million compared to service revenue of $18.3 million in the same period of 2009.

The decrease is primarily due to a decline in revenue at the software business.

Salaries and benefits cost decreased $0.9 million.

Salaries and benefits were 32.1% of service revenue for the third quarter of 2008 compared to 34.3% of

service revenue in the same period of 2007.

The decrease is related to reduction in employees offset by severance of $0.2 million recorded in the third quarter of 2008.

Facilities and telecommunication expenses are comparable to the same period of 2007.

Facilities and telecommunication expenses were 4.2% of service revenue in the third quarter of 2008 and 4.6% in the third quarter of

Salaries and benefits were 35.3% of service revenue for the first quarter of 2009 compared to 39.5%

of service revenue in the same period of 2008.

The expense decrease is primarily due to a reduction in employees and an increase in capitalized labor.

Facilities and telecommunication expenses decreased $0.2 million.

Facilities and telecommunication expenses were 4.3% of service revenue in the first quarter of 2009 and 5.1% in the first quarter of 2008.

Other operating expenses decreased $0.3 million.

Other operating expenses were 12.9% of service revenue in the third quarter of 2008

compared to 14.5% in the same period of 2007.

Depreciation and amortization increased $0.3 million.

Depreciation and amortization was 7.3%

of service revenue in the third quarter of 2008 compared to 6.1% in the same period of 2007.

The increase is related to asset additions and the rollout of new software projects.

The operating margin percentage increased from 30.8% to 33.8%.

Income from operations was $6.7 million in

the third quarter of 2008 compared to income from operations of $6.1 million in the same period of 2007.

The increase in operating margin is primarily due to the impact of operational efficiencies and managements focus on reducing costs.

Other operating expenses were 12.1% of service revenue in the first quarter of 2009 compared to 13.4%

in the same period of 2008.

Depreciation and amortization was flat when compared to the first quarter of 2008.

Depreciation and

amortization was 8.4% of service revenue in the first quarter of 2009 compared to 7.5% in the same period of 2008.

The operating margin

percentage increased from 26.0% to 31.7% due to increased revenue from the renters insurance program and cost containment with revenue growth.

Income from operations was $5.7 million in the first quarter of 2009 compared to income from operations of $4.8 million in the same period of 2008.

Investigative and Litigation Services Segment

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

Service revenue was $18.6

million for the three months ended September 30, 2008, a decrease of $6.3 million compared to service revenue of $24.9 million in the same period of 2007.

The decrease is primarily due to the decrease in billings in the segments

electronic discovery business of the Litigation Support Services division.

Three Months Ended March 31, 2009 Compared to Three Months

Ended March 31, 2008

Total service revenue was $11.7 million for the three months ended March 31, 2009, a decrease of $11.8

million compared to service revenue of $23.5 million in the same period of 2008.

The decrease is primarily due to the case activity level in the Litigation Support Services division.

Salaries and benefits decreased by $2.6 million.

benefits were 41.0% of service revenue in the third quarter of 2008 compared to 36.2% in the same period of 2007.

The expense decrease is mainly due to the decreased compensation related to lower revenue and profitability offset by an increase of

employees in the Litigation Support Services division to support the revenue growth.

Facilities and telecommunication expenses were

comparable to the third quarter of 2007.

Facilities and telecommunication expenses were 3.9% of service revenue in the third quarter of 2008 and 2.7% in the same period of 2007.

Other operating expenses increased by $0.4 million.

Other operating expenses were 13.8% of service revenue in the third quarter of 2008 and 8.7% for the

Salaries and benefits were 56.8% of service revenue in the first quarter of 2009 compared to 39.4% in

the same period of 2008.

The expense decrease is mainly due to the decline of compensation related to revenue and profitability.

Facilities and telecommunication expenses decreased $0.2 million.

Facilities and telecommunication expenses were 5.0% of service revenue in the first quarter of 2009 and 3.3% in the first quarter of 2008.

Other operating expenses decreased by $0.3 million.

Other operating expenses were 19.4% of service revenue in the first quarter of 2009 and 11.0% for the

same period of 2008.

The expense increase is related to geographic expansion and new business development efforts in this segment.

Depreciation and amortization was consistent when compared to the third quarter of 2007.

Depreciation and amortization was 4.5% of service revenue in the third quarter of 2008 compared to 2.9% in the same period of 2007.

The operating margin percentage decreased from 46.9% to 34.1%.

Income from operations was $6.4 million for the third quarter of 2008 compared to $11.7

million for the same period of 2007.

The decrease in margin is primarily due to the revenue decrease on the higher margin electronic discovery business.

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

Corporate expenses represent primarily compensation and benefits for senior management, administrative staff, technology personnel and their related

expenses in addition to an administrative fee paid to First American.

The Corporate expenses were $8.7 million in the third quarter of 2008 compared to expenses of $9.2 million in the same period of 2007.

The decrease in expenses is related to

managements focus to reduce costs in the challenging economy.

Consolidated Results

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

Consolidated service

revenue for the three months ended September 30, 2008 was $174.7 million, a decrease of $20.0 million compared to service revenue of $194.7 million in the same period in 2007.

Service revenue at existing businesses decreased by $24.8 million,

offset by an increase in service revenue of $4.8 million related to acquisitions.

The decrease in service revenue is primarily due to the declining economy and weakened mortgage industry, and the challenging credit environment, offset by growth in

our international operations.

Salaries and benefits decreased $5.5 million.

Salaries and benefits were 33.8% of service revenue for the

three months ended September 30, 2008 and 33.2% for the same period in 2007.

The decrease is related to decreases in employees and office consolidations, offset by $0.5 million increase in severance expense recorded and additional employees

added to support international growth.

Facilities and telecommunication decreased by $0.6 million compared to the same period in 2007.

Facilities and telecommunication expenses were 4.5% of service revenue in the third quarter of 2008 and 4.3% in the same period of 2007.

Depreciation and amortization was flat when compared to the first quarter of 2008.

Depreciation and amortization was

6.2% of service revenue in the first quarter of 2009 compared to 3.3% in the same period of 2008.

The operating margin percentage

decreased from 40.5% to 9.8%.

The decrease in margin is primarily due to the revenue decline on the higher margin electronic discovery business.

Income from operations was $1.1 million for the first quarter of 2009 compared to $9.5 million for the

same period of 2008.

The decrease is primarily due to the revenue decrease on the higher margin electronic discovery business.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Corporate costs and expenses represent primarily compensation and benefits for senior management, administrative staff, technology personnel and their

related expenses in addition to an administrative fee paid to First American.

The corporate expenses were $7.9 million in the first quarter of 2009 compared to expenses of $10.7 million in the same period of 2008.

The expense decrease is due to

moving technology personnel from Corporate to Employer Services, decreases in compensation and benefit expenses, and travel expenses

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Consolidated service revenue for the three months ended March 31, 2009 was $190.0 million, an increase of $1.7 million compared to service revenue of

$188.3 million in the same period in 2008.

The increase in service revenue compared to first quarter 2008 is directly related the increase in the Data Services segment, offset by a decrease in service revenue due to the downturn in domestic and

international hiring, the decline in the mortgage industry, weakness in the credit markets, and overall economic slowdown.

benefits decreased $13.3 million.

Salaries and benefits were 28.0% of service revenue for the three months ended March 31, 2009 and 35.3% for the same period in 2008.

The decrease is primarily due to strategic reductions in employees, office

consolidations, and a reduction in the 401(k) match expense.

Facilities and telecommunication decreased by $1.5 million compared to the

same period in 2008.

Facilities and telecommunication expenses were 3.5% of service revenue in the first quarter of 2009 and 4.4% in the first quarter of 2008.

The decrease is primarily due to savings related to office consolidations.

Other operating expenses decreased by $3.5 million compared to the same period in 2008.

Other operating expenses were 11.4% of service revenue for the three months ended September 30, 2008 and 11.9% in the third quarter of 2007.

decrease is due to operational efficiencies on decreased revenues and managements focus to reduce costs.

Depreciation and

amortization increased by $2.4 million due to an intangible impairment charge recorded in our Dealer Services segment, additional expense related to office consolidations, fixed asset additions and the roll out of internally developed software,

offset by certain fixed assets and intangibles becoming fully depreciated.

The consolidated operating margin was 12.4% for the three

months ended September 30, 2008, compared to 17.6% for the same period in 2007.

Income from operations was $21.8 million for the

three months ended September 30, 2008 compared to $34.2 million for the same period in 2007.

The decrease of $12.4 million is comprised of decreases in operating income of $3.1 million in Lender Services, $2.6 million in Data Services, $2.7

million in Dealer Services, and $5.3 million in Investigative and Litigation Support Services, offset by an increase in operating income of $0.6 million at Multifamily Services, $0.1 million in Employer Services, and a decrease of Corporate expenses

of $0.5 million.

The results for the three months ended September 2008 include an impairment charge of $1.3 million related to the automotive lead generation business identifiable intangible assets and approximately $1.5 million in

restructuring charges.

Lender Services Segment

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Service revenue was $102.9

million for the nine months ended September 30, 2008, a decrease of $23.2 million compared to service revenue of $126.1 million for the nine months ended September 30, 2007.

The acquisition of a mortgage credit reporting business during

the fourth quarter of 2007 increased service revenue by $11.0 million, while service revenue from existing businesses decreased by $34.2 million.

A decrease in transactions related to the decline in the mortgage industry resulted in an overall

decrease in service revenue.

Gross margin was $64.9 million for the nine months ended September 30, 2008, a decrease of $19.4 million

compared to gross margin of $84.3 million in the same period of 2007.

The acquisition of a mortgage credit reporting business during the fourth quarter of 2007 increased gross margin by $5.7 million, while gross margin from existing businesses

decreased by $25.1 million.

The gross margin percentage was 63.0% for the nine months ended September 30, 2008 as compared to 66.8% for the nine months ended September 30, 2007.

The decrease is due to an increase in credit data costs and

the current years product mix.

Salaries and benefits decreased by $3.4 million.

Salaries and benefits were 32.7% of service revenue in

the third quarter of 2008 compared to 29.4% during the same period in 2007.

The decrease is due to the segment reducing employees in line with the decrease in service revenue.

This is offset by an acquisition during the fourth quarter of 2007 which

increased salaries and benefits expense by $1.9 million and severance expense of $0.8 million that was recorded for the three months ended September 30, 2008.

Facilities and telecommunication expenses for the nine months ended September 30, 2008 were comparable to the same period in 2007.

Facilities and telecommunication expenses were 5.5% of service revenue in the

first nine months of 2008 compared to 4.6% in the same period in 2007.

Other operating expenses decreased by $1.5 million.

Other operating

expenses were 3.8% of service revenue in the nine months ended September 30, 2008 compared to 4.3% for the same period of 2007.

The decrease in other operating expense was primarily due to a reduction of temporary labor costs, international

operations, and bad debt expense.

This is offset by the acquisition of a mortgage credit reporting business during the fourth quarter of 2007 which increased other operating expenses by $1.3 million during the nine months ended September 30,

Depreciation and amortization decreased by $2.0 million.

Depreciation and amortization was 2.9% of service revenue during the nine

months ended September 30, 2008 compared to 4.0% in the same period in 2007.

The decrease is primarily due to certain fixed assets and intangibles becoming fully expensed offset by additional expense related to office consolidations.

Income from operations was $18.6 million for the nine months ended September 2008 compared to $31.0 million in the same period of 2007.

Income from operations from existing businesses decreased by $14.1 million, offset by the acquisition of a mortgage credit reporting business during the fourth quarter of 2007 which increased income from operations by $1.7 million.

The operating

margin percentage decreased from 24.6% to 18.0% primarily due to the overall decrease in service revenue and restructuring costs.

Data Services Segment

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Service revenue was $87.5 million for the nine months ended September 30, 2008, a decrease of $7.9 million compared to service revenue of $95.4

million in the same period of 2007.

The decrease in service revenue is primarily due to the reduced volumes in the lead generation, transportation and specialty credit businesses as a result of the economic slowdown in the housing and credit

Cost of service revenue was $31.5 million for the nine months ended September 30, 2008, an increase of $2.5 million compared

to cost of service revenue of $29.0 million in the same period of 2007.

Cost of service revenue was 36.0% of service revenue during the nine months ended September 30, 2008 compared to 30.4% in the same period in 2007.

The increase is primarily

due to reduced volume levels of the relatively higher gross margin products in the lead generation and specialty credit businesses.

Salaries and benefits increased by $3.0 million.

Salaries and benefits were approximately 23.0% of service revenue in the nine months ended September 30, 2008 compared to 18.0% of service revenue in the same period of 2007.

increase is primarily due to an increase in salaries and benefits for technology personnel, previously outsourced, to gain cost efficiencies.

Facilities and telecommunication expenses for the nine months ended September 30, 2008 were comparable to the same period in 2007.

Facilities and telecommunication expenses were approximately 2.8% and 2.4% of service revenue for the

nine months ended September 30, 2008 and 2007, respectively.

Other operating expenses decreased by $2.4 million.

Other operating

expenses were 9.2% of service revenue in the nine months ended September 30, 2008 and 11.0% in the same period of 2007.

The decrease is primarily due to the decrease of technology related shared services fees.

Depreciation and amortization increased by $0.5 million.

Depreciation and amortization was 9.3% of

service revenue during the nine months ended September 30, 2008 compared to 8.0% in the same period in 2007.

Increase is due to the rollout of new software projects.

Income from operations was $17.2 million for the nine months ended September 30, 2008, a decrease of $11.6 million compared to $28.8 million in the nine months ended September 30, 2007.

The operating margin

percentage decreased from 30.1% to 19.7% in comparing the nine months ended September 30, 2008 to the same period of 2007.

The decrease is primarily driven by the lead generation business where revenue has declined, cost of service has

increased and expenses to support future growth have increased.

Dealer Services Segment

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Service revenue was $72.7 million for the nine months ended September 30, 2008, a decrease of $8.6 million compared to service revenue of $81.3

million for the nine months ended September 30, 2007.

The decrease in service revenue is primarily due to the decline in revenues at the automotive lead generation business.

Gross margin was $30.7 million for the nine months ended September 30, 2008, a decrease of $3.8 million compared to gross margin of $34.5 million in

the same period of 2007.

The impact of the decrease in service revenue, primarily in the automotive lead generation business, resulted in an overall decrease in gross margin.

Gross margin was 42.2% for the nine months ended September 30, 2008

as compared to 42.4% for the nine months ended September 30, 2007.

Salaries and benefits decreased by $1.0 million.

benefits were 8.4% of service revenue in the first nine months of 2008 compared to 8.7% during the same period in 2007.

Salaries and benefits expense decreased due to office consolidations and operational efficiencies, offset by $0.3 million in

severance recorded.

Facilities and telecommunication expenses decreased by $0.2 million.

Facilities and telecommunication expenses were

0.5% of service revenue in the first nine months of 2008 compared to 0.8% in the first nine months of 2007.

Other operating expenses

decreased by $3.4 million.

Other operating expenses were 14.9% of service revenue in the first nine months of 2008 compared to 17.5% for the same period in 2007.

The decrease is due to a decrease in the amounts allocated from shared services, and a

decrease in bad debt expense at the automotive lead generation business, offset by $0.3 million in expense related to office consolidation.

Depreciation and amortization increased $1.8 million.

The increase is due to the $1.3 million impairment charge related to the write-off of identifiable intangible assets and $0.4 million related to office consolidation.

Depreciation and

amortization was 3.6% and 1.1% of service revenue for the nine months ended September 30, 2008 and 2007, respectively.

operations was $10.8 million for the nine months ended September 2008 compared to $11.8 million in the same period in 2007.

The results for the nine months ended September 2008 includes an impairment charge of approximately $1.3 million related to

identifiable intangible assets and approximately $1.2 million in restructuring charges.

The operating margin percentage increased from 14.5% to 14.8% primarily due to the impact of operational efficiencies at the automotive credit reporting

subsidiary, including the impact of lower allocations from shared services and operating improvements in the automotive lead generation business offset by expenses related to office consolidation including the intangible impairment charge.

Employer Services Segment

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Service revenue was $163.4

million for the nine months ended September 30, 2008, a decrease of $8.6 million compared to service revenue of $172.0 million in the same period of 2007.

The decrease was a result of a reduction in revenue of $13.1 million from existing

businesses offset by the addition of $4.5 million of revenue from acquisitions.

The decrease in service revenue from existing businesses is directly related to the slowdown in hiring in the United States and abroad.

This is offset by the 2007 and

2008 acquisitions and continued international growth.

Salaries and benefits decreased by $5.5 million.

Salaries and benefits were 36.2% of

service revenue in the nine months ended September 30, 2008 compared to 37.5% in the same period of 2007.

The decrease is a direct effect of office closings in 2007 and the shift of personnel to shared services, offset by an increase for

international growth.

Facilities and telecommunication expenses decreased by $0.3 million.

Facilities and telecommunication expenses were

4.5% of service revenue in the nine months ended September 30, 2008 and 4.4% in the nine months ended September 30, 2007.

operating expenses increased by $4.3 million.

Other operating expenses were 17.7% of service revenue in the nine months ended September 30, 2008 and 14.3% for the same period of 2007.

The increase in other operating expenses is primarily due to

the increase in allocation for shared services, increase in bad debt, and foreign currency losses.

Depreciation and amortization increased

by $2.1 million primarily due to the addition of intangible assets related to the acquisitions and the rollout of new software projects.

Approximately $0.5 million was recorded related to asset write downs for the office consolidations.

Income from operations was $13.1 million for the nine months ended September 30, 2008, a decrease of $5.4 million compared to income from

operations of $18.5 million in the same period of 2007.

The operating margin percentage decreased from 10.7% to 8.0%.

The decrease in the operating margin is primarily due to a change in the revenue mix of the businesses in the nine months ended

September 30, 2008 compared to the same period in 2007.

Multifamily Services Segment

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Service revenue was $58.0 million for the nine months ended September 30, 2008, an increase of $1.0 million compared to service revenue of $57.0

million in the same period of 2007.

The 1.9% growth from existing businesses is driven by expanded market share and an increase in products and services.

Salaries and benefits expenses decreased $0.4 million.

Salaries and benefits were 34.4% of service revenue for the nine months ended September 30, 2008 compared to 35.8% of service revenue in the same period of

The decrease is related to a decrease in employees offset by $0.3 million in severance recorded.

Facilities and telecommunication

expenses decreased $0.2 million.

Facilities and telecommunication expenses were 4.6% and 5.0% of service revenue in the nine months ended September 30, 2008 and 2007, respectively.

Other operating expenses decreased $0.7 million.

Other operating expenses were 13.7% of service revenue

in the nine months ended September 30, 2008 compared to 15.1% in the same period of 2007.

The decrease is due to managements focus to reduce costs.

Depreciation and amortization increased $0.7 million.

Depreciation and amortization was 7.3% of service revenue in the nine months ended September 30, 2008 compared to 6.2% in the same period of 2007.

increase is related to asset additions the rollout of new software projects.

Income from operations was $18.0 million for the nine months

ended September 30, 2008 compared to income from operations of $16.3 million in the same period of 2007.

The operating margin percentage increased from 28.5% to 31.0% due to increased revenue from the renters insurance program and cost

Investigative and Litigation Services Segment

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Service revenue was $63.3

million for the nine months ended September 30, 2008, an increase of $10.4 million compared to service revenue of $52.9 million in the same period of 2007.

The increase is primarily due to the growth in the segments electronic discovery

business of the Litigation Support Services division.

Salaries and benefits increased by $3.4 million.

Salaries and benefits were 40.0% of

service revenue in the nine months ended September 30, 2008 compared to 41.5% in the same period of 2007.

The increase is mainly due to the increase of employees in the Litigation Support Services division to support the revenue growth and

compensation related to revenue and profitability.

Facilities and telecommunication expenses increased $0.5 million.

Facilities and

telecommunication expenses were 3.5% of service revenue in the nine months ended September 30, 2008 and 3.2% in the same period of 2007.

The increase is related to geographic expansion and new business development efforts in this segment.

Other operating expenses increased by $2.6 million.

Other operating expenses were 13.2% of service revenue in the nine months ended

September 30, 2008 and 10.9% for the same period of 2007.

The expense increase is related to geographic expansion and new business development efforts in this segment.

Depreciation and amortization increased by $0.2 million.

Depreciation and amortization was 3.9% of service revenue in the nine months ended

September 30, 2008 compared to 4.2% in the same period of 2007.

The operating margin percentage was 37.0% and 37.1% for the nine

months ended September 30, 2008 and 2007, respectively.

Income from operations was $23.4 million for the nine months ended September 30, 2008 compared to $19.6 million for the same period of 2007.

The increase in margin is primarily due to

the revenue increase on the higher margin electronic discovery business.

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Corporate expenses represent primarily compensation and benefits for senior management, administrative staff, technology personnel and their related expenses in addition to an administrative fee paid to First American.

The Corporate

expenses were $28.2 million in the nine months ended 2008 compared to expenses of $35.7 million in the same period of 2007.

The decrease is primarily related to the $8.0 million of severance costs recorded for the former CEO in the nine months ended

September 30, 2007.

Consolidated Results

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Consolidated service

revenue for the nine months ended September 30, 2008 was $545.3 million, a decrease of $37.2 million compared to service revenue of $582.5 million in the same period in 2007.

Acquisitions accounted for $15.5 million increase in revenue growth

offset by $52.7 million of revenue decline at existing businesses.

The decrease in service revenue is directly related to the downturn in domestic hiring, the decline in the mortgage industry, weakness in the credit markets, and overall economic

Salaries and benefits decreased $9.5 million.

Salaries and benefits were 34.6% of service revenue for the nine months ended

September 30, 2008 and 34.0% for the same period in 2007.

The decrease is primarily due to strategic reductions in employees, office consolidations and the departure of our former CEO in 2007.

In connection with the former CEOs Transition

Agreement, the Company recorded compensation expense of $8.0 million in the nine months ended September 30, 2007, reflecting the value of the cash severance payment of $4.4 million and the value of the previously unvested restricted stock,

restricted stock units and stock options.

This is offset by the increase related to customary annual salary increases, acquisitions and additional employees added to support international growth.

Facilities and telecommunication increased by $0.2 million compared to the same period in 2007.

Facilities and telecommunication expenses were 4.4% of

service revenue in the nine months ended September 30, 2008 and 4.1% in the same period of 2007.

Other operating expenses decreased

by $3.8 million compared to the same period in 2007.

Other operating expenses were 12.0% and 11.9% of service revenue for the nine months ended September 30, 2008 and 2007, respectively.

The decrease is due to a decrease in temporary labor,

leased equipment, marketing, and office expenses related to the overall initiative to reduce costs.

This is offset by an increase in shared services allocations and acquisitions.

Depreciation and amortization increased by $4.0 million due to an increase in amortization of intangible assets as a result of acquisitions, fixed

asset additions and the roll out of internally developed software, offset by certain fixed assets and intangibles becoming fully depreciated.

Approximately $0.8 million was recorded related to asset write downs and $1.6 million related to

identifiable intangible assets write downs for office consolidations.

The consolidated operating margin was 13.4% for the nine months

ended September 30, 2008, compared to 15.5% for the same period in 2007.

Excluding restructuring costs of $4.5 million in 2008, the consolidated operating margin was 14.2%.

Income from operations was $72.9 million for the nine months ended September 30, 2008 compared to $90.1 million for the same period in 2007.

of operations for the nine months ended September 30, 2008 include restructuring costs of $4.5 million.

Results of operations for the nine months ended September 30, 2007 include restructuring costs of $1.7 million and $8.0 in severance

costs related to the departure of our CEO in March 2007.

The decrease of $17.2 million is comprised of decreases in operating income of $12.4 million in Lender Services, $11.5 million in Data Services, $1.0 million in Dealer Services, $5.3 million

in Employer Services, offset by increases in operating income of $3.8 million in Investigative and Litigation Support Services and $1.7 million at Multifamily Services and a decrease of Corporate expenses of $7.5 million.

Other operating expenses were 10.2% and 12.1% of service revenue

for the three months ended March 31, 2009 and 2008, respectively.

The decrease in expense is due to office consolidations and cost cutting measures at the Employer Services and Credit Services segments.

This is offset by an increase in bad debt

expense at the Data Services segment.

Depreciation and amortization increased by $0.8 million due to fixed asset additions and the roll

out of internally developed software, offset by certain fixed assets and intangibles becoming fully depreciated.

The consolidated

operating margin was 9.9% for the three months ended March 31, 2009, compared to 14.4% for the same period in 2008.

Income from operations was $18.8 million for the three months ended March 31, 2009 compared to $27.2 million for the same

period in 2008.

The decrease of $8.4 million is comprised of a decrease in operating income of $8.4 million in Investigative and Litigation Support Services, $1.6 million in Credit Services, and $4.0 million at Employer Services offset by increases

in operating income of $1.9 million in Data Services, $0.9 million in Multifamily Services and a decrease of corporate expenses of $2.9 million.

Critical Accounting Estimates

Critical accounting policies are those policies used in the preparation of the companys

financial statements that require management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosure of contingencies.

A summary of these policies can be found in

Managements Discussion and Analysis in the Companys Annual Report on Form 10-K for year ended December 31, 2008.

Liquidity and Capital Resources

The Companys principal sources of capital include, but are not limited to, existing

cash balances, operating cash flows and borrowing under its Secured Credit Facility.

The Companys short-term and long-term liquidity depends primarily upon its level of net income, working capital management (accounts receivable, accounts

payable and accrued expenses) and bank borrowings.

The Company believes that, based on current forecasts and anticipated market conditions, sufficient operating cash flow will be generated to meet substantially all operating needs, to make planned

capital expenditures, scheduled debt payments, and tax obligations for the next twelve months.

Any material variance of operating results could require us to seek other funding alternatives including raising additional capital.

cash balances, operating cash flows and borrowing under its Secured Credit Facility (see Note 6 to the Consolidated Financial Statements).

The Companys short-term and long-term liquidity depends primarily upon its level of net income, working

capital management (accounts receivable, accounts payable and accrued expenses), capital expenditures and bank borrowings.

The Company believes that, based on current forecasts and anticipated market conditions, sufficient operating cash flow will

be generated to meet all operating needs, to make planned capital expenditures, scheduled debt payments, and tax obligations for the next twelve months.

Any material variance of operating results could require us to seek other funding alternatives

including raising additional capital, which may be difficult in the current economic conditions.

In previous years, First Advantage sought

to acquire other businesses as part of its growth strategy.

The Company will continue to evaluate acquisitions in order to achieve economies of scale, expand market share and enter new markets.

While uncertainties within the Companys industry exist, management is not aware of any trends or events likely to have a material adverse effect on

liquidity or the accompanying financial statements.

Management expects continued weakness in the real estate and mortgage markets to continue impacting the Companys Credit Services segment and the transportation and specialty credit businesses

in the Data Services segment.

In addition, the effect of the issues in the real estate and related credit markets and other macroeconomic matters has resulted in higher unemployment rates negatively impacting the volumes in the Employer Services

Given this outlook, management is focusing on expense reductions, operating efficiencies, and increasing market share throughout the Company.

Statements of Cash Flows

The Companys primary source of liquidity is cash flow from operations and amounts available under credit lines the Company has established with a

As of September 30, 2008, cash and cash equivalents were $45.5 million.

Net cash provided by operating activities of continuing

operations was $33.0 million for the nine months ended September 30, 2008 compared to cash provided by operating activities from continuing operations of $88.5 million for the same period in 2007.

Cash provided by operating activities of continuing operations decreased by $55.5 million from the nine months ended September 30, 2007 to the same

period of 2008 while income from continuing operations was $42.5 million in the nine months ended September 30, 2008 and $48.1 million for the same period in 2007.

The decrease in cash provided by operating activities was primarily due to

income tax payments of $75.7 million, the majority of which were made in the first quarter of 2008 and payments made for annual incentive compensation.

The tax payments were primarily related to the gain on sale of investment securities recognized

in the fourth quarter of 2007.

Cash used in investing activities of continuing operations was $86.4 million and $58.1 million for the nine

months ended September 30, 2008 and 2007, respectively.

In the nine months ended September 30, 2008, cash in the amount of $59.2 million was used for acquisitions (including $42.9 million related to earnout provisions and purchase of

minority interests of prior years acquisitions) compared to $28.0 million in 2007.

Purchases of property and equipment, including software, were $24.3 million in the nine months ended September 30, 2008 compared to $27.6 million in the

same period of 2007.

Cash provided by financing activities of continuing operations was $20.4 million for the nine months ended

September 30, 2008, compared to cash used in financing activities of continuing operations of $28.7 million for the nine months ended September 30, 2007.

In the nine months ended September 30, 2008, proceeds from existing credit

facilities were $100.3 million compared to $50.1 million in 2007.

Repayment of debt was $85.5 million in the nine months ended September 30, 2008 and $83.2 million in the same period of 2007.

Cash paid for interest decreased $5.0 million for the nine months ended September 30, 2008 compared to the same period in 2007.

The reduction

is due to the pay down of debt principal with 2007 proceeds from asset dispositions and cash flow from operations.

The Companys primary source of liquidity is cash flow from operations

and amounts available under credit lines the Company has established with a bank.

As of March 31, 2009, cash and cash equivalents were $59.2 million.

Net cash provided by operating activities of continuing operations was $12.9 million in the first quarter of 2009 compared to cash used in operating activities of continuing operations was $35.7 million for the same

period in 2008.

Cash provided by operating activities of continuing operations increased by $48.6 million from the first quarter of 2008 to the first quarter of 2009 while income from continuing operations was $10.8 million in the first quarter of

2009 and $16.2 million for the same period in 2008.

The increase in cash provided by operating activities was primarily due to the non-recurrence of 2008 income tax payments of $56.9 million related to the sale of DealerTrack shares and a 2008

severance payment of $2.2 million to the former CEO.

Cash used in investing activities of continuing operations was $24.1 million and

$47.1 million for the three months ended March 31, 2009 and 2008, respectively.

In the first quarter of 2009, net cash in the amount of $18.1 million was used for acquisitions compared to $36.1 million in 2008.

Purchases of property and

equipment were $5.0 million in the first quarter of 2009 compared to $10.4 million in the same period of 2008.

Cash provided by financing activities of continuing operations was $17.5 million for the three months

ended March 31, 2009, compared to $67.2 million for the three months ended March 31, 2008.

In the first quarter of 2009, proceeds from existing credit facilities were $45.0 million compared to $75.2 million in 2008.

Repayment of debt was

$22.6 million in the first quarter of 2009 and $3.3 million in the same period of 2008.

Cash used to acquire noncontrolling interest in a consolidated subsidiary was $5.1 million and $8.0 million for the three months ended March 31, 2009 and

2008, respectively.

Debt and Capital

In 2005, the Company executed a revolving credit agreement with a bank syndication (the Credit Agreement).

available under the Credit Agreement total up to $225 million.

The Credit Agreement includes a $10 million sub-facility for the issuance of letters of credit and up to a $5 million swing loan facility.

The credit facility maturity date is

September 28, 2010.

The Credit Agreement is collateralized by the stock of the Companys subsidiaries.

At September 30, 2008, the Company had available lines of credit of $189.8 million and the Company

was in compliance with the covenants of its loan agreements.

First Advantage filed a Registration Statement with the Securities and

Exchange Commission for the issuance of up to 5.0 million shares of our Class A common stock, par value $.001 per share, from time to time as full or partial consideration for the acquisition of businesses, assets or securities of other

business entities.

Borrowings available under the Credit Agreement total up to $225 million.

The Credit Agreement

includes a $10 million sub-facility for the issuance of letters of credit and up to a $5 million swing loan facility.

The credit facility maturity date is September 28, 2010.

The Credit Agreement is collateralized by the stock and accounts

receivable of the Companys subsidiaries.

At March 31, 2009, the Company had available lines of credit of $180.6 million.

March 31, 2009, the Company was in compliance with the financial covenants of its loan agreements.

First Advantage filed a

Registration Statement with the Securities and Exchange Commission for the issuance of up to 5.0 million shares of our Class A common stock, par value $.001 per share, from time to time as full or partial consideration for the acquisition

of businesses, assets or securities of other business entities.

The Registration Statement was declared effective on January 9, 2006.

A total of 1,338,631 shares were issued for acquisitions as of September 30, 2008.

A total of 1,338,631 shares were issued for acquisitions as of March 31, 2009.

Contractual Obligations and Commercial Commitments

The following is a schedule of long-term contractual commitments, as of September 30, 2008, over the periods in which they are expected to be paid.

The following is a schedule of long-term contractual commitments, as of March 31, 2009, over the periods in which they are expected to be paid.

(in thousands)

Advertising commitments

8 unchanged sentences

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What changed 10-Q

Item 1. Financial Statements