**EXHIBIT 11.1**

 

**EFJ, INC. AND SUBSIDIARIES**

**COMPUTATION OF NET INCOME (LOSS) PER SHARE**

**(Unaudited and in thousands, except share and per share data)**

 
|                                                             |   | **Three Months Ended  June 30,** |   | **Six Months Ended  June 30** |   |
|------------------------------------------------------------------|--------|----------------------------------|--------|-------------------------------|--------|
|                                                             |   | **2004**                         |   | **2003**                      |   | **2004** |   | **2003** |   |
|                                                             |   |                             |   |                          |   |   |   |   |   |
| Net income (loss)                                                |   | $                                | (1,461 | )                             | $      | (132 | ) | $ | 1,534 |   | $ | (696 | ) |
|                                                             |   |                             |   |                          |   |   |   |   |   |
| **Net income (loss) per share – Basic:**                    |   |                             |   |                          |   |   |   |   |   |
|                                                             |   |                             |   |                          |   |   |   |   |   |
| Weighted average common  shares  - Basic                    |   | 17,716,875                       |   | 17,577,315                    |   | 17,650,585 |   | 17,577,315 |   |
|                                                             |   |                             |   |                          |   |   |   |   |   |
| Net income (loss) per share –  Basic                        |   | $                                | (0.08  | )                             | $      | (0.01 | ) | $ | 0.09 |   | $ | (0.04 | ) |
|                                                             |   |                             |   |                          |   |   |   |   |   |
| **Net income (loss) per share – Diluted:**                  |   |                             |   |                          |   |   |   |   |   |
|                                                             |   |                             |   |                          |   |   |   |   |   |
| Shares used in this  computation:                                |   |                             |   |                          |   |   |   |   |   |
| Weighted average common shares  - Basic                          |   | 17,716,875                       |   | 17,577,315                    |   | 17,650,585 |   | 17,577,315 |   |
| Dilutive effect of shares under  employee stock plans - See Note |   | —                           |   | —                        |   | 1,189,686 |   | — |   |
| Weighted average common shares – Diluted -  See Note        |   | 17,716,875                       |   | 17,577,315                    |   | 18,840,271 |   | 17,577,315 |   |
|                                                             |   |                             |   |                          |   |   |   |   |   |
| Net income (loss) per share –  Diluted                      |   | $                                | (0.08  | )                             | $      | (0.01 | ) | $ | 0.08 |   | $ | (0.04 | ) |

 

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Note:                   Forthe three months ended June 30, 2004 and 2003 and the six months ended June 30,2003, the effect of diluted net loss per share would be anti-dilutive as theCompany incurred a net loss for the period. As such, dilutive effect of outstanding stock options are excluded fromthe calculation of the diluted weighted average common shares, and the weightedaverage common shares is used for both the basic loss per share and the dilutednet loss per share.

 

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