**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  September 30,** | ** ** | **Nine Months Ended  September 30** | ** ** |
|-----------------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                                      | ** ** | **2004**                              | ** ** | **2003**                            | ** ** | **2004** | ** ** | **2003** |   |
|                                                            |       |                                  |       |                                |       |   |   |   |   |
| Net income (loss)                                               |       | $                                     | 784        |                                | $          | (1,787 | ) | $ | 2,318 |   | $ | (2,483 | ) |
|                                                            |       |                                  |       |                                |       |   |   |   |   |
| **Net income (loss) per share – Basic:**                   |       |                                  |       |                                |       |   |   |   |   |
|                                                            |       |                                  |       |                                |       |   |   |   |   |
| Weighted average common shares - Basic                          |       | 17,887,457                            |       | 17,577,315                          |       | 17,779,443 |   | 17,577,315 |   |
|                                                            |       |                                  |       |                                |       |   |   |   |   |
| Net income (loss) per share – Basic                        |       | $                                     | 0.04       |                                | $          | (0.10 | ) | $ | 0.13 |   | $ | (0.14 | ) |
|                                                            |       |                                  |       |                                |       |   |   |   |   |
| **Net income (loss) per share – Diluted:**                 |       |                                  |       |                                |       |   |   |   |   |
|                                                            |       |                                  |       |                                |       |   |   |   |   |
| Shares used in this computation:                                |       |                                  |       |                                |       |   |   |   |   |
| Weighted average common shares - Basic                          |       | 17,887,457                            |       | 17,577,315                          |       | 17,779,443 |   | 17,577,315 |   |
| Dilutive effect of shares under employee stock plans - See Note |       | 784,844                               |       | —                              |       | 1,004,838 |   | — |   |
| Weighted average common shares – Diluted - See Note        |       | 18,672,301                            |       | 17,577,315                          |       | 18,784,281 |   | 17,577,315 |   |
|                                                            |       |                                  |       |                                |       |   |   |   |   |
| Net income (loss) per share – Diluted                      |       | $                                     | 0.04       |                                | $          | (0.10 | ) | $ | 0.12 |   | $ | (0.14 | ) |

 

Note:                   For the three and nine months ended September 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 stockoptions are excluded from the calculation of the diluted weighted averagecommon shares, and the weighted average common shares is used for both thebasic loss per share and the diluted net loss per share.

 

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