**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 March 31,** |   |
|------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                     |   | **2004**                              |   | **2003** |   |
|                                                                                     |   |                                  |   |   |   |
| Net income  (loss)                                                                       |   | $                                     | 2,995  |   | $ | (564 | ) |
|                                                                                     |   |                                  |   |   |   |
| **Net income (loss)  per share – Basic:**                                           |   |                                  |   |   |   |
|                                                                                     |   |                                  |   |   |   |
| Weighted  average common shares - Basic                                                  |   | 17,584,295                            |   | 17,577,315 |   |
|                                                                                     |   |                                  |   |   |   |
| Net income  (loss) per share – Basic                                                |   | $                                     | 0.17   |   | $ | (0.03 | ) |
|                                                                                     |   |                                  |   |   |   |
| **Net income (loss)  per share – Diluted:**                                         |   |                                  |   |   |   |
|                                                                                     |   |                                  |   |   |   |
| Shares used in  this computation:                                                        |   |                                  |   |   |   |
| Weighted  average common shares - Basic                                                  |   | 17,584,295                            |   | 17,577,315 |   |
| Dilutive  effect of shares under employee stock plans   –  See Note below |   | 1,477,822                             |   | — |   |
| Weighted  average common shares – Diluted - See Note below                          |   | 19,062,117                            |   | 17,577,315 |   |
|                                                                                     |   |                                  |   |   |   |
| Net income  (loss) per share – Diluted                                              |   | $                                     | 0.16   |   | $ | (0.03 | ) |

 

Note:  For the three months ended March 31,2003, 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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