The years ended June 30, 2006 and 2005 reflect the results of our insurance operations for the full year periods, while the year ended June 30, 2004 reflects the results of our acquisition activities and the real estate operations for the full year, and the results of our insurance operations for the two months following the date of the USAuto acquisition. In addition to the actual results, we also discuss pro forma operating results for the year ended June 30, 2004 that assume that the USAuto acquisition occurred on July 1, 2003.
premiums earned, including policy and renewal fees, from (i) sales of policies issued by our insurance company subsidiaries, net of the portion of those premiums ceded to reinsurers, and (ii) the sales of policies issued by our managing general agency (“MGA”) subsidiaries that are assumed 100% by our insurance company subsidiaries through quota-share reinsurance;
Net income for the year ended June 30, 2006 was $28.1 million, compared with $26.2 million for the year ended June 30, 2005. Net income per share was $0.59 and $0.57 on a basic and diluted basis, respectively, for the year ended June 30, 2006 and $0.56 and $0.53 on a basic and diluted basis, respectively, for the year ended June 30, 2005. Total revenues for the year ended June 30, 2006 increased 49% from $166.8 million to $249.0 million over the same period last year.
Income before income taxes was $26.5 million for the year ended June 30, 2006 compared with $25.6 million for the year ended June 30, 2005.
Net income per share for the year ended June 30, 2005 was $0.56 and $0.53 on a basic and diluted basis, respectively, compared with a net loss per share of $0.15 on both a basic and diluted basis for the year ended June 30, 2004. The weighted average shares outstanding increased as a result of the additional shares issued in the April 2004 rights offering and the USAuto acquisition, as well as the 750,000 contingent shares issued in connection with the USAuto acquisition.
The initial aggregate purchase price was $160,080 consisting of $76,000 in cash, 13,250 shares of the Company’s common stock valued at $82,362 and $1,718 in acquisition expenses. In addition, the Company paid $2,905 in USAuto debt at closing. The value of the shares issued was determined based on the average market price of the Company’s common stock over the three-day period before and after the terms of the acquisition were agreed to and announced. Effective December 31, 2004, an additional 750 shares were issued upon the attainment of financial targets through that date. These shares were valued at $6,720 based on the market price of the Company’s common stock on December 31, 2004 and have been recorded as additional goodwill.
At June 30, 2006, fixed maturities and cash equivalents with a market value of $5,929 (amortized cost of $6,089) were on deposit with various insurance departments as a requirement of doing business in those states. In addition, cash equivalents of $1,595 were on deposit with another insurance company as collateral for an assumed reinsurance contract.
Prior to the April 30, 2004 acquisition of USAuto, the Company’s business activities were limited to pursuing opportunities to acquire an operating company and to dispose of foreclosed real estate held for sale. As a result of the acquisition, the Company operates in two business segments with its primary focus the selling, servicing and underwriting of non-standard personal automobile insurance.
The real estate and corporate segment consists of the Company’s above-mentioned business activities prior to the USAuto acquisition in addition to interest expense associated with all debt and other general corporate overhead expenses. Total assets by segment are those assets used in the operation of each segment.