The following table contains our selected consolidated financial data as of and for the five fiscal years ended December 31, 2005, which have been derived from our audited consolidated financial statements and notes thereto, with the exception of “Title and Escrow Services segment statistics.” You should review the information that we have presented below in conjunction with our consolidated financial statements, related notes and other financial information included elsewhere herein.
(4) Represents the percentage of title insurance premiums from policies we issued through our own insurance underwriting subsidiary, which we acquired in September 2002. This percentage declined in 2004 resulting from our acquisition of Nationwide Appraisal, which had historically utilized third-party title insurance underwriters exclusively for the title policies it issued. During 2004, United Capital Title Insurance Company, our title insurance underwriter, commenced efforts to become licensed in additional states in order to capture more of the premiums resulting from title policies we issue.
The following discussion of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere herein. Historical results and percentage relationships among accounts are not necessarily an indication of trends in operating results for any future period. In these discussions, most percentages and dollar amounts have been rounded to aid presentation. As a result, all such figures are approximations.
Our Lender Services segment encompasses our strategy of providing national lenders and mortgage brokers with a comprehensive suite of services. This segment currently includes real estate appraisal and valuation services, title insurance and escrow related services and flood zone determination services, primarily for lenders involved in residential real estate refinance transactions. Unlike our Title and Escrow Services segment, this segment typically conducts its business on a national scope from centralized processing centers. The significant subsidiaries within this segment include Nationwide Appraisal Services Corporation and Nationwide TotalFlood Services. Our Lender Services segment, which was established as a result of acquisitions in 2004, did not achieve anticipated margins in 2005 primarily due to internal operating system capacity issues. Pre-tax margins for the Lender Services segment were 2.8% for the year ended December 31, 2005 and 5.3% for the year ended December 31, 2004. We believe that as we improve operational efficiencies through system enhancements, margins for our Lender Services segment can be similar to the pre-tax margins of our Title and Escrow Services segment which were 11.2% and 9.0% for the years ended December 31, 2005 and 2004, respectively.
Our revenue from title insurance, escrow and related real estate services is primarily from three sources: residential resale, lender/refinance and commercial real estate transactions. We typically recognize revenue for the services we perform when the corresponding real estate transaction closes. In the case of revenue from the flood zone determination services we provide, we defer all revenue related to those flood zone determinations where there are any obligations for us to provide future monitoring of the flood zone status and then recognize the revenue ratably over the average periods that we estimate the related loans will be outstanding. This deferred revenue of $2.0 million is reflected in other liabilities on our balance sheet at December 31, 2005. In most cases we receive payment for our services at the time the related real estate transaction closes. In some cases, we bill for services provided, principally related to our Lender Services business, and collect the accounts receivable at a later date.
Our management’s discussion and analysis of financial condition and results of operations addresses our key performance indicators (revenue, net income) and generally accepted accounting principles (“GAAP”) measures, non-financial performance indicators (opened orders, closed orders, average revenue per closed order), as well as the trends and uncertainties affecting our industry and markets and analyzes our liquidity and capital resources. While management believes the key performance indicators of revenue and net income are the best indicators of financial and operating performance, the non-GAAP, non-financial performance indicators may also provide management with additional insight into the volume of transactions and trend in operating performance for traditional title and escrow services.
Title insurance revenue is closely related to the level of real estate activity and the average price of real estate sales. Real estate sales are directly affected by the availability of funds to finance purchases, predominantly mortgage interest rates. Other factors affecting real estate activity include, but are not limited to, demand for housing, employment levels, family income levels and general economic conditions. In addition to real estate sales, mortgage refinancing is an important source of title insurance revenue. We have found that residential real estate activity generally decreases when mortgage interest rates are high or increasing, when the mortgage funding supply is limited, and when the United States economy is weak.
We update loss reserve estimates at the end of each quarter and year by utilizing both internal and external resources and the latest available information. In addition, an independent actuarial consulting firm assists us in analyzing our historic loss experience and developing statistical models to project ultimate loss expectancy. The actuaries prepare an analysis of our reserves at the end of each quarter. We examine both the quantitative data provided by the actuaries and qualitative information derived from internal sources such as our legal, claims, and underwriting departments to ultimately arrive at our best reserve estimate. This process involves significant judgment and assumptions and we strive to improve our loss reserve estimation process by enhancing our ability to analyze loss development patterns and we look for ways to identify new trends to reduce the uncertainty of our loss exposure. However, adjustments may be required as experience develops unexpectedly, new information becomes known, new loss patterns emerge, or as other contributing factors are considered and incorporated into our analysis.
The balance of our reserve for title insurance and escrow losses relates to our agency operations and totaled $3.7 million as of December 31, 2005. We calculate a reasonable range of title insurance and escrow loss reserve estimates for each of our agency operations. When calculating these estimates we also consider the quantitative data, as well as various qualitative factors which include; current legal environment, unusual loss activity, anticipated loss activity as a result of known factors, business volumes and anticipated business volumes, and a review of both historical business mix and anticipated business mix.
Although we believe that our reserves for claims are reasonable, it is possible that our actual incurred claims will not conform to our assumptions underlying our reserves. The ultimate settlement of claims may vary significantly from the estimates included in our financial statements, and could therefore result in changes to reserve provisions in future periods.
Goodwill represents the excess of cost over fair value of identifiable net assets acquired and assumed in a business combination. SFAS No. 142, Goodwill and Intangible Assets (“SFAS 142”) provides that goodwill and other intangible assets with indefinite useful lives should not be amortized, but shall be tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount. We measure for impairment on an annual basis.
In January 2003, we acquired Land Title of Nevada. The acquisition marked our entrance into the Las Vegas, Nevada market, adding at the time five branch offices and 94 employees.
Our revenue, which is reported net of underwriting fees paid to third party title insurance underwriters, increased by $79.9 million or 26.6% for the year ended December 31, 2005 compared to the same period ended December 31, 2004. The increase is primarily attributable to a complete year of the additional operations of our Lender Services segment, which included acquisitions in May, July and November of 2004. Revenue related to Lender Services operations provided $28.1 million of the increase for the year ended December 31, 2005. The remaining increase in revenue was the result of an increase in the average revenue per closed order for our real estate settlement services resulting from a relatively strong residential real estate market.
Rent expense decreased as a percentage of revenue to 5.5% from 5.8% for the year ended December 31, 2005 compared to the prior year. The decrease as a percentage of revenue was the result of higher revenue levels that helped offset the fixed nature of rent costs, and the higher revenue levels also offset the typical annual inflationary increases in lease rates compared to the prior year. Rent expense overall is higher for the year ended December 31, 2005 compared to the prior year resulting from additional office locations and higher rent in existing locations.
Provision for title insurance and escrow losses decreased as a percentage of revenue for the year ended December 31, 2005 to 2.0% from 2.1% for the prior year. This decrease was primarily a result of favorable claims experience in both our title and escrow agency operations and insurance underwriting operation. We expect this percentage will decline as we increase revenue from our appraisal operations and see an increase in other income, neither of which require such provision for losses.
Contract service fees relates to fees paid to third party appraisers and abstractors who conduct valuation services and title searches throughout the United States. This expense is variable in relation to the volume of business generated by the operations of our Lender Services segment. Contract service fees have increased as a percentage of revenue to 8.1% for the year ended December 31, 2005 from 5.9% in the prior year due to having a complete year of Lender Services operations in 2005 compared to only having Lender Services since May of 2004.
The significant components of other operating expenses include title plant maintenance and access, supplies, utilities, insurance, allowance for bad debt, depreciation, delivery and professional fees. Other operating expenses increased $16.0 million or 25.5% to $78.5 million for the year ended December 31, 2005, compared to $62.5 million for the prior year. The increase is a result of several costs in this category that correspond directly with our volume of business. In addition, the increase includes $1.3 million in professional fees incurred in connection with our achieving the requirements of Section 404 of the Sarbanes-
The significant components of other income include interest income from invested cash balances and fixed maturity bonds, investment dividends, delivery fee income, revenue from servicing seller-financed mortgages and revenue from flood zone determinations services. Other income increased as a percentage of revenue for the year ended December 31, 2004 to 6.3% from 5.3% compared to the prior year. The increase resulted from the inclusion of $1.9 million of flood determination revenue, a new revenue stream in 2004. Additionally, the upward trend in market interest rates and higher investment balances increased investment income in 2004.
Rent expense increased as a percentage of revenue for the year ended December 31, 2004 to 5.8% from 5.5% for the prior year. The increase in relation to revenue is primarily related to the expansion of branches in Southern California during the year. Our growth in recent years in this market necessitated an increase in office space to accommodate current and anticipated future space requirements. Rent expense overall was higher in 2004 compared to 2003, resulting from additional office locations which were acquired during 2004, as previously discussed.
Interest expense increased to $1.2 million for the year ended December 31, 2004 primarily resulting from additional debt obtained during 2004 to assist with the financing of the Nationwide Appraisal acquisition.
Contract service fees is a new classification line item in our financial statements resulting from the acquisition of Nationwide. This line item relates to fees paid to third-party appraisers and abstractors who conduct valuation services and title searches throughout the United States. This expense is variable in relation to the volume of business generated by Nationwide’s operations.
The significant components of other operating expenses include title plant maintenance and access, supplies, utilities, insurance, allowance for bad debt, depreciation, delivery and professional fees. Other operating expenses increased $9.0 million, or 16.8% to $62.5 million for the year ended December 31, 2004 compared to $53.5 million for the prior year. The increase is the result of several costs in this category that vary directly with our volume of business such as title plant and other data purchased from third parties, supplies and delivery expense. Additionally, we experienced an increase in costs related to title plant and other data purchased from third parties, which are typically variable in relation to revenue, but these contractual costs rose in relation to the prior year.
We require capital above our ongoing operating needs to expand our geographical base, further implement our market penetration program, recruit and train new personnel and purchase additional property and equipment to implement our expansion program. During the year ended December, 2005, we financed our operating and business development activities primarily through operating cash flows and through the use of cash on hand.
In November 2005, we completed a secondary public offering of 5.0 million shares of common stock at a price of $6.00 per share. The net proceeds from this public offering were $27.8 million and a portion of these were used in January 2006 for the redemption of our outstanding Series A Preferred Stock and the remaining amount will be used in future periods for working capital and general corporate purposes. This net proceeds amount included $0.7 million that we received when the underwriters exercised the warrants they purchased from one of the selling stockholders in the secondary offering transaction. In December 2005, the underwriters notified us of their election to exercise the over-allotment option and purchased an additional 1.0 million shares of common stock at a price of $6.00 per share. The net proceeds from the exercise of the over-allotment option were $5.7 million and will be used for working capital and general corporate purposes.
Subsequent to December 31, 2005, pursuant to an agreement with the holder of 175,162 outstanding shares of our Series A Preferred Stock, we redeemed all such outstanding preferred stock at a price of $100 per share, plus accrued but unpaid dividends for a total redemption amount of $17.6 million.
Our Board of Directors declared a cash dividend of $0.02 per common share to stockholders of record as of December 27, 2005, and paid this dividend totaling $0.6 million in January 2006. We intend to continue paying a comparable quarterly cash dividend on our common stock. However, the payment of dividends depends entirely upon a decision by our Board of Directors and may be discontinued at any time, for any reason. Further, under Delaware corporate law, in the absence of current or retained earnings, we may be prohibited from paying dividends, whether in cash or otherwise.
Historically, residential real estate activity has been generally slower in the winter, when fewer families move, buy or sell homes, with increased volumes in the spring and summer. Residential refinancing activity is generally more uniform throughout the year, subject to interest rate stability. Demand for our title insurance and related settlement services generally tracks these seasonal demand patterns of the residential real estate market, although acquisitions of other title insurance and related settlement service companies and changes in interest rates may alter these traditional seasonal demand patterns. We typically report our lowest revenue and earnings in the first quarter, with revenue and earnings increasing into the second quarter and through the third quarter and declining again in the fourth quarter.
The following table sets forth our contractual commitments and commercial obligations as of December 31, 2005 ($ in thousands):
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Capital Title Group, Inc. and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.
United Title Company (“United Title”), a California corporation that commenced operations in 1978, is an independent title agency that provides escrow and title services to the real estate industry in California. United Title is licensed in Alameda, Contra Costa, El Dorado, Kern, Los Angeles, Orange, Placer, Riverside, Sacramento, San Bernardino, San Diego, San Francisco, San Mateo, Santa Barbara, Santa Clara and Ventura Counties in California.
United Capital Title Insurance Company (“United Capital”), a California domiciled title insurance underwriter, commenced operations in 1997. United Capital is the predominant underwriter for both United Title and First California and underwrites a portion of the title insurance policies sold by Capital Title, New Century and Land Title.
Nationwide Appraisal Services Corporation (“Nationwide Appraisal”), a Pennsylvania corporation that commenced operations in 1994, and was acquired in May 2004, provides appraisal, title and related settlement services to its customers in the mortgage and real estate industry throughout the United States through a centralized processing center located near Pittsburgh, Pennsylvania.
Nationwide TotalFlood, Inc. (formerly known as Determination Processing Services, Inc.), a California corporation acquired in July 2004, provides residential and commercial flood zone determinations on real property throughout the United States through a centralized processing center located in Los Angeles, California.
Management believes that the estimates and assumptions that are most important to the portrayal of the Company’s financial condition and results of operations, in that they require management’s most difficult, subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to the Company. These critical accounting policies relate to impairment of intangible assets and long lived assets, reserves related to title insurance and escrow losses and contingencies and litigation. Management believes estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial condition or results of operations.
Accounts receivable are reported net of an allowance for doubtful accounts. The allowance is established based on the Company’s estimate including a review of individual accounts and the Company’s collection history.
Goodwill represents the excess of cost over fair value of identifiable net assets acquired and assumed in a business combination. SFAS 142, Goodwill and Intangible Assets (“SFAS 142”) provides that goodwill and other intangible assets with indefinite useful lives should not be amortized, but shall be tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount. We measure for impairment on an annual basis.
Comprehensive income consists of net income and net unrealized gains (losses) on investments and is presented in the consolidated statements of stockholders’ equity and comprehensive income.
The Company’s reserve for title insurance losses from its title insurance underwriter includes known claims as well as a provision of losses expected to be incurred, net of recoveries. Known claims are reserved for, based on a review of the claim amount and estimated costs associated with settling the claim. The Company also reserves for claims arising from the escrow process. Reserves for claims which are incurred, but not reported to the Company, are recorded based on several factors including, but not limited to, historical loss experience, and current industry and legal environments. The occurrence of a significant title or escrow claim in any given period could have a material adverse effect on the Company’s financial condition and results of operations during that period.
The Company also operates under agency agreements with various third party title insurance companies. In the event of a title insurance policy loss, under these agreements, the Company is generally responsible for the first $5,000 of loss. A provision for future title losses is maintained by periodic charges to the statements of operations based on historical title loss experience.
The Company and its subsidiaries file consolidated federal and state income tax returns. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net of valuation allowances.
In May 2005, the FASB issued FASB Statement No. 154 (“SFAS 154”), Accounting Changes and Error Corrections. SFAS 154 applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement that does not include specific transition provisions. SFAS 154 eliminates the requirement in ABP Opinion No. 20, Accounting Changes, to include the cumulative effect of changes in accounting principle in the income statement in the period of change and, instead, requires changes in accounting principle to be retrospectively applied. Retrospective application requires the new accounting principle to be applied as if the change occurred at the beginning of the first period presented by modifying periods previously reported, if an estimate of the prior period impact is practicable and estimable. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We do not currently anticipate any changes in accounting principle other than the adoption of SFAS 123R discussed below, which has its own adoption transition provision and is therefore not in the scope of SFAS 154. As a result, we do not believe the adoption of SFAS 154 will have a material impact on the Company’s consolidated financial statements.
In December 2004, the FASB issued FASB Statement No. 123 (revised 2004) Share-Based Payment, (“SFAS 123R”), which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. SFAS 123R supersedes APB opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in SFAS 123R is similar to the approach described in SFAS 123. However, SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values rather than pro forma footnote disclosure. SFAS 123R is effective in our first quarter of fiscal 2006 and requires measurement of the cost of share-based payment transactions to employees at the fair value of the award on the grant date and recognition of expense over the requisite service or vesting period. SFAS 123R allows implementation using a modified version of prospective application, under which compensation expense for the unvested portion of previously granted awards and all new awards will be recognized on or after the date of adoption. SFAS 123R also allows companies to implement by restating previously issued financial statements, basing the amounts on the expense previously calculated and reported in their pro forma footnote disclosures required under SFAS 123. We will adopt SFAS 123R using the modified prospective method beginning January 1, 2006. The impact of adopting SFAS 123R on our consolidated results of operations is not currently expected to differ materially from the pro forma disclosures currently required by SFAS 123.
In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143 (“FIN 47”). FIN 47 requires the recognition of a liability for the fair value of a legally-required conditional asset retirement obligation when incurred, if the liability’s fair value can be reasonably estimated. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The adoption of FIN 47 did not have a material impact on our consolidated financial statements.
In November 2004, the Company acquired the assets of Real Estate Appraisal Services, Inc. (“REAS”). Under the terms of the agreement, approved by the Board of Directors of each company, the purchase price was $0.8 million, $0.3 of which was paid in cash and $0.5 million of which was a note payable in favor of the seller, Citizens Financial Group. REAS, located in Cleveland, Ohio, is a provider of appraisal and flood determination services for residential and commercial property primarily in Ohio, and provides an extension of services to customers of our Lender Services segment. The operations of REAS have been included in the consolidated financial statements of the Company since November 6, 2004, which was the effective date of the transaction.
The purchase price was allocated to the assets purchased and liabilities assumed, based on their respective fair values at the date of acquisition. Included in this allocation of the purchase was approximately $2.0 million of goodwill. The following table summarizes the estimated fair values and the allocation of the purchase price and direct acquisition costs to the assets and liabilities acquired at the date of purchase ($ in thousands):
The purchase price, and direct transaction costs were allocated to the assets purchased and liabilities assumed, based on their respective fair values at the date of acquisition. Included in this allocation of the purchase was $23.6 million of goodwill and three other intangible assets; $1.0 million related to existing customer relationships, which is being amortized over a five-year period, approximately $50,000 for a covenant not to compete agreements with former stockholders of Nationwide, which is amortized over the three-year term of the agreement, and approximately $456,000 was allocated to Nationwide’s backlog of opened orders, which was fully amortized during the second quarter 2004. The following table summarizes the estimated fair values of the allocation of the purchase price and direct acquisition costs to the assets and liabilities acquired at the date of purchase ($ in thousands):
Under FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, securities are generally classified as available-for-sale, held-to-maturity, or trading. The Company has classified its entire fixed maturity bonds and equity securities portfolios as available-for-sale. Securities classified as available-for-sale are reported at fair value in the consolidated statements of financial position with the related unrealized holding gains and losses on such available-for-sale securities reported as a separate component of equity after adjustments for related changes in deferred income taxes. The cost, gross unrealized gains and losses and fair value of fixed maturity bonds available-for-sale as of December 31, 2005 and 2004, were as follows ($ in thousands):
Investment in equity securities at December 31, 2005 and 2004 consisted of investments in the following ($ in thousands):
Gross unrealized losses on investment securities and the fair values of the related securities, aggregated by category and length of time that securities have been in a continuous unrealized loss position at December 31, 2005, were as follows ($ in thousands):
Unrealized losses relating to U.S. government, state and political subdivision and fixed maturity corporate holdings were primarily caused by interest rate increases. Since the decline in fair value of these investments is attributable to changes in interest rates and not credit quality, and the Company has the intent and ability to hold these securities, the Company does not consider these investments other-than-temporarily impaired. The unrealized losses relating to equity securities were caused by market changes that the Company considers to be temporary. During 2005, 2004 and 2003, the Company incurred no impairment charges relating to investments that it determined to be other than temporarily impaired.
Other income includes net investment income related to the Company’s investment portfolio of approximately $1.3 million, $0.9 million and $0.7 million for the years ended December 31, 2005, 2004 and 2003, respectively.
At December 31, 2005, the Company had a $2.1 million income tax receivable which was included in deposits and other assets.
The activity within the reserve for title insurance and escrow losses was as follows ($ in thousands):
Long term debt components are general obligations of the Company and consisted of the following ($ in thousands):
The Company leases office equipment and offices at approximately 140 locations. These lease periods range from one month to 84 months with renewal options of up to ten years. In addition, the Company has a 50 year ground lease, through December 2047, for its corporate office with annual payments of approximately $115,000, subject to adjustments based on the consumer price index. For the years ended December 31, 2005, 2004 and 2003 rental expense was $20.9 million, $17.4 million and $14.3 million, respectively.
The Company’s future minimum lease commitments after December 31, 2005 were as follows ($ in thousands):
In the ordinary course of business, the Company’s title insurance subsidiaries are subject to claims and are named as defendants in litigation relating to policies of insurance or other related services performed on behalf of insured policyholders and other customers. While the results of insurance claims and litigation cannot be predicted with certainty, management believes, based on the advice of legal counsel, that the final outcome of such lawsuits and claims will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.
The California State Controller is conducting an audit of United Title including, among other things, its practices related to unclaimed property. In conjunction with the acquisition of Nations Holding Group in September, 2002 the Company has access to a funded indemnification account which we believe is sufficient to cover any potential exposure on these matters. Accordingly, management does not believe this potential exposure would have a material affect to our financial position, results of operations or cash flows. The results of legal proceedings cannot be predicted with certainty, but United Title intends to vigorously defend the lawsuit and any adverse findings of the State Controller.
Our Board of Directors declared a cash dividend during the fourth quarter 2005 of $0.02 per share to stockholders of record as of December 27, 2005, and we paid this dividend totaling $0.6 million on January 10, 2006.
Accounts payable and accrued expenses consisted of $14.4 million of accrued bonus and incentives, $7.8 million of trade accounts payable and $8.4 million of other accrued liabilities as of December 31, 2005. As of December 31, 2004, accounts payable and accrued expenses consisted of $13.3 million of accrued bonus and incentives, $6.5 million of trade accounts payable and $8.3 million of other accrued liabilities.
Changes in the allowance for uncollectible accounts receivable for the three years ended December 31, 2005, 2004 and 2003 are as follows ($ in thousands):
The Company’s two reportable segments are Title and Escrow Services and Lender Services. Reportable segments are determined based on the organizational structure, types of products and services and market differentiation. The acquisition of Nationwide in 2004 precipitated the establishment of the Lender Services segment based upon these factors, therefore, segment information is not presented for 2003. In our Lender Services segment, revenue from two financial institution customers combined represented 52% and 50% of segment revenue for the years ended December 31, 2005 and 2004, respectively. Summarized financial information concerning the Company’s reportable segments is presented as follows ($ in thousands):
This segment encompasses the Company’s bundled services strategy which currently includes real estate appraisal and valuation services, title insurance and escrow related services and flood zone determination services which are marketed to regional and national lenders and mortgage brokers. Unlike the Company’s traditional title and escrow services division, this segment typically conducts its business on a national scope from centralized processing centers. This segment generates its revenue principally from providing appraisal and valuation services, issuing title insurance policies, providing escrow services and flood zone determination services primarily for lenders involved in residential real estate transactions.
The following table sets forth unaudited selected quarterly financial data for each quarter of the years ended December 31, 2005 and 2004 ($ in thousands, except per share data):
In January 2006, pursuant to an agreement with the holder of 175,162 outstanding shares of our Series A Preferred Stock, we redeemed all such outstanding preferred stock at a price of $100 per share, plus accrued but unpaid dividends for a total redemption amount of $17.6 million.