You should read the selected consolidated financial data set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and the related notes included elsewhere in this report. We derived the following selected financial information as of and for each of the three years in the period ended December 31, 2004 from our audited consolidated financial statements and the related notes included elsewhere in this report. We derived the selected financial information as of and for each of the two years in the period ended December 31, 2001 from our audited consolidated financial statements and the related notes not included elsewhere in this report.
Under our typical acquisition structure, we acquire 100% of the equity of independent financial services products distribution businesses on terms that are relatively standard across our acquisitions. To determine our
Life insurance commissions and estate planning fees. Insurance and annuity commissions paid by insurance companies are based on a percentage of the premium that the insurance company charges to the policyholder. First-year commissions are calculated as a percentage of the first twelve months’ premium on the policy and earned in the year that the policy is originated. In many cases, our firms receive renewal commissions for a period following the first year, if the policy remains in force. Some of our firms receive commissions for the settlement of life insurance policies. These commissions are generally based on a percentage of the settlement proceeds received by the client. Our firms also earn fees for developing estate plans.
Amortization. Amortization increased $3.0 million, or 18.2%, to $19.5 million in 2004 compared with $16.5 million in 2003. Amortization expense increased as a result of a 17% increase in net intangible assets resulting primarily from acquisitions consummated in 2004. As a percentage of revenue, amortization was 3.0% in 2004 compared with 3.6% in 2003.
Loss on sale of subsidiaries. Loss on sale of subsidiaries increased $1.5 million to $1.8 million in 2003 compared with $0.3 million in 2002. The loss on sale resulted from the disposal of three subsidiaries in 2003 and two subsidiaries in 2002.
Management believes that our existing cash, cash equivalents, funds generated from our operating activities and funds available under our credit facility will provide sufficient sources of liquidity to satisfy our financial needs for the next twelve months. However, if circumstances change, we may need to raise debt or additional equity capital in the future.
On January 1, 2002, we adopted SFAS No. 144. In accordance with SFAS No. 144, long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We recognized an impairment loss on identifiable intangible assets subject to amortization of $1.0 million, $4.2 million, and $2.4 million for the years ended as of December 31, 2002, 2003 and 2004 respectively.