-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R8JXGenfLMZV1lDuJh0V3vFK9sdBxkh8myb2d5QjucltLTy71dhSVJviy3n6jHD+ eRq7kXdhMGzGCy3PLZGoFg== 0000878897-04-000027.txt : 20040505 0000878897-04-000027.hdr.sgml : 20040505 20040504173751 ACCESSION NUMBER: 0000878897-04-000027 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040331 ITEM INFORMATION: FILED AS OF DATE: 20040505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MEDICAL SECURITY GROUP INC CENTRAL INDEX KEY: 0000878897 STANDARD INDUSTRIAL CLASSIFICATION: HOSPITAL & MEDICAL SERVICE PLANS [6324] IRS NUMBER: 391431799 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13154 FILM NUMBER: 04778865 BUSINESS ADDRESS: STREET 1: 3100 AMS BLVD CITY: GREEN BAY STATE: WI ZIP: 54313 BUSINESS PHONE: 9206611111 MAIL ADDRESS: STREET 1: 3100 AMS BLVD CITY: GREEN BAY STATE: WI ZIP: 54313 FORMER COMPANY: FORMER CONFORMED NAME: UNITED WISCONSIN SERVICES INC /WI DATE OF NAME CHANGE: 19930328 8-K 1 form8k_2004qtr1.txt AMERICAN MEDICAL SECURITY GROUP, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 4, 2004 AMERICAN MEDICAL SECURITY GROUP, INC. (Exact name of Registrant as specified in its charter) WISCONSIN 1-13154 39-1431799 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 3100 AMS BOULEVARD, GREEN BAY, WISCONSIN 54313 (Address of principal executive offices) (Zip Code) (920) 661-1111 (Registrant's telephone number, including area code) ------------------ ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On May 4, 2004, American Medical Security Group, Inc. issued a press release announcing first quarter 2004 financial results. A copy of the press release is furnished as Exhibit 99 to this report. The information in this Form 8-K and the exhibit attached hereto are furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN MEDICAL SECURITY GROUP, INC. Dated: May 4, 2004 /S/ TIMOTHY J. MOORE ------------------------------------- Timothy J. Moore Senior Vice President of Corporate Affairs, General Counsel & Secretary 3 AMERICAN MEDICAL SECURITY GROUP, INC. (THE "REGISTRANT") (COMMISSION FILE NO. 1-13154) EXHIBIT INDEX TO FORM 8-K CURRENT REPORT DATE OF REPORT: MAY 4, 2004 EXHIBIT FILED NUMBER DESCRIPTION HEREWITH 99 Press Release dated May 4, 2004 issued by the Registrant X EX-1 EX-99 2 exhibit99.txt EARNINGS RELEASE EXHIBIT 99 [AMERICAN MEDICAL SECURITY GROUP, INC. LOGO.] P.O. Box 19032 Green Bay, WI 54307-9032 FOR MORE INFORMATION CONTACT: Cliff Bowers Vice President Corporate Communications (920) 661-2766 - ------------------------------- NEWS RELEASE for Immediate Release - ------------------------------- AMERICAN MEDICAL SECURITY GROUP REPORTS FIRST QUARTER 2004 FINANCIAL RESULTS o 1Q 2004 EARNINGS OF $0.75 PER DILUTED SHARE, INCLUDING PBM SETTLEMENT o ADJUSTED 1Q EARNINGS PER DILUTED SHARE OF $0.52 MEETS GUIDANCE o 2004 ANNUAL EPS GUIDANCE REAFFIRMED o MEDONE NEW-MEMBER ENROLLMENT CONTINUES TO STRENGTHEN GREEN BAY, Wis. - May 4, 2004 - American Medical Security Group, Inc. (NYSE: AMZ) (AMS), today reported GAAP net income for the first quarter of 2004 of $11.0 million or $0.75 per diluted share, including a gain of $3.4 million or $0.23 per diluted share (net of tax) received from a settlement of a dispute with the company's former pharmacy benefits manager (PBM). Adjusted net income(1) in the quarter was $7.6 million or $0.52 per diluted share. That compares to adjusted net income of $6.4 million or $0.47 per diluted share for the first quarter of 2003 and net income of $7.3 million or $0.50 per diluted share for the fourth quarter of 2003. Adjusted net income excludes realized investment gains, loss from discontinued operations in 2003 and the impact of the PBM settlement recognized during the first quarter of 2004. More Ad One The following table reconciles GAAP net income and GAAP net income per diluted share to adjusted net income and adjusted net income per diluted share: For the three months ended March 31, 2004 2003 -------------------------- INCOME (millions) GAAP Net Income $ 11.0 $ 6.5 Less: Loss from Discontinued Operations - (0.1) - -------------------------------------------------------------------------------- Income From Continuing Operations 11.0 6.6 Less: Realized Investment Gains - 0.2 Less: PBM Settlement 3.4 - - -------------------------------------------------------------------------------- Adjusted Net Income (1) $ 7.6 $ 6.4 ================================================================================ INCOME PER DILUTED SHARE GAAP Net income Per Diluted Share $ 0.75 $ 0.48 Less: Loss from Discontinued Operations - (0.01) - -------------------------------------------------------------------------------- Income From Continuing Operations 0.75 0.49 Less: Realized Investment Gains - 0.02 Less: PBM Settlement 0.23 - - -------------------------------------------------------------------------------- Adjusted Net Income Per Diluted Share (1) $ 0.52 $ 0.47 ================================================================================ "We remain pleased with our strong and consistent bottom-line performance," said Samuel V. Miller, AMS Chairman, President and Chief Executive Officer. "Looking ahead, we believe our top-line and membership results will benefit in subsequent quarters of 2004 from investments and upgrades we've made in our field sales force, as well as the continued introduction of new products." AMS is aggressively marketing its health savings account (HSA) products, as well as other high-deductible, consumer-directed products for individuals. The company also expects to launch HSA products for small groups later in 2004. REVENUES Total revenues for the first quarter of 2004 were $185.6 million, essentially flat with the $185.5 million reported for the fourth quarter of 2003. Revenues for the first quarter of 2003 were $186.9 million. MEMBERSHIP Total health membership at the end of the first quarter was 536,215. That compares to 546,766 at the end of the fourth quarter of 2003 and 552,303 at the end of first quarter of 2003. More Ad Two "A drop in dental and self-funded membership accounted for about two-thirds of the company's overall membership decline in the first quarter," said John R. Lombardi, Executive Vice President and Chief Financial Officer. "In addition, our small group market remains soft due in part to job attrition among existing small group customers. "While we aren't satisfied with our overall membership results for the quarter, we're pleased that new-member enrollment for our MedOne individual business has now improved over several quarters. That has led to MedOne in-force membership growth for two consecutive quarters." HEALTH SEGMENT RATIOS The first quarter 2004 health segment combined ratio (loss ratio plus expense ratio) was 92.1%, including an impact of 300 basis points from the PBM settlement. On an adjusted basis, the first quarter health segment combined ratio was 95.1%. That compares to 95.9% in the first quarter of 2003 and 95.3% in the fourth quarter of 2003. The health segment loss ratio was 64.4% in the first quarter of 2004, including the 300-basis-point effect of the PBM settlement. The adjusted loss ratio in the quarter was 67.4%. That compares to 68.1% in the first quarter of 2003 and 67.9% in the fourth quarter. AMS' health segment expense ratio of 27.7% for the first quarter of 2004 is down from the 27.8% reported for the first quarter of 2003 and up compared to 27.4% for the fourth quarter of 2003. CASH FLOW & BALANCE SHEET Cash flow provided by operations in the quarter was $10.4 million, an improvement of $14.0 million from the first quarter of 2003. The improvement is in part due to the $5.9 million PBM settlement. In the first quarter of 2003, cash used in operations was $3.6 million. AMS had a book value per share of $17.11 at March 31, 2004. That compares to $14.68 at the end of the first quarter of 2003 and $16.12 at the end of the fourth quarter of last year. More Ad Three OTHER MATTER The company previously announced that it has reached an agreement to certify and settle a class-action lawsuit in Alabama relating to the rating methodology formerly used by the company. The company believes that current reserves for the Alabama settlement are adequate for the expected cost of the settlement. EARNINGS GUIDANCE The company anticipates earnings per diluted share will be approximately $0.53 for the second quarter of 2004. The company also reaffirmed its earnings guidance of between $2.13 and $2.18 per diluted share for the full-year 2004, excluding the gain from the PBM settlement. The company's GAAP earnings for the full year are expected to be between $2.36 and $2.41 per diluted share, including the $0.23 per diluted share impact of the PBM settlement discussed earlier. # # # # # NOTES (1) AMS management believes that this measure of profitability provides a meaningful presentation of the underlying earnings of the Company's continuing operations. Adjusted financial measures exclude: (a) loss from discontinued operations in 2003; (b) the impact of the PBM settlement net of tax in 2004; and (c) realized investment gains from the sale of securities net of tax. AMS WILL HOST A CONFERENCE CALL TO DISCUSS ITS FINANCIAL RESULTS ON WEDNESDAY MAY 5, 2004, AT 10:00 A.M. (CENTRAL TIME). INTERESTED PARTIES MAY LISTEN TO THE CONFERENCE CALL LIVE VIA THE INVESTOR SECTION OF THE COMPANY'S WEBSITE AT WWW.EAMS.COM. LISTEN-ONLY ACCESS TO THE LIVE CONFERENCE CALL IS ALSO AVAILABLE BY DIALING 913-981-5546. FOLLOWING THE LIVE CALL, A REPLAY WILL BE AVAILABLE UNTIL MIDNIGHT, FRIDAY, MAY 7, 2004, BY DIALING 719-457-0820 (CODE 558874). THIS PRESS RELEASE, ACCOMPANYING FINANCIAL INFORMATION AND OTHER STATISTICAL INFORMATION CONTAINED IN THE CONFERENCE CALL WILL APPEAR IN THE INVESTOR SECTION OF THE COMPANY'S WEBSITE AT WWW.EAMS.COM. CAUTIONARY STATEMENT: Some of the statements contained in this press release are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements express expectations for or about the future, rather than historical fact. Forward-looking statements are subject to inherent risks and uncertainties that may cause actual results or events to differ materially from those contemplated by such statements. Such risks and uncertainties include, among others, unexpected increases in health care costs; the company's ability to predict future health care costs and adequately price its products; the company's ability to expand its distribution network, generate new sales, sell new products and retain existing members; the company's ability to control expenses; legislative and regulatory matters, including delays in regulatory approvals, changes in government regulation, regulatory action resulting from market conduct activity; general business conditions, including competitive practices and demand for the company's existing and new products; adverse outcomes of legal proceedings; publicity about the company; development of and changes in claims and litigation reserves; general economic conditions that impact the performance of the company's investment portfolio or decisions of consumers to purchase our products; and other factors that may be referred to in American Medical Security Group, Inc.'s reports filed with the Securities and Exchange Commission from time to time. Forward-looking statements made in this release express expectations only as of the date they are made. The company does not undertake any obligation to update or revise such statements as a result of new information or future events. [AMERICAN MEDICAL SECURITY GROUP, INC. LOGO] FINANCIAL SUPPLEMENT AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
INCOME DATA ================================================================================================================================== (in thousands, except earnings per share) --------------------------------------------------------------------------- 2003 2004 --------------------------------------------------------------------------- 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr --------------------------------------------------------------------------- REVENUES Premiums $ 179,055 $ 178,776 $ 176,735 $ 177,852 $ 712,418 $ 177,722 Investment income 3,402 3,345 3,211 3,573 13,531 3,538 Realized investment gain 375 91 1,416 28 1,910 65 Fees & other 4,040 3,845 3,899 4,073 15,857 4,249 ---------- ---------- ---------- ---------- ---------- --------- Total revenues 186,872 186,057 185,261 185,526 743,716 185,574 EXPENSES Benefits 120,598 119,315 119,218 119,366 478,497 118,505 General and administrative 29,284 29,244 26,908 27,989 113,425 28,187 Commissions and selling 24,042 24,294 24,292 24,455 97,083 24,749 Interest expense 339 324 309 283 1,255 221 Depreciation 1,777 1,664 1,673 1,660 6,774 1,591 Amortization 238 239 238 188 903 163 ---------- ---------- ---------- ---------- ---------- --------- Total expenses 176,278 175,080 172,638 173,941 697,937 173,416 ---------- ---------- ---------- ---------- ---------- --------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 10,594 10,977 12,623 11,585 45,779 12,158 Income taxes 3,997 4,151 4,735 4,318 17,201 4,515 ---------- ---------- ---------- ---------- ---------- --------- INCOME FROM CONTINUING OPERATIONS 6,597 6,826 7,888 7,267 28,578 7,643 PBM settlement, net of tax - - - - - 3,356 Income (loss) from discontinued operations (134) (57) 923 - 732 - ---------- ---------- ---------- ---------- ---------- --------- NET INCOME $ 6,463 $ 6,769 $ 8,811 $ 7,267 $ 29,310 $ 10,999 ========== ========== ========== ========== ========== ========= PER SHARE DATA Adjusted net income - diluted (1) $ 0.47 $ 0.48 $ 0.49 $ 0.50 $ 1.94 $ 0.52 Income from continuing operations - diluted $ 0.49 $ 0.49 $ 0.55 $ 0.50 $ 2.03 $ 0.52 Income (loss) from discontinued operations - diluted $ (0.01) $ - $ 0.06 $ - $ 0.05 $ - Net income - basic $ 0.50 $ 0.51 $ 0.66 $ 0.54 $ 2.21 $ 0.81 Net income - diluted $ 0.48 $ 0.48 $ 0.61 $ 0.50 $ 2.08 $ 0.75 Weighted average common shares - basic 12,981 13,160 13,392 13,542 13,270 13,627 Weighted average common shares - diluted 13,575 14,015 14,340 14,464 14,100 14,585 MARGIN ANALYSIS Income before income taxes 5.7% 5.9% 6.8% 6.2% 6.2% 6.6% Net income 3.5% 3.6% 4.8% 3.9% 3.9% 5.9%
(1) - See page 8 for reconciliation of GAAP net income to adjusted net income. 2 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
FINANCIAL DATA ================================================================================================================================== (in thousands, except membership) ----------------------------------------------------------------------------- 2003 2004 ----------------------------------------------------------------------------- 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr ----------------------------------------------------------------------------- REVENUE MIX Health premiums $ 175,924 $ 175,703 $ 173,744 $ 174,871 $ 700,242 $ 174,810 Life premiums 3,131 3,073 2,991 2,981 12,176 2,912 Investment income 3,777 3,436 4,627 3,601 15,441 3,603 Service fees 4,040 3,845 3,899 4,073 15,857 4,249 ---------- ---------- ---------- ---------- ---------- --------- Total revenues $ 186,872 $ 186,057 $ 185,261 $ 185,526 $ 743,716 $ 185,574 ========== ========== ========== ========== ========== ========= MEMBERSHIP ANALYSIS Fully insured medical 278,091 275,323 270,401 273,252 273,252 269,697 Self funded medical 42,704 42,568 43,858 46,012 46,012 44,400 Dental 231,508 228,610 226,734 227,502 227,502 222,118 ---------- ---------- ---------- ---------- ---------- --------- Total Health 552,303 546,501 540,993 546,766 546,766 536,215 Life 144,207 141,930 137,395 136,423 136,423 132,437 FINANCIAL STATISTICS Book value per share $ 14.68 $ 15.27 $ 15.71 $ 16.12 $ 16.12 $ 17.11 Cash flow from operations $ (3,575) $ 1,978 $ 9,092 $ 12,630 $ 20,125 $ 10,422 Return on equity, annualized 14.2% 13.9% 15.3% 13.6% 14.3% 13.6% Debt to total capital 15.0% 14.1% 13.5% 12.2% 12.2% 11.5% Common shares outstanding, net of treasury 12,936 13,254 13,434 13,511 13,511 13,549
3 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
BALANCE SHEETS (in thousands) ------------------------------------------------------------ 2003 2004 ------------------------------------------------------------ 3/31 6/30 9/30 12/31 3/31 ------------------------------------------------------------ ASSETS Investments: Fixed maturity securities available for sale, at fair value $ 283,595 $ 286,044 $ 286,324 $ 302,277 $ 313,813 Fixed maturity securities held to maturity, at amortized cost 3,175 3,168 3,483 3,377 3,170 Trading securities, at fair value 1,142 1,217 1,254 1,424 1,582 --------- --------- --------- --------- --------- Total investments 287,912 290,429 291,061 307,078 318,565 Cash and cash equivalents 20,396 22,036 30,183 17,289 18,716 Other assets: Property and equipment, net 34,112 35,118 34,445 37,446 37,441 Goodwill and other intangibles, net 35,468 35,229 34,283 34,095 33,932 Other assets 50,737 49,239 49,378 48,179 44,594 --------- --------- --------- --------- --------- Total other assets 120,317 119,586 118,106 119,720 115,967 --------- --------- --------- --------- --------- TOTAL ASSETS $ 428,625 $ 432,051 $ 439,350 $ 444,087 $ 453,248 ========= ========= ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Medical and other benefits payable $ 131,650 $ 131,023 $ 127,023 $ 129,809 $ 123,426 Advance premiums 17,300 16,453 16,150 15,865 16,902 Payables and accrued expenses 23,466 21,039 24,020 24,099 22,539 Notes payable 33,558 33,258 32,958 30,158 30,158 Other liabilities 32,736 27,860 28,162 26,332 28,436 ---------- ---------- ---------- ---------- ---------- Total liabilities 238,710 229,633 228,313 226,263 221,461 Shareholders' equity: Common stock 16,654 16,654 16,654 16,654 16,654 Paid-in capital 190,367 192,362 193,509 194,431 194,426 Retained earnings 9,321 16,090 24,901 32,168 43,167 Unrealized gain on investments 8,090 9,964 7,521 6,133 8,869 Treasury stock (34,517) (32,652) (31,548) (31,562) (31,329) ---------- ---------- ---------- ---------- ---------- Total shareholders' equity 189,915 202,418 211,037 217,824 231,787 ---------- ---------- ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 428,625 $ 432,051 $ 439,350 $ 444,087 $ 453,248 ========== ========== ========== ========== ==========
4 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
SEGMENT DATA - HEALTH (in thousands, except financial statistics) ----------------------------------------------------------------------------- 2003 2004 ----------------------------------------------------------------------------- 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr ----------------------------------------------------------------------------- OPERATING RESULTS Revenues: Premiums $ 175,924 $ 175,703 $ 173,744 $ 174,871 $ 700,242 $ 174,810 Investment income 1,715 1,683 1,596 1,675 6,669 1,568 Other revenue 3,965 3,772 3,828 4,008 15,573 4,193 --------- --------- --------- --------- --------- ---------- Total revenues 181,604 181,158 179,168 180,554 722,484 180,571 Expenses: Benefits 119,783 118,637 118,518 118,708 475,646 117,904 PBM settlement (pre-tax) - - - - - (5,339) General and administrative 29,352 29,189 27,090 28,004 113,635 28,345 Commissions and selling 23,472 23,724 23,727 23,901 94,824 24,200 --------- --------- --------- --------- --------- ---------- Total expenses 172,607 171,550 169,335 170,613 684,105 165,110 --------- --------- --------- --------- --------- ---------- Income before income taxes $ 8,997 $ 9,608 $ 9,833 $ 9,941 $ 38,379 $ 15,461 ========= ========= ========= ========= ========= ========== FINANCIAL STATISTICS Loss ratio 68.1% 67.5% 68.2% 67.9% 67.9% 64.4% Expense ratio: General and administrative 14.4% 14.5% 13.4% 13.7% 14.0% 13.8% Commissions and selling 13.3% 13.5% 13.7% 13.7% 13.5% 13.8% --------- --------- --------- --------- --------- ---------- Total expense ratio 27.8% 28.0% 27.0% 27.4% 27.5% 27.7% --------- --------- --------- --------- --------- ---------- Combined ratio 95.9% 95.5% 95.3% 95.3% 95.5% 92.1% ========= ========= ========= ========= ========= ========== Premiums per member per month: Fully insured medical $ 181 $ 184 $ 184 $ 185 $ 183 $ 186 Self funded 53 53 55 53 54 55 Dental 23 23 24 24 23 24 Short-term disability 22 22 23 23 22 23 Benefits cost per member per month: Fully insured medical $ 125 $ 124 $ 127 $ 128 $ 126 $ 119 Self funded 27 36 40 29 33 39 Dental 15 16 15 15 15 15 Short-term disability 12 8 3 4 7 6
5 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
SEGMENT DATA - LIFE (in thousands, except financial statistics) ----------------------------------------------------------------------------- 2003 2004 ----------------------------------------------------------------------------- 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr ----------------------------------------------------------------------------- OPERATING RESULTS Revenues: Premiums $ 3,131 $ 3,073 $ 2,991 $ 2,981 $ 12,176 $ 2,912 Investment income 133 129 121 129 512 121 Other revenue 75 73 71 65 284 56 --------- --------- --------- --------- --------- -------- Total revenues 3,339 3,275 3,183 3,175 12,972 3,089 Expenses: Benefits 837 679 700 658 2,874 601 General and administrative 510 487 383 415 1,795 402 Commissions and selling 589 585 582 575 2,331 564 --------- --------- --------- --------- --------- -------- Total expenses 1,936 1,751 1,665 1,648 7,000 1,567 --------- --------- --------- --------- --------- -------- Income before income taxes $ 1,403 $ 1,524 $ 1,518 $ 1,527 $ 5,972 $ 1,522 ========= ========= ========= ========= ========= ======== FINANCIAL STATISTICS Loss ratio 26.7% 22.1% 23.4% 22.1% 23.6% 20.6% Expense ratio: General and administrative 13.9% 13.5% 10.4% 11.7% 12.4% 11.9% Commissions and selling 18.8% 19.0% 19.5% 19.3% 19.1% 19.4% --------- --------- --------- --------- --------- -------- Total expense ratio 32.7% 32.5% 29.9% 31.0% 31.6% 31.3% --------- --------- --------- --------- --------- -------- Combined ratio 59.4% 54.6% 53.3% 53.1% 55.2% 51.9% ========= ========= ========= ========= ========= ========
6 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
CORPORATE AND OTHER (in thousands) ----------------------------------------------------------------------------- 2003 2004 ----------------------------------------------------------------------------- 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr ----------------------------------------------------------------------------- OPERATING RESULTS Revenues: Investment income $ 1,554 $ 1,533 $ 1,494 $ 1,769 $ 6,350 $ 1,849 Realized investment gain 375 91 1,416 28 1,910 65 Total revenues 1,929 1,624 2,910 1,797 8,260 1,914 Expenses: Benefits (22) (1) - - (23) - General and administrative 1,199 1,232 1,108 1,230 4,769 1,031 Commissions and selling (19) (15) (17) (21) (72) (15) Interest expense 339 324 309 283 1,255 221 Amortization of intangibles 238 239 238 188 903 163 --------- --------- --------- --------- --------- -------- Total expenses 1,735 1,779 1,638 1,680 6,832 1,400 --------- --------- --------- --------- --------- -------- Loss before income taxes $ 194 $ (155) $ 1,272 $ 117 $ 1,428 $ 514 ========= ========= ========= ========= ========= ========
7 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME (in thousands, except earnings per share) ----------------------------------------------------------------------------- 2003 2004 ----------------------------------------------------------------------------- 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr ----------------------------------------------------------------------------- INCOME GAAP Net income $ 6,463 $ 6,769 $ 8,811 $ 7,267 $ 29,310 $ 10,999 Less: Income (loss) from discontinued operations (134) (57) 923 - 732 - --------- --------- -------- -------- -------- -------- Income from continuing operations 6,597 6,826 7,888 7,267 28,578 10,999 Less: PBM settlement, net of tax - - - - - 3,356 Realized investment gains, net of tax 234 57 885 18 1,192 41 --------- --------- -------- -------- -------- -------- Adjusted net income $ 6,363 $ 6,769 $ 7,003 $ 7,249 $ 27,386 $ 7,602 ========= ========= ======== ======== ======== ======== INCOME PER SHARE - DILUTED GAAP Net income per share $ 0.48 $ 0.48 $ 0.61 $ 0.50 $ 2.08 $ 0.75 Less: Income (loss) from discontinued operations (0.01) - 0.06 - 0.05 - --------- --------- -------- -------- -------- -------- Income from continuing operations 0.49 0.49 0.55 0.50 2.03 0.75 Less: PBM settlement, net of tax - - - - - 0.23 Realized investment gains, net of tax 0.02 - 0.06 - 0.08 - --------- --------- -------- -------- -------- -------- Adjusted net income per share $ 0.47 $ 0.48 $ 0.49 $ 0.50 $ 1.94 $ 0.52 ========= ========= ======== ======== ======== ========
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