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 SECOND QUARTER 2004 FINANCIAL RESULTS
|X| 2Q 2004 EARNINGS OF $0.53 PER DILUTED SHARE
|X| MEDICAL MEMBERSHIP IMPROVES, DENTAL DECLINES
|X| INDIVIDUAL NEW-MEMBER AND INFORCE ENROLLMENT CONTINUES TO GROW
GREEN BAY, Wis. - August 4, 2004 - American Medical Security Group,
Inc. (NYSE: AMZ) (AMS), today reported net income for the second quarter of 2004
of $7.7 million or $0.53 per diluted share. That is a 14.4% increase over net
income of $6.8 million or $0.48 per diluted share for the second quarter of
2003.
GAAP net income for the first six months of 2004 was $18.7 million or
$1.28 per diluted share. Adjusted net income(1) for the same period was $15.4
million or $1.05 per diluted share excluding 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). For the first six months of
2003, GAAP net income was $13.2 million or $0.96 per diluted share.
Improving new member enrollment and persistency remains an AMS priority
according to Samuel V. Miller, AMS Chairman, President & Chief Executive
Officer.
Ad One
"The environment in the small group business continues to be
challenging. However, we believe the individual market is strong and getting
stronger," Miller said. "We will take advantage of that through our promising
Health Savings Account (HSA) products and other high-deductible plans that are
particularly well positioned for the individual market. We are also in the
process of more than doubling the number of our MedOne specialists. These sales
representatives specialize in facilitating MedOne sales through our agents."
REVENUES
Total revenues of $184.0 million for the second quarter of 2004 were
down slightly compared to $185.6 million in the first quarter of 2004. Total
revenues for the second quarter of 2003 were $186.1 million.
For the first six months of 2004, total revenues were $369.6 million,
compared to $372.9 million for the first six months of 2003.
AMS said that the trend toward lower-cost, higher-deductible health
plans in both its group and individual businesses is having a negative effect on
growth in premium per member per month. At the same time, the company expects
these plans to attract customers who will have lower utilization because of
their increased financial involvement in their own health care decisions.
MEMBERSHIP
The company's medical membership increased slightly in the quarter
compared to the first quarter. That progress was driven by the third consecutive
quarter of new-member and inforce enrollment growth for the company's MedOne
individual business.
Total sequential health membership was down slightly due to a decline
in dental membership. Total health membership was 533,834 at the end of the
second quarter of 2004. That compares to 536,215 at the end of the first quarter
of 2004, and 546,501 at the end of the second quarter of 2003.
Ad Two
HEALTH SEGMENT RATIOS(1)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------------------
2004 2003 2004 2003
- --------------------------------------------------------------------------------
HEALTH LOSS RATIO:
GAAP 67.3% 67.5% 65.8% 67.8%
PBM Settlement - - 1.5 -
--------------------------------------------------
Adjusted 67.3% 67.5% 67.4% 67.8%
HEALTH EXPENSE RATIO:
GAAP 27.6% 28.0% 27.6% 27.9%
HEALTH COMBINED RATIO:
GAAP 94.9% 95.5% 93.5% 95.7%
PBM Settlement - - 1.5 -
--------------------------------------------------
Adjusted 94.9% 95.5% 95.0% 95.7%
CASH FLOW & BALANCE SHEET
Net cash used in operations in the second quarter of 2004 was $3.6
million. That compares to cash provided by operations of $2.0 million in the
second quarter of 2003. Cash provided by operations was $10.4 million in the
first quarter of 2004, including $5.9 million from the PBM settlement. Cash flow
in the second quarter of 2004 reflects a reduction in claim inventories, an
extra federal tax payment and the payment of litigation expenses.
For the first six months of 2004, cash from operations was $6.8 million
including the PBM settlement amount. For the same period of 2003, cash used in
operations was $1.6 million.
At June 30, 2004, AMS had a book value per share of $17.16. That
compares to $15.27 at the end of the second quarter of 2003, and $17.11 at the
end of the first quarter of 2004.
Ad Three
EARNINGS GUIDANCE
The company anticipates that GAAP earnings per diluted share will be
approximately $0.54 for the third quarter and $0.56 for the fourth quarter of
2004. That would bring full-year 2004 earnings per diluted share to
approximately $2.38. Excluding the $0.23 gain from the PBM settlement, adjusted
earnings per diluted share would be approximately $2.15 for full-year 2004.(1)
NOTES
(1) AMS management believes that these measures of profitability, which exclude
the impact of the one-time PBM settlement, provide a meaningful presentation of
the underlying earnings of the Company's continuing operations.
# # # # #
AMS WILL HOST A CONFERENCE CALL TO DISCUSS ITS FINANCIAL RESULTS ON
THURSDAY, AUGUST 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 785-832-0326. FOLLOWING THE LIVE CALL, A REPLAY WILL BE
AVAILABLE UNTIL MIDNIGHT, SATURDAY, AUGUST 7, 2004 BY DIALING 402-530-0420. 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 2nd Qtr
--------------------------------------------------------- -------------------------
REVENUES
Premiums $ 179,055 $ 178,776 $ 176,735 $ 177,852 $ 712,418 $ 177,722 $ 176,528
Investment income 3,402 3,345 3,211 3,573 13,531 3,538 3,454
Realized investment gain (loss) 375 91 1,416 28 1,910 65 (117)
Fees & other 4,040 3,845 3,899 4,073 15,857 4,249 4,155
---------- ---------- --------- --------- --------- --------- ----------
Total revenues 186,872 186,057 185,261 185,526 743,716 185,574 184,020
EXPENSES
Benefits 120,598 119,315 119,218 119,366 478,497 118,505 117,392
General and administrative 29,284 29,244 26,908 27,989 113,425 28,187 28,349
Commissions and selling 24,042 24,294 24,292 24,455 97,083 24,749 24,173
Interest expense 339 324 309 283 1,255 221 221
Depreciation 1,777 1,664 1,673 1,660 6,774 1,591 1,470
Amortization 238 239 238 188 903 163 163
---------- ---------- --------- --------- --------- --------- ----------
Total expenses 176,278 175,080 172,638 173,941 697,937 173,416 171,768
---------- ---------- --------- --------- --------- --------- ----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 10,594 10,977 12,623 11,585 45,779 12,158 12,252
Income taxes 3,997 4,151 4,735 4,318 17,201 4,515 4,506
---------- ---------- --------- --------- --------- --------- ----------
INCOME FROM CONTINUING OPERATIONS 6,597 6,826 7,888 7,267 28,578 7,643 7,746
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 $ 7,746
========== ========== ========= ========= ========= ========= ==========
PER SHARE DATA
Adjusted net income - diluted (1) $ 0.47 $ 0.48 $ 0.49 $ 0.50 $ 1.94 $ 0.52 $ 0.53
Income from continuing operations - diluted $ 0.49 $ 0.49 $ 0.55 $ 0.50 $ 2.03 $ 0.52 $ 0.53
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 $ 0.57
Net income - diluted $ 0.48 $ 0.48 $ 0.61 $ 0.50 $ 2.08 $ 0.75 $ 0.53
Weighted average common shares - basic 12,981 13,160 13,392 13,542 13,270 13,627 13,690
Weighted average common shares - diluted 13,575 14,015 14,340 14,464 14,100 14,585 14,666
MARGIN ANALYSIS
Income before income taxes 5.7% 5.9% 6.8% 6.2% 6.2% 6.6% 6.7%
Net income 3.5% 3.6% 4.8% 3.9% 3.9% 5.9% 4.2%
----------------------
YTD
06/30/03 06/30/04
----------------------
REVENUES
Premiums $ 357,831 $ 354,250
Investment income 6,747 6,992
Realized investment gain (loss) 466 (52)
Fees & other 7,885 8,404
---------- ----------
Total revenues 372,929 369,594
EXPENSES
Benefits 239,913 235,897
General and administrative 58,528 56,536
Commissions and selling 48,336 48,922
Interest expense 663 442
Depreciation 3,441 3,061
Amortization 477 326
---------- ----------
Total expenses 351,358 345,184
---------- ----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 21,571 24,410
Income taxes 8,148 9,021
---------- ----------
INCOME FROM CONTINUING OPERATIONS 13,423 15,389
PBM settlement, net of tax - 3,356
Income (loss) from discontinued operations (191) -
---------- ----------
NET INCOME $ 13,232 $ 18,745
========== ==========
PER SHARE DATA
Adjusted net income - diluted (1) $ 0.95 $ 1.05
Income from continuing operations - diluted $ 0.97 $ 1.05
Income (loss) from discontinued
operations - diluted $(0.01) $ -
Net income - basic $ 1.01 $ 1.37
Net income - diluted $ 0.96 $ 1.28
Weighted average common shares - basic 13,071 13,658
Weighted average common shares - diluted 13,795 14,625
MARGIN ANALYSIS
Income before income taxes 5.8% 6.6%
Net income 3.5% 5.1%
(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 2nd Qtr
--------------------------------------------------------- -------------------------
REVENUE MIX
Health premiums $ 175,924 $ 175,703 $ 173,744 $ 174,871 $ 700,242 $ 174,810 $ 173,673
Life premiums 3,131 3,073 2,991 2,981 12,176 2,912 2,855
Investment income 3,777 3,436 4,627 3,601 15,441 3,603 3,337
Service fees 4,040 3,845 3,899 4,073 15,857 4,249 4,155
--------- --------- --------- --------- --------- --------- ---------
Total revenues $ 186,872 $ 186,057 $ 185,261 $ 185,526 $ 743,716 $ 185,574 $ 184,020
========= ========= ========= ========= ========= ========= =========
MEMBERSHIP ANALYSIS
Fully insured medical 278,091 275,323 270,401 273,252 273,252 269,697 270,538
Self funded medical 42,704 42,568 43,858 46,012 46,012 44,400 44,538
Dental 231,508 228,610 226,734 227,502 227,502 222,118 218,758
--------- --------- --------- --------- --------- --------- ---------
Total Health 552,303 546,501 540,993 546,766 546,766 536,215 533,834
Life 144,207 141,930 137,395 136,423 136,423 132,437 130,418
FINANCIAL STATISTICS
Book value per share $ 14.68 $ 15.27 $ 15.71 $ 16.12 $ 16.12 $ 17.11 $ 17.16
Cash flow from operations $(3,575) $ 1,978 $ 9,092 $12,630 $20,125 $10,422 $(3,646)
Return on equity, annualized 14.2% 13.9% 15.3% 13.6% 14.3% 13.6% 13.3%
Debt to total capital 15.0% 14.1% 13.5% 12.2% 12.2% 11.5% 11.4%
Common shares outstanding, net of treasury 12,936 13,254 13,434 13,511 13,511 13,549 13,678
---------------------
YTD
6/30/03 6/30/04
---------------------
REVENUE MIX
Health premiums $ 351,627 $ 348,483
Life premiums 6,204 5,767
Investment income 7,213 6,940
Service fees 7,885 8,404
--------- ---------
Total revenues $ 372,929 $ 369,594
========= =========
MEMBERSHIP ANALYSIS
Fully insured medical 275,323 270,538
Self funded medical 42,568 44,538
Dental 228,610 218,758
--------- ---------
Total Health 546,501 533,834
Life 141,930 130,418
FINANCIAL STATISTICS
Book value per share $ 15.27 $ 17.16
Cash flow from operations $ (1,597) $ 6,776
Return on equity, annualized 13.9% 13.6%
Debt to total capital 14.1% 11.4%
Common shares outstanding, net of treasury 13,254 13,678
3
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
BALANCE SHEETS
(IN THOUSANDS)
------------------------------------------ ---------------------
2003 2004
3/31 6/30 9/30 12/31 3/31 6/30
------------------------------------------ ---------------------
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value $ 283,595 $ 286,044 $ 286,324 $ 302,277 $ 313,813 $ 296,890
Fixed maturity securities held to maturity, at amortized cost 3,175 3,168 3,483 3,377 3,170 3,163
Trading securities, at fair value 1,142 1,217 1,254 1,424 1,582 1,700
--------- --------- --------- --------- --------- ----------
Total investments 287,912 290,429 291,061 307,078 318,565 301,753
Cash and cash equivalents 20,396 22,036 30,183 17,289 18,716 19,610
Other assets:
Property and equipment, net 34,112 35,118 34,445 37,446 37,441 38,485
Goodwill and other intangibles, net 35,468 35,229 34,283 34,095 33,932 33,769
Other assets 50,737 49,239 49,378 48,179 44,594 46,310
--------- --------- --------- --------- --------- ----------
Total other assets 120,317 119,586 118,106 119,720 115,967 118,564
--------- --------- --------- --------- --------- ----------
TOTAL ASSETS $ 428,625 $ 432,051 $ 439,350 $ 444,087 $ 453,248 $ 439,927
========= ========= ========= ========= ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Medical and other benefits payable $ 131,650 $ 131,023 $ 127,023 $ 129,809 $ 123,426 $ 118,723
Advance premiums 17,300 16,453 16,150 15,865 16,902 14,982
Payables and accrued expenses 23,466 21,039 24,020 24,099 22,539 20,281
Notes payable 33,558 33,258 32,958 30,158 30,158 30,158
Other liabilities 32,736 27,860 28,162 26,332 28,436 21,005
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities 238,710 229,633 228,313 226,263 221,461 205,149
Shareholders' equity:
Common stock 16,654 16,654 16,654 16,654 16,654 16,654
Paid-in capital 190,367 192,362 193,509 194,431 194,426 195,548
Retained earnings 9,321 16,090 24,901 32,168 43,167 50,913
Unrealized gain on investments 8,090 9,964 7,521 6,133 8,869 2,094
Treasury stock (34,517) (32,652) (31,548) (31,562) (31,329) (30,431)
---------- ---------- ---------- ---------- ---------- ----------
Total shareholders' equity 189,915 202,418 211,037 217,824 231,787 234,778
---------- ---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 428,625 $ 432,051 $ 439,350 $ 444,087 $ 453,248 $ 439,927
========== ========== ========== ========== ========== ==========
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 2nd Qtr
---------------------------------------------------------------- -------------------------
OPERATING RESULTS
Revenues:
Premiums $ 175,924 $ 175,703 $ 173,744 $ 174,871 $ 700,242 $ 174,810 $ 173,673
Investment income 1,715 1,683 1,596 1,675 6,669 1,568 1,496
Other revenue 3,965 3,772 3,828 4,008 15,573 4,193 4,104
--------- --------- --------- --------- --------- ---------- ---------
Total revenues 181,604 181,158 179,168 180,554 722,484 180,571 179,273
Expenses:
Benefits 119,783 118,637 118,518 118,708 475,646 117,904 116,833
PBM settlement (pre-tax) - - - - - (5,339) -
General and administrative 29,352 29,189 27,090 28,004 113,635 28,345 28,377
Commissions and selling 23,472 23,724 23,727 23,901 94,824 24,200 23,643
--------- --------- --------- --------- --------- ---------- ---------
Total expenses 172,607 171,550 169,335 170,613 684,105 165,110 168,853
--------- --------- --------- --------- --------- ---------- ---------
Income before income taxes $ 8,997 $ 9,608 $ 9,833 $ 9,941 $ 38,379 $ 15,461 $ 10,420
========= ========= ========= ========= ========= ========== =========
FINANCIAL STATISTICS
Loss ratio 68.1% 67.5% 68.2% 67.9% 67.9% 64.4% 67.3%
Expense ratio:
General and administrative 14.4% 14.5% 13.4% 13.7% 14.0% 13.8% 14.0%
Commissions and selling 13.3% 13.5% 13.7% 13.7% 13.5% 13.8% 13.6%
--------- --------- --------- --------- --------- ---------- ---------
Total expense ratio 27.8% 28.0% 27.0% 27.4% 27.5% 27.7% 27.6%
--------- --------- --------- --------- --------- ---------- ---------
Combined ratio 95.9% 95.5% 95.3% 95.3% 95.5% 92.1% 94.9%
========= ========= ========= ========= ========= ========== =========
Premiums per member per month:
Fully insured medical $ 181 $ 184 $ 184 $ 185 $ 183 $ 186 $ 185
Self funded 53 53 55 53 54 55 55
Dental 23 23 24 24 23 24 24
Short-term disability 22 22 23 23 22 23 24
Benefits cost per member per month:
Fully insured medical $ 125 $ 124 $ 127 $ 128 $ 126 $ 119 $ 125
Self funded 27 36 40 29 33 39 39
Dental 15 16 15 15 15 15 16
Short-term disability 12 8 3 4 7 6 4
-----------------------
YTD
6/30/03 6/30/04
-----------------------
OPERATING RESULTS
Revenues:
Premiums $ 351,627 $ 348,483
Investment income 3,398 3,064
Other revenue 7,737 8,297
--------- ----------
Total revenues 362,762 359,844
Expenses:
Benefits 238,420 234,737
PBM settlement (pre-tax) - (5,339)
General and administrative 58,541 56,722
Commissions and selling 47,196 47,843
--------- ----------
Total expenses 344,157 333,963
--------- ----------
Income before income taxes $ 18,605 $ 25,881
========= ==========
FINANCIAL STATISTICS
Loss ratio 67.8% 65.8%
Expense ratio:
General and administrative 14.4% 13.9%
Commissions and selling 13.4% 13.7%
--------- ----------
Total expense ratio 27.9% 27.6%
--------- ----------
Combined ratio 95.7% 93.5%
========= ==========
Premiums per member per month:
Fully insured medical $ 182 $ 185
Self funded 53 55
Dental 23 24
Short-term disability 22 23
Benefits cost per member per month:
Fully insured medical $ 125 $ 122
Self funded 31 39
Dental 15 16
Short-term disability 10 5
5
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
SEGMENT DATA - LIFE
(IN THOUSANDS, EXCEPT FINANCIAL STATISTICS)
------------------------------------------------ ----------------- -------------------
2003 2004 YTD
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 6/30/03 06/30/04
------------------------------------------------ ----------------- -------------------
OPERATING RESULTS
Revenues:
Premiums $ 3,131 $ 3,073 $ 2,991 $ 2,981 $ 12,176 $ 2,912 $ 2,855 $ 6,204 $ 5,767
Investment income 133 129 121 129 512 121 114 262 235
Other revenue 75 73 71 65 284 56 51 148 107
------- ------- ------- ------- -------- ------- ------- ------- -------
Total revenues 3,339 3,275 3,183 3,175 12,972 3,089 3,020 6,614 6,109
Expenses:
Benefits 837 679 700 658 2,874 601 559 1,516 1,160
General and administrative 510 487 383 415 1,795 402 383 997 785
Commissions and selling 589 585 582 575 2,331 564 530 1,174 1,094
------- ------- ------- ------- -------- ------- ------- ------- -------
Total expenses 1,936 1,751 1,665 1,648 7,000 1,567 1,472 3,687 3,039
------- ------- ------- ------- -------- ------- ------- ------- -------
Income before income taxes $ 1,403 $ 1,524 $ 1,518 $ 1,527 $ 5,972 $ 1,522 $ 1,548 $ 2,927 $ 3,070
======= ======= ======= ======= ======== ======= ======= ======= =======
FINANCIAL STATISTICS
Loss ratio 26.7% 22.1% 23.4% 22.1% 23.6% 20.6% 19.6% 24.4% 20.1%
Expense ratio:
General and administrative 13.9% 13.5% 10.4% 11.7% 12.4% 11.9% 11.6% 13.7% 11.8%
Commissions and selling 18.8% 19.0% 19.5% 19.3% 19.1% 19.4% 18.6% 18.9% 19.0%
------- ------- ------- ------- -------- ------- ------- ------- -------
Total expense ratio 32.7% 32.5% 29.9% 31.0% 31.6% 31.3% 30.2% 32.6% 30.7%
------- ------- ------- ------- -------- ------- ------- ------- -------
Combined ratio 59.4% 54.6% 53.3% 53.1% 55.2% 51.9% 49.8% 57.0% 50.8%
======= ======= ======= ======= ======== ======= ======= ======= =======
6
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
CORPORATE AND OTHER
(IN THOUSANDS)
------------------------------------------------ ----------------- -------------------
2003 2004 YTD
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 6/30/03 6/30/04
------------------------------------------------ ----------------- -------------------
OPERATING RESULTS
Revenues:
Investment income $ 1,554 $ 1,533 $ 1,494 $ 1,769 $ 6,350 $ 1,849 $ 1,844 $ 3,087 $ 3,693
Realized investment gain (loss) 375 91 1,416 28 1,910 65 (117) 466 (52)
------------------------------------------------- -------- -------- -------- --------
Total revenues 1,929 1,624 2,910 1,797 8,260 1,914 1,727 3,553 3,641
Expenses:
Benefits (22) (1) - - (23) - - (23) -
General and administrative 1,199 1,232 1,108 1,230 4,769 1,031 1,059 2,431 2,090
Commissions and selling (19) (15) (17) (21) (72) (15) - (34) (15)
Interest expense 339 324 309 283 1,255 221 221 663 442
Amortization of intangibles 238 239 238 188 903 163 163 477 326
------------------------------------------------- -------- -------- -------- --------
Total expenses 1,735 1,779 1,638 1,680 6,832 1,400 1,443 3,514 2,843
------------------------------------------------- -------- -------- -------- --------
Income (loss) before income taxes $ 194 $ (155) $ 1,272 $ 117 $ 1,428 $ 514 $ 284 $ 39 $ 798
================================================= ======== ======== ======== ========
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 2nd Qtr
---------------------------------------------------- ----------------------
INCOME
GAAP Net income $ 6,463 $ 6,769 $ 8,811 $ 7,267 $ 29,310 $ 10,999 $ 7,746
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 7,746
Less:
PBM settlement, net of tax - - - - - 3,356 -
Realized investment gains (loss), net of tax 234 57 885 18 1,192 41 (74)
-------- -------- ------- ------- -------- -------- --------
Adjusted net income $ 6,363 $ 6,769 $ 7,003 $ 7,249 $ 27,386 $ 7,602 $ 7,820
======== ======== ======= ======= ======== ======== ========
INCOME PER SHARE - DILUTED
GAAP Net income per share $ 0.48 $ 0.48 $ 0.61 $ 0.50 $ 2.08 $ 0.75 $ 0.53
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 0.53
Less:
PBM settlement, net of tax - - - - - 0.23 -
Realized investment gain (loss), net of tax 0.02 - 0.06 - 0.08 - (0.01)
-------- -------- ------- ------- -------- -------- --------
Adjusted net income per share $ 0.47 $ 0.48 $ 0.49 $ 0.50 $ 1.94 $ 0.52 $ 0.53
======== ======== ======= ======= ======== ======== ========
--------------------
YTD
6/30/03 6/30/04
--------------------
INCOME
GAAP Net income $ 13,232 $ 18,745
Less:
Income (loss) from discontinued operations (191) -
--------- ---------
Income from continuing operations 13,423 18,745
Less:
PBM settlement, net of tax - 3,356
Realized investment gains (loss), net of tax 291 (33)
--------- ---------
Adjusted net income $ 13,132 $ 15,422
========= =========
INCOME PER SHARE - DILUTED
GAAP Net income per share $ 0.96 $ 1.28
Less:
Income (loss) from discontinued operations (0.01) -
--------- ---------
Income from continuing operations 0.97 1.28
Less:
PBM settlement, net of tax - 0.23
Realized investment gain (loss), net of tax 0.02 -
--------- ---------
Adjusted net income per share $ 0.95 $ 1.05
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8