SCC ProShares UltraShort Consumer Discretionary

Security Capital Corporation (AMEX: SCC) (the "Company") announced results for the first quarter ended March 31, 2006. Dollar amounts are in thousands, except per share amounts. Due to the previously announced sale of our 91.52% interest (on a fully diluted basis) in our Primrose Holdings, Inc. ("Primrose") subsidiary on March 31, 2006, the discussion in this release and the attached financial statement schedules present the results of operations and cash flows of Primrose for the three months ended March 31, 2006 and 2005, and the financial condition of Primrose at December 31, 2005, as discontinued operations. The Company's remaining operating segment reported as continuing operations is the Employer Cost Containment and Health Services segment, composed of the operations of WC Holdings, Inc. ("WC"). We continue to pursue the sale of the WC business and the balance of the Company and are currently considering offers for our interest in WC and the balance of the Company. We expect to enter into a definitive agreement for the sale of WC and the balance of the Company during the second quarter of 2006. Revenues for the Employer Cost Containment and Health Services segment for the three months ended March 31, 2006 increased $5,727, or 18%, to $37,312 compared to revenues of $31,585 for the three months ended March 31, 2005. The increase was driven by revenues of $3,487 from Caronia Corporation ("Caronia"). Caronia was acquired on March 31, 2005, and therefore, the revenues of Caronia were not included in revenues for the three months ended March 31, 2005, but were included in revenues beginning with the second quarter of 2005. The remaining increase can be attributed to the revenue contribution of service contracts entered into during 2005. Selling, general and administrative expenses ("SG&A") for the three months ended March 31, 2006 increased $3,446, or 12%, to $32,321 compared to SG&A of $28,875 for the three months ended March 31, 2005. The increase was driven by the SG&A from Caronia of $2,674, an increase in salaries and benefits of approximately $1,830 due to increased personnel to service the growth in customers, higher rent and office expense of $400 due to the leasing of additional office facilities and equipment due to the growth in customers, and legal costs of $200 associated with the settlement of litigation. The first quarter of 2005 included $2,100 of expenses associated with an internal investigation. Depreciation and amortization expense ("D&A") increased $335, or 38%, to $1,228 for the three months ended March 31, 2006 compared to $893 for the three months ended March 31, 2005. The increase was primarily due to D&A of $281 from Caronia and the additional depreciation expense from asset additions placed in service during 2005. Interest expense increased by $194, or 45%, to $624 for the three months ended March 31, 2006 compared to $430 for the three months ended March 31, 2005. The increase in interest expense was primarily due to higher average outstanding borrowings during the three months ended March 31, 2006 compared to the three months ended March 31, 2005. In connection with the acquisition of Caronia, on March 31, 2005 WC obtained a $40,500 five-year, fully-amortizing term loan. Income tax expense was $1,217 and $679 for the three months ended March 31, 2006 and 2005, respectively, representing an overall effective tax rate of 37.6% and 44.5%, respectively. Income from discontinued operations was $448 and $1,013 for the three months ended March 31, 2006 and 2005, respectively. Discontinued operations for the three months ended March 31, 2006 also included a gain from the sale of Primrose of $36,566. Earnings per basic and diluted share from continuing operations were $0.24 per share for the three months ended March 31, 2006 compared to $0.09 per share in the three months ended March 31, 2005. Earnings per basic and diluted share from discontinued operations were $5.42 and $5.37, respectively, for the three months ended March 31, 2006 compared to $0.15 and $0.14, respectively, for the three months ended March 31, 2005. The gain on the sale of Primrose contributed $5.35 and $5.30 to earnings per basic and diluted share, respectively, from discontinued operations for the three months ended March 31, 2006. During the three months ended March 31, 2006, the Company issued 378,000 shares of Class A Common Stock pursuant to stock option exercises. The options were exercised at a weighted average exercise price of $8.78. The Company also issued an additional 105,502 shares of Class A Common Stock subsequent to March 31, 2006 pursuant to stock option exercises. The weighted average exercise price of options exercised subsequent to March 31, 2006 was $8.86. WC is a majority-owned subsidiary that provides cost containment services relative to direct and indirect costs of corporations and their employees primarily relating to industrial health and safety, industrial medical care and workers' compensation insurance. WC's activities are primarily centered in Ohio, California, Virginia, Maryland, Texas, Michigan, Florida, Washington, Minnesota and New York. This filing contains "forward-looking" statements within the meaning of the "safe harbor" provisions of the Private Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. Such factors and uncertainties include, but are not limited to: future legislative changes which could impact the laws governing workers' compensation and medical malpractice insurance in the various states in which the Company's employer cost containment and health services segment operates, the Company's ability to enhance its existing services and successfully introduce and market new services, new service developments by the Company's competitors, market acceptance of new services of both the Company and its competitors, competitive pressures on prices, the ability to attract and retain qualified personnel, interest rates, the effects on the Company of an event of default under the Company's loan agreement and decisions relative to and the outcome of the Company's formal sale process. -0- *T Index of Schedules Schedule 1 Unaudited Condensed Consolidated Balance Sheets at March 31, 2006 and December 31, 2005 Schedule 2 Unaudited Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2006 and 2005 Schedule 3 Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2006 and 2005 Schedule 1 Security Capital Corporation and Subsidiaries Condensed Consolidated Balance Sheets (unaudited) March 31, Dec. 31, (in thousands, except share and per share amounts) 2006 2005 -------------------- ASSETS Current assets: Cash and cash equivalents $ 91,145 $ 8,940 Accounts receivable, net 20,026 21,124 Deferred income taxes. 1,244 1,244 Other current assets 1,496 1,580 Current assets of discontinued operations -- 7,425 -------------------- Total current assets 113,911 40,313 Property and equipment, net 8,032 8,282 Goodwill, net 55,727 55,727 Identified intangible assets, net 11,769 12,358 Deferred income taxes 668 668 Other assets 1,445 1,055 Non-current assets of discontinued operations -- 23,371 -------------------- Total assets $ 191,552 $141,774 -------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 271 $ 2,171 Accrued expenses and other liabilities 11,776 12,013 Income taxes payable 21,764 6,784 Unearned revenue 28,531 25,239 Current portion of long-term debt 9,674 9,674 Current liabilities of discontinued operations -- 4,303 -------------------- Total current liabilities 72,016 60,184 Long-term debt 22,726 24,751 Other long-term obligations 2,297 2,465 Non-current liabilities of discontinued operations -- 3,182 Minority interests 3,971 3,637 Commitments and contingencies Stockholders' equity: Common stock, $0.01 par value, 7,500 shares authorized; 380 shares issued and outstanding -- -- Class A common stock, $0.01 par value, 10,000,000 shares authorized; 7,156,309 shares issued, 7,148,587 shares outstanding 71 68 Additional paid-in capital 71,252 67,010 Retained earnings (accumulated deficit) 19,070 (19,632) Accumulated other comprehensive income 234 194 Less: treasury stock, at cost, 7,722 shares (85) (85) -------------------- Total stockholders' equity 90,542 47,555 -------------------- Total liabilities and stockholders' equity $ 191,552 $141,774 -------------------- Schedule 2 Security Capital Corporation and Subsidiaries Condensed Consolidated Statements of Income (unaudited) For the Three Months Ended March 31, -------------------- (in thousands, except per share amounts) 2006 2005 -------------------- Revenues. $ 37,312 $ 31,585 Selling, general and administrative expenses 32,321 28,875 Depreciation and amortization 1,228 893 -------------------- Operating income 3,763 1,817 Interest expense (624) (430) Other income, net 100 139 -------------------- Income from continuing operations before income taxes, minority interest and gain on sale of subsidiary 3,239 1,526 Income tax expense (1,217) (679) Minority interest in income of consolidated subsidiary (334) (260) -------------------- Income from continuing operations 1,688 587 Income from discontinued operations (net of tax of $233 in 2006 and $589 in 2005) 448 1,013 Gain on sale of discontinued operations (net of tax of $17,614) 36,566 -- -------------------- Net income $ 38,702 $ 1,600 -------------------- Basic earnings per common share: Earnings from continuing operations $ 0.24 $ 0.09 Earnings from discontinued operations 5.42 0.15 -------------------- Total $ 5.66 $ 0.24 -------------------- Diluted earnings per common share: Earnings from continuing operations $ 0.24 $ 0.09 Earnings from discontinued operations 5.37 0.14 -------------------- Total $ 5.61 $ 0.23 -------------------- Basic weighted average shares used in computation 6,833 6,579 -------------------- Diluted weighted average shares used in computation 6,895 6,651 -------------------- Schedule 3 Security Capital Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (unaudited) For the Three Months Ended March 31, -------------------- (in thousands) 2006 2005 -------------------- Cash flows from operating activities: Net income $ 38,702 $ 1,600 Adjustments to reconcile net income to net cash provided by operating activities: Income from discontinued operations (448) (1,013) Gain on sale of discontinued operations (36,566) -- Stock-based compensation 77 -- Depreciation 639 527 Amortization 589 366 Minority interest in income of consolidated subsidiary 334 260 Amortization of deferred financing costs 48 41 Allowances for doubtful accounts 63 80 Unrealized gain on derivative -- (93) Changes in operating assets and liabilities, net of effects of acquisition: Decrease in accounts receivable 1,035 3,263 Increase in other assets (353) (50) Increase in unearned revenue 3,292 2,766 Decrease in accounts payable, accrued expenses and other liabilities (4,567) (1,723) Cash flow from discontinued operations 853 (100) -------------------- Net cash provided by operating activities 3,698 5,924 Cash flows from investing activities: Net proceeds from sale of subsidiary 76,753 -- Capital expenditures (389) (433) Acquisition (net of acquired cash of $2,611 in 2005) -- (13,449) -------------------- Net cash provided by (used in) investing activities 76,364 (13,882) Cash flows from financing activities: Proceeds from long-term borrowings (net of deferred financing costs of $141) -- 40,359 Repayments of long-term borrowings (2,025) (24,929) Proceeds from employee stock option exercises 3,325 1,960 Tax benefit of stock option exercises 843 -- -------------------- Net cash provided by financing activities 2,143 17,390 -------------------- Increase in cash and cash equivalents 82,205 9,432 Cash and cash equivalents, beginning of period 8,940 10,400 -------------------- Cash and cash equivalents, end of period $ 91,145 $ 19,833 -------------------- Supplemental cash flow information: Noncash investing activities Accrued transaction costs related to acquisition $ -- $ 736 *T