Freddie Mac 2004 Annual Report Download - page 235

NOTE 19: EARNINGS PER COMMON SHARE
Basic earnings per common share are computed as Net income available to common stockholders divided
by the weighted average common shares outstanding (Weighted average common shares outstanding-basic)
for the period. Diluted earnings per common share are computed as Net income available to common
stockholders divided by the weighted average common shares outstanding considering the eÅect of dilutive
common equivalent shares outstanding (Weighted average common shares outstanding-diluted) for the
period. Dilutive common equivalent shares reÖect the assumed issuance of additional common shares
pursuant to certain of the company's stock-based compensation plans (see ""NOTE 11: STOCK-BASED
COMPENSATION'') that could potentially reduce or ""dilute'' earnings per share, based on the treasury
stock method.
Table 19.1 provides computations of Freddie Mac's basic and diluted earnings per common share.
Table 19.1 Ì Earnings Per Common Share Ì Basic and Diluted
Year Ended December 31,
2004 2003 2002
(dollars in millions
and shares in thousands)
Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,937 $ 4,816 $ 10,090
Preferred stock dividends and issuance costs on redeemed preferred
stock (including $0, $0 and $5 of issuance costs on redeemed
preferred stock) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (210) (216) (239)
Net income available to common stockholders(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,727 $ 4,600 $ 9,851
Weighted average common shares outstanding Ì basicÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 689,282 687,094 692,727
Dilutive potential common shares(2)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,239 1,581 2,389
Weighted average common shares outstanding Ì diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏ 691,521 688,675 695,116
Basic earnings per common shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 3.96 $ 6.69 $ 14.22
Diluted earnings per common share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 3.94 $ 6.68 $ 14.17
(1) Net income available to common stockholders is not aÅected by dilutive potential common shares for the years ended December 31,
2004, 2003 and 2002.
(2) The eÅect of dilutive common equivalent shares outstanding includes: (a) the weighted average shares related to stock options
(including the ESPP) that have an exercise price lower than the average market price during the period; (b) the weighted average of
non-vested restricted shares; and (c) all restricted stock units. Such items are excluded from weighted average common shares
outstanding Ì basic.
Options to purchase 2.4 million, 3.4 million and 2.5 million shares of common stock were excluded from
the computation of Diluted earnings per common share at December 31, 2004, 2003 and 2002, respectively,
because the options' exercise price exceeded the average market price of the common stock for the years
ended December 31, 2004, 2003 and 2002, respectively.
Freddie Mac
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