PNC Bank 2005 Annual Report Download - page 43

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liability has been incurred and that the amount of loss can be
reasonably estimated. We regularly review and adjust the
reserves as appropriate to reflect changes in the status of the
proceedings and claims.
The reserves that we establish for these types of
contingencies are based upon our opinion regarding the
future outcome of legal and regulatory proceedings and
claims at the time. The final resolution of legal and
regulatory proceedings and claims is frequently different,
possibly significantly, from the resolution we anticipated.
Also, we may not be able to reasonably estimate a potential
loss from a proceeding even if some liability is probable and
an actual loss is later incurred. As a result, our ultimate
financial exposure to legal and regulatory proceedings and
claims may be substantially different from what is reflected
in the related reserves.
2002 BLACKROCK LONG-TERM
RETENTION AND INCENTIVE PLAN
See Note 18 Stock-Based Compensation Plans in the Notes
To Consolidated Financial Statements in Item 8 of this
Report for a description of BlackRock’ s LTIP.
Under the BlackRock LTIP, awards vest at the end of any
three-month period beginning on or after January 1, 2005
and ending on or prior to March 30, 2007 during which the
average closing price of BlackRock’ s common stock is at
least $62 per share. During the first quarter of 2005,
BlackRock’ s average closing stock price exceeded the $62
threshold and the stock price provision was met. In addition
to the stock price threshold, the vesting of awards is
contingent on the participants’ continued employment with
BlackRock for periods ranging from two to five years
through the payment date in early 2007.
We reported pretax charges in 2004 totaling $110 million in
connection with the LTIP, including $96 million in the third
quarter, based upon management’ s determination during the
third quarter of 2004 that the likelihood of vesting of the
LTIP awards was probable of reaching the stock price
threshold. These amounts included a pro rata share of the
estimated dilution of our investment in BlackRock that is
expected to occur in 2007 when we transfer shares of
BlackRock stock owned by PNC to fund a portion of the
LTIP awards.
We reported pretax expense of $64 million in 2005,
including $16 million during the fourth quarter, related to
the LTIP awards.
RECENT ACCOUNTING
PRONOUNCEMENTS
See Note 1 Accounting Policies in the Notes To
Consolidated Financial Statements in Item 8 of this Report
for additional information on the following recent
accounting pronouncements that are relevant to our
business, including a description of each new
pronouncement, the required date of adoption, our planned
date of adoption and the expected impact on our
consolidated financial statements. All of the following
pronouncements were issued by the FASB unless otherwise
noted.
Issued in February 2006: SFAS 155, “Accounting for
Certain Hybrid Financial Instruments-an amendment of
FASB Statements No. 133 and 140.”
Issued in November 2005: FASB Staff Position No. (“FSP”)
115-1, “The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments.”
In June 2005, the FASB’ s Emerging Issues Task Force
(“EITF”) issued EITF Issue 04-5, “Determining Whether a
General Partner, or the General Partners as a Group,
Controls a Limited Partnership or Similar Entity When the
Limited Partners Have Certain Rights.”
Issued in May 2005: SFAS 154, “Accounting Changes and
Error Corrections – a replacement of APB Opinion No. 20
and FASB Statement No. 3.”
Issued in December 2004:
• SFAS 123 (Revised), “Share -Based Payment,”
• FSP 109-2, “Accounting and Disclosure Guidance
for the Foreign Earnings Repatriation Provision
within the American Jobs Creation Act of 2004,”
and
• SFAS 153, “Exchanges of Nonmonetary Assets, an
amendment of APB Opinion No. 29, Accounting
for Nonmonetary Transactions.”
Issued in May 2004: FSP 106-2, “Accounting and
Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of
2003.”
In December 2003, the American Institute of Certified
Public Accountants issued Statement of Position 03-3,
“Accounting for Loans and Debt Securities Acquired in a
Transfer.”