Progressive 2006 Annual Report Download - page 27

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Consolidated Statements of Changes in Shareholders’ Equity
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
(millions — except per share amounts)
For the years ended December 31, 2006 2005 2004
Retained Earnings
Balance, Beginning of year $ 4,726.0 $ 3,812.9 $ 3,729.8
Net income 1,647.5 $ 1,647.5 1,393.9 $ 1,393.9 1,648.7 $ 1,648.7
Cash dividends on Common Shares ($.0325,
$.0300 and $.0275 per share) (25.0) (23.7) (23.3)
Treasury shares purchased1,2 (1,111.6) (457.0) (1,542.4)
Capitalization of stock spilt (585.9) — —
Other, net3(4.1) (.1) .1
Balance, End ofyear $ 4,646.9 $ 4,726.0 $ 3,812.9
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance, Beginning of year $ 398.7 $ 444.8 $ 425.0
Changes in:
Net unrealized gains on securities 206.7 (45.0) 16.9
Net unrealized gains on forecasted transactions (1.1) (1.1) (1.0)
Foreign currency translation adjustment — — 3.9
Other comprehensive income 205.6 205.6 (46.1) (46.1) 19.8 19.8
Balance, End of year $ 604.3 $ 398.7 $ 444.8
Comprehensive Income $ 1,853.1 $ 1,347.8 $ 1,668.5
Common Shares, $1.00 Par Value
Balance, Beginning of year $ 197.3 $ 200.4 $ 216.4
Stock options exercised 3.7 1.6 2.1
Treasury shares purchased1,2 (39.1) (5.2) (18.6)
Restricted stock issued, net of forfeitures .2 .5 .5
Capitalization of stock split 585.9 — —
Balance, End of year $ 748.0 $ 197.3 $ 200.4
Paid-in Capital
Balance, Beginning of year $ 848.2 $ 743.3 $ 688.3
Stock options exercised 39.6 42.6 49.6
Tax benefits from exercise/vesting of
stock-based compensation
38.8 41.2 44.3
Treasury shares purchased1,2 (63.8) (20.6) (67.5)
Restricted stock issued, net of forfeitures (.2) 41.7 27.3
Amortization of stock-based compensation 27.8 — —
SFAS 123(R) reclass4(51.5) — —
Other38.5 — 1.3
Balance, End of year $ 847.4 $ 848.2 $ 743.3
Unamortized Restricted Stock
Balance, Beginning of year $ (62.7) $ (46.0) $ (28.9)
Restricted stock issued, net of forfeitures — (42.2) (40.6)
Restricted stock market value adjustment — (8.2) (.3)
Amortization of restricted stock — 33.7 23.8
SFAS 123(R) reclass462.7 — —
Balance, End of year $ — $ (62.7) $ (46.0)
Total Shareholders’ Equity $ 6,846.6 $ 6,107.5 $ 5,155.4
1Progressive did not split its treasury shares in conjunction with the May 18, 2006, 4-for-1 stock split. In 2006, we repurchased 3,182,497
Common Shares prior to the stock split and 35,887,246 Common Shares subsequent to the stock split.
2Includes 16.9 million Common Shares purchased pursuant to a “Dutch auction” tender offer in 2004; these shares were purchased at
a price of $88 per share, on a pre-split basis, for a total cost of $1.5 billion.
3Primarily reflects activity associated with our deferred compensation plans.
4Upon adoption of SFAS 123(R), companies were required to eliminate any unearned compensation (i.e., contra-equity) accounts against
the appropriate equity accounts. As a result, as of January 1, 2006, we were required to reclassify $62.7 million of “Unamortized restricted
stock,” of which $51.5 million related to equity awards and $11.2 million related to liability awards.
There are 20.0 million Serial Preferred Shares authorized; no such shares are issued or outstanding.
There are 5.0 million Voting Preference Shares authorized; no such shares have been issued.
See notes to the complete consolidated financial statements included in Progressive’s 2006 Annual Report to Shareholders, which is
attached as an Appendix to Progressive’s 2007 Proxy Statement.