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50
2006
Share-based compensation expense by type of award:
Stock options $ 14,575
Restricted Stock 1,179
Total share-based compensation 15,754
Tax effect on share-based compensation (6,049)
Net effect on net income $ 9,705
Tax effect on:
Cash flows from operating activities $ (17,053)
Cash flows from financing activities $ 17,053
Effect on earnings per share:
Basic $ 0.12
Diluted $ 0.12
For the year ended December 31, 2006, the share-based compensation expense of $1.18 million
related to Restricted Stock would also have been recorded as an expense under APB 25. Prior to
the adoption of SFAS 123R, we presented all tax benefits for deductions resulting from the exercise
of stock options and disqualifying dispositions as operating cash flows in our consolidated statement
of cash flows. SFAS 123R requires the benefits from tax deductions in excess of recognized
compensation expense to be reported as a financing cash flow, rather than as an operating cash
flow. This requirement will reduce net operating cash flows and increase net financing cash flows in
periods after adoption. Total cash flows will remain unchanged from what would have been
reported under prior accounting rules.
12. Earnings Per Share
At December 31, 2006, we had 78,769,186 outstanding common shares. We have granted
options to purchase common shares to the directors and coworkers of the Company as
discussed in Note 11. These options have a dilutive effect on the calculation of earnings per
share. The following table is a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations as required by SFAS 128 (in thousands, except per
share amounts):
Years Ended December 31,
2006 2005 2004
Basic earnings per share:
Income available to
common shareholders (numerator) $ 266,080 $ 272,092 $ 241,445
Weighted-average common
shares outstanding (denominator) 78,874 81,128 83,391
Basic earnings per share $ 3.37 $ 3.35 $ 2.90
Diluted earnings per share:
Income available to
common shareholders (numerator) $ 266,080 $ 272,092 $ 241,445
Weighted-average common
shares outstanding 78,874 81,128 83,391
Effect of dilutive securities:
Options on common stock 1,777 2,438 3,161
Total common shares and
dilutive securities (denominator) 80,651 83,566 86,552
Diluted earnings per share $ 3.30 $ 3.26 $ 2.79