Huntington National Bank 2004 Annual Report Download - page 119

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED
15. EARNINGS PER SHARE
Basic earnings per share is the amount of earnings for the period available to each share of common stock outstanding during the
reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during
the reporting period adjusted for the potential issuance of common shares for dilutive stock options. The calculation of basic and
diluted earnings per share for each of the three years ended December 31 is as follows:
Year Ended December 31,
(in thousands, except per share amounts) 2004 2003 2002
Income before cumulative effect of accounting change $398,925 $385,693 $323,731
Cumulative effect of change in accounting principle, net of tax —(13,330) —
Net income $398,925 $372,363 $323,731
Average common shares outstanding 229,913 229,401 242,279
Dilutive effect of common stock equivalents 3,943 2,181 1,733
Diluted average common shares outstanding 233,856 231,582 244,012
Earnings Per Share
Basic
Income before cumulative effect of accounting change $1.74 $1.68 $1.34
Net income 1.74 1.62 1.34
Diluted
Income before cumulative effect of accounting change 1.71 1.67 1.33
Net income 1.71 1.61 1.33
The average market price of Huntington’s common stock for the period was used in determining the dilutive effect of outstanding
stock options. Common stock equivalents are computed based on the number of shares subject to stock options that have an exercise
price less than the average market price of Huntington’s common stock for the period.
Approximately 2.6 million, 2.8 million, and 7.7 million stock options outstanding at the end of 2004, 2003, and 2002, respectively,
were not included in the computation of diluted earnings per share because the effect would be antidilutive. The weighted average
exercise price for these options was $26.96 per share, $26.74 per share, and $22.19 per share at the end of the same respective periods.
On January 7, 2005, Huntington released from escrow 86,118 shares of Huntington common stock to former shareholders of
LeaseNet, Inc., which were previously issued in September 2002. A total of 373,896 common shares, previously held in escrow, was
returned to Huntington. All shares in escrow had been accounted for as treasury stock.
16. STOCK-BASED COMPENSATION
Huntington sponsors nonqualified and incentive stock option plans. These plans provide for the granting of stock options to officers
and other employees. Huntington’s board of directors has approved all of the plans. Shareholders have approved each of the plans,
except for the broad-based Employee Stock Incentive Plan. Approximately 28.8 million shares have been authorized under the plans,
of which 8.8 million were available for future grants at December 31, 2004. Options that were granted in the most recent seven years
vest ratably over three years or when other conditions are met while those granted in 1994 through 1997 vested ratably over four
years. All grants preceding 1994 became fully exercisable after one year. All options granted have a maximum term of ten years.
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