Mercury Insurance 2007 Annual Report Download - page 85

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2007 MERCURYNOW 83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the stock option activity of the Company’s plans in 2007 is presented below:
Weig hted-Average
Remaining Aggregate
Weighted-Average Contractual Term Intrinsic Value
Shares Exercise Price (years) (in 000’s)
Outstanding at January 1, 2007 467,052 $ 44.81
Granted 114,500 51.94
Exercised (60,307) 36.04
Cancelled or expired (44,000) 54.94
Outstanding at December 31, 2007 477,245 $ 46.70 6.2 $ 2,506
Vested or expected to vest at December 31, 2007 477,245 $ 46.70 6.2 $ 2,506
Exercisable at December 31, 2007 277,545 $ 42.06 4.4 $ 2,457
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing
stock price and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all
options been exercised on December 31, 2007. The aggregate intrinsic value of stock options exercised during 2007, 2006 and 2005 was $1,134,000,
$1,661,000 and $2,780,000, respectively. The total fair value of options vested during 2007, 2006 and 2005 was $487,000, $886,000 and $827,000,
respectively.
The following table summarizes information regarding stock options outstanding at December 31, 2007:
Options Outstanding Options Exercisable
Weighted Avg.
Range of Number Remaining Weighted Avg. Number Weighted Avg.
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
$ 21.75 to 29.77 27,245 2.3 $ 25.31 27,245 $ 25.31
$ 31.22 to 58.83 450,000 6.4 $ 47.99 250,300 $ 43.88
As of December 31, 2007, $1,683,000 of total unrecognized compensation cost related to non-vested stock options is expected to be recognized
over a weighted-average period of 2.2 years.
Note 13. Earnings Per Share
A reconciliation of the numerator and denominator used in the basic and diluted earnings per share calculation is presented below:
2007 2006 2005
(000’s) (000’s) (000’s) (000’s) (000’s) (000’s)
Weighted Weighted Weig hted
Income Shares Per-Share Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Basic EPS
Income available to
common stockholders $ 237,832 54,704 $ 4.35 $ 214,817 54,651 $ 3.93 $ 253,259 54,566 $ 4.64
Effect of dilutive securities:
Options — 125 — 135 — 151
Diluted EPS
Income available to
common stockholders
after assumed conversions $ 237,832 54,829 $ 4.34 $ 214,817 54,786 $ 3.92 $ 253,259 54,717 $ 4.63
The diluted weighted shares excludes incremental shares of 88,000, 107,000 and 19,000 for 2007, 2006 and 2005, respectively. These shares
are excluded due to their antidilutive effect.