eTrade 2006 Annual Report Download - page 130
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NOTE 20—EARNINGS PER SHARE
The following table is a reconciliation of basic and diluted earnings per share (in thousands, except per share
amounts):
Year Ended December 31,
2006 2005 2004
BASIC:
Numerator:
Net income from continuing operations $626,814 $446,238 $381,830
Gain (loss) from discontinued operations, net of tax 2,045 (17,472) (1,347)
Cumulative effect of accounting change, net of tax — 1,646 —
Net income $628,859 $430,412 $380,483
Denominator:
Basic weighted-average shares outstanding 421,127 371,468 366,586
DILUTED:
Numerator:
Net income $628,859 $430,412 $380,483
Interest on convertible subordinated notes, net of tax — — 19,963
Net income, as adjusted $628,859 $430,412 $400,446
Denominator:
Basic weighted-average shares outstanding 421,127 371,468 366,586
Effect of dilutive securities:
Weighted-average options and restricted stock issued to employees 13,358 11,137 10,461
Weighted-average warrants and contingent shares outstanding 248 2,025 2,532
Weighted-average mandatory convertible notes 1,624 — —
Shares issuable for assumed conversion of convertible subordinated
notes — — 25,810
Diluted weighted-average shares outstanding 436,357 384,630 405,389
PER SHARE:
Basic earnings per share:
Earnings per share from continuing operations $ 1.49 $ 1.20 $ 1.04
Earnings (loss) per share from discontinued operations 0.00 (0.04) (0.00)
Earnings per share from cumulative effect of accounting change — 0.00 —
Net earnings per share $ 1.49 $ 1.16 $ 1.04
Diluted earnings per share:
Earnings per share from continuing operations 1.44 1.16 0.99
Earnings (loss) per share from discontinued operations 0.00 (0.04) (0.00)
Earnings per share from cumulative effect of accounting change — 0.00 —
Net earnings per share $ 1.44 $ 1.12 $ 0.99
Excluded from the calculations of diluted earnings per share are 2.2 million and 7.8 million shares of
common stock for the years ended December 31, 2006 and 2005, respectively, issuable under convertible
subordinated notes as the effect of applying the treasury stock method on an if-converted basis would be anti-
dilutive. There were not any shares excluded from the year ended 2004. In addition, in 2005, 25.0 million shares
of common stock potentially issuable related to the conversion of mandatory convertible notes was excluded
from the calculations because it would be anti-dilutive.
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