|
Note 14
Shareholders’ Equity and Earnings Per Common Share
The following table presents share repurchase activity for the three months
and years ended December 31, 2005, 2004 and 2003, including total common shares repurchased under announced programs, weighted average per share price and the remaining buyback authority under announced programs.
|
| (Dollars in millions, except per share information; shares in thousands) |
|
Number of Common
Shares Repurchased
under Announced
Programs(1)
|
|
Weighted
Average
Per
Share
Price(1)
|
Remaining Buyback Authority
under Announced Programs(2)
|
|
Dollars
|
|
Shares
|
| Three months ended March 31, 2005 |
|
43,214 |
|
$ |
46.05 |
|
$ |
14,688 |
|
237,411 |
| Three months ended June 30, 2005 |
|
40,300 |
|
|
45.38 |
|
|
12,859 |
|
197,111 |
| Three months ended September 30, 2005 |
|
10,673 |
|
|
43.32 |
|
|
11,403 |
|
186,438 |
|
|
|
| October 1-31, 2005 |
|
0 |
|
|
0.00 |
|
|
11,403 |
|
186,438 |
| November 1-30, 2005 |
|
11,550 |
|
|
45.38 |
|
|
10,879 |
|
174,888 |
| December 1-31, 2005 |
|
20,700 |
|
|
46.42 |
|
|
9,918 |
|
154,188 |
|
|
|
| Three months ended December 31, 2005 |
|
32,250 |
|
|
46.05 |
|
|
|
|
| Year ended December 31, 2005 |
|
126,437 |
|
|
45.61 |
|
|
|
|
|
| (Dollars in millions, except per share information; shares in thousands) |
|
Number of Common
Shares Repurchased
under Announced
Programs(3)
|
|
Weighted
Average
Per
Share
Price(3)
|
Remaining Buyback Authority
under Announced Programs(4)
|
| Dollars
|
|
Shares
|
| Three months ended March 31, 2004 |
|
24,306 |
|
$ |
40.03 |
|
$ |
12,378 |
|
204,178 |
| Three months ended June 30, 2004 |
|
49,060 |
| 41.07 |
| 7,978 |
|
155,118 |
| Three months ended September 30, 2004 |
|
40,430 |
| 43.56 |
| 6,217 |
|
114,688 |
|
|
|
| October 1-31, 2004 |
|
16,102 |
| 44.24 |
| 5,505 |
|
98,586 |
| November 1-30, 2004 |
|
11,673 |
| 45.84 |
| 4,969 |
|
86,913 |
| December 1-31, 2004 |
|
6,288 |
| 46.32 |
| 4,678 |
|
80,625 |
|
|
|
| Three months ended December 31, 2004 |
|
34,063 |
| 45.17 |
|
|
|
|
| Year ended December 31, 2004 |
|
147,859 |
| 42.52 |
|
|
|
|
|
| (Dollars in millions, except per share information; shares in thousands) |
|
Number of Common
Shares Repurchased
under Announced
Programs(5)
|
|
Weighted
Average
Per
Share
Price(5)
|
Remaining Buyback Authority
under Announced Programs(6)
|
| Dollars
|
|
Shares
|
| Three months ended March 31, 2003 |
|
36,800 |
|
$ |
34.24 |
|
$ |
13,930 |
|
270,370 |
| Three months ended June 30, 2003 |
|
60,600 |
| 37.62 |
| 10,610 |
|
209,770 |
| Three months ended September 30, 2003 |
|
50,230 |
| 40.32 |
| 8,585 |
|
159,540 |
|
|
|
| October 1-31, 2003 |
|
13,800 |
| 40.28 |
| 8,029 |
|
145,740 |
| November 1-30, 2003 |
|
64,212 |
| 37.68 |
| 5,610 |
|
81,528 |
| December 1-31, 2003 |
|
33,044 |
| 38.10 |
| 4,351 |
|
48,484 |
|
|
|
| Three months ended December 31, 2003 |
|
111,056 |
| 38.13 |
|
|
|
|
| Year ended December 31, 2003 |
|
258,686 |
| 37.88 |
|
|
|
|
| Footnote (1) |
|
Reduced Shareholders’ Equity by $5.8 billion and increased diluted earnings per common share by $0.05 in 2005. These repurchases were partially offset by the issuance of
approximately 79.6 million shares of common stock under employee plans, which increased Shareholders’ Equity by $3.1 billion, net of $145 million of deferred compensation related to restricted stock awards, and decreased diluted earnings
per common share by $0.04 in 2005. |
| Footnote (2) |
|
On January 28, 2004, the Board authorized a stock repurchase program of up to 180 million shares of the Corporation’s common stock at an aggregate cost not to exceed
$9.0 billion. This repurchase plan was completed during the third quarter of 2005. On March 22, 2005, the Board authorized an additional stock repurchase program of up to 200 million shares of the Corporation’s common stock at an
aggregate cost not to exceed $12.0 billion and to be completed within a period of 18 months. |
| Footnote (3) |
|
Reduced Shareholders’ Equity by $6.3 billion and increased diluted earnings per common share by $0.06 in 2004. These repurchases were partially offset by the issuance of
approximately 121 million shares of common stock under employee plans, which increased Shareholders’ Equity by $3.9 billion, net of $127 million of deferred compensation related to restricted stock awards, and decreased diluted earnings
per common share by $0.06 in 2004. |
| Footnote (4) |
|
On January 22, 2003, the Board authorized a stock repurchase program of up to 260 million shares of the Corporation’s common stock at an aggregate cost of $12.5
billion. This repurchase plan was completed during the second quarter of 2004. On January 28, 2004, the Board authorized a stock repurchase program of up to 180 million shares of the Corporation’s common stock at an aggregate cost not
to exceed $9.0 billion. This repurchase plan was completed during the third quarter of 2005. |
| Footnote (5) |
|
Reduced Shareholders’ Equity by $9.8 billion and increased diluted earnings per common share by $0.11 in 2003. These repurchases were partially offset by the issuance of
approximately 139 million shares of common stock under employee plans, which increased Shareholders’ Equity by $4.2 billion, net of $123 million of deferred compensation related to restricted stock awards, and decreased diluted earnings
per common share by $0.08 in 2003. |
| Footnote (6) |
|
On December 11, 2001, the Board authorized a stock repurchase program of up to 260 million shares of the Corporation’s common stock at an aggregate cost of up to
$10.0 billion. This repurchase plan was completed during the second quarter of 2003. On January 22, 2003, the Board authorized a stock repurchase program of up to 260 million shares of the Corporation’s common stock at an aggregate
cost of $12.5 billion. This repurchase plan was completed during the second quarter of 2004. |
The Corporation will continue to repurchase shares, from time to time, in the open market or in
private transactions through the Corporation’s approved repurchase programs. The Corporation expects to continue to repurchase a number of shares of common stock at least equal to any shares issued under the Corporation’s employee stock
plans.
At December 31, 2005, the Corporation had 690,000
shares authorized and 382,450 shares, or $96 million, outstanding of Bank of America 6.75% Perpetual Preferred Stock with a stated value of $250 per share. Ownership is held in the form of depositary shares paying dividends quarterly at an annual
rate of 6.75 percent. On or after April 15, 2006, the Corporation may redeem Bank of America 6.75% Perpetual Preferred Stock, in whole or in part, at its option, at $250 per share, plus accrued and unpaid dividends.
The Corporation also had 805,000 shares authorized and 700,000 shares, or
$175 million, outstanding of Bank of America Fixed/Adjustable Rate Cumulative Preferred Stock with a stated value of $250 per share. Ownership is held in the form of depositary shares paying dividends quarterly at an annual rate of 6.60 percent
through April 1, 2006. After April 1, 2006, the dividend rate on Fixed/Adjustable Rate Cumulative Preferred Stock will be a rate per annum equal to 0.50 percent plus the highest of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate, and the Thirty Year Constant Maturity Rate, as each term is defined in BAC’s Amended and Restated Certificate of Designations establishing the Fixed/Adjustable Rate Cumulative Preferred Stock. The applicable rate per annum for any
dividend period beginning on or after April 1, 2006 will not be less than 7.00 percent nor greater than 13.00 percent. On or after April 1, 2006, the Corporation may redeem Bank of America Fixed/Adjustable Rate Cumulative Preferred Stock,
in whole or in part, at its option, at $250 per share, plus accrued and unpaid dividends.
In addition to the preferred stock described above, the Corporation had 35,045 shares authorized and 7,739 shares, or $1 million, outstanding of the Series B Preferred Stock with a stated value of $100 per share
paying dividends quarterly at an annual rate of 7.00 percent. The Corporation may redeem the Series B Preferred Stock, in whole or in part, at its option, at $100 per share, plus accrued and unpaid dividends.
All preferred stock outstanding has preference over our common stock with respect to the payment of dividends and distribution of our assets in the event of a liquidation or dissolution. Except in certain circumstances, the holders of preferred stock have no voting rights.
The following table presents the changes in Accumulated OCI for 2005 and 2004.
|
| (Dollars in millions)(1) |
|
Securities
|
|
Derivatives(2)
|
|
Other
|
|
Total
|
|
| Balance, December 31, 2003 (Restated) |
|
$ |
(70) |
| $ |
(2,094) |
| $ |
(270) |
| $ |
(2,434) |
|
| Net change in fair value recorded in Accumulated OCI |
| 1,088 |
| (294) |
| (18) |
| 776 |
|
Less: Net gains (losses) reclassified into earnings (3) |
| 1,215 |
| (109) |
| — |
| 1,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2004 (Restated) |
| (197) |
| (2,279) |
| (288) |
| (2,764) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net change in fair value recorded in Accumulated OCI |
|
|
(1,907) |
| |
(2,225) |
| |
48 |
|
|
|
(4,084) |
|
Less: Net gains (losses) reclassified into earnings (3) |
|
|
874 |
|
|
|
(166) |
| |
— |
|
|
|
708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2005 |
|
$ |
(2,978) |
| $ |
(4,338) |
| $ |
(240) |
| $ |
(7,556) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Footnote (1) |
|
Amounts shown are net-of-tax. |
| Footnote (2) |
|
The amount included in Accumulated OCI for terminated derivative contracts was a loss of $2.5 billion and a gain of $143 million, net-of-tax, at December 31, 2005 and 2004.
|
| Footnote (3) |
|
Included in this line item are amounts related to derivatives used in cash flow hedge relationships. These amounts are reclassified into earnings in the same period or periods
during which the hedged forecasted transaction affects earnings. |
The calculation of earnings per common share and diluted earnings per common share for 2005, 2004 and
2003 is presented below. See Note 1 of the Consolidated Financial Statements for a discussion on the calculation of earnings per common share.
|
| (Dollars in millions, except per share information; shares in thousands) |
|
2005
|
|
2004
(Restated)
|
|
2003
(Restated)
|
|
| Earnings per common share |
|
| Net income |
|
$ |
16,465 |
|
|
$ |
13,947 |
| $ |
10,762 |
|
| Preferred stock dividends |
|
|
(18) |
| (16) |
| (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income available to common shareholders |
|
$ |
16,447 |
|
|
$ |
13,931 |
| $ |
10,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average common shares issued and outstanding |
|
|
4,008,688 |
|
| 3,758,507 |
| 2,973,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per common share |
|
$ |
4.10 |
|
|
$ |
3.71 |
| $ |
3.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per common share |
|
| Net income available to common shareholders |
|
$ |
16,447 |
|
|
$ |
13,931 |
| $ |
10,758 |
|
| Convertible preferred stock dividends |
|
|
— |
|
| 2 |
| 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income available to common shareholders and assumed conversions |
|
$ |
16,447 |
|
|
$ |
13,933 |
| $ |
10,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average common shares issued and outstanding |
|
|
4,008,688 |
|
| 3,758,507 |
| 2,973,407 |
|
Dilutive potential common shares (1) (2) |
|
|
59,452 |
|
| 65,436 |
| 56,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total diluted average common shares issued and outstanding |
|
|
4,068,140 |
|
| 3,823,943 |
| 3,030,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per common share |
|
$ |
4.04 |
|
|
$ |
3.64 |
| $ |
3.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Footnote (1) |
|
For 2005, 2004 and 2003, average options to purchase 39 million, 62 million and 34 million shares, respectively, were outstanding but not included in the computation
of earnings per common share because they were antidilutive. |
| Footnote (2) |
|
Includes incremental shares from assumed conversions of convertible preferred stock, restricted stock units, restricted stock shares and stock options. |
Effective for the third quarter dividend, the Board increased the quarterly cash dividend 11 percent from $0.45 to $0.50 per common share. In October 2005, the Board declared a fourth quarter cash dividend which was paid on December 23, 2005 to common shareholders of record on
December 2, 2005. In January 2006, the Board declared a quarterly cash dividend of $0.50 per common share payable on March 24, 2006 to shareholders of record on March 3, 2006.
|
