ERIE, Pa., Feb. 26 /PRNewswire-FirstCall/ -- Erie Indemnity Company today announced financial results for the fourth quarter and full year 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20041112/ERIELOGO )
Key points for the fourth quarter 2006:
* Net income totaled $45.5 million, a 3.1 percent increase from $44.2
million for the same period in 2005. Net income in the fourth quarter of
2006 was affected by improved revenue from investments, primarily
earnings generated from limited partnerships, that offset the declines
in income from management and insurance underwriting operations.
* Net income per share-diluted increased to $.71 per share, compared to
$.64 per share in the comparable quarter for 2005.
* Net income, excluding net realized gains on investments and related
federal income taxes, increased 5.7 percent to $.69 per share in the
fourth quarter of 2006, from $.65 per share, for the same period one
year ago.
* Income from management operations decreased to $31.5 million for the
fourth quarter 2006 compared to $38.0 million in the fourth quarter of
2005.
* Management fee revenue increased by 0.1 percent. The total direct
written premiums of the Property and Casualty Group, from which the
management fee is derived, decreased 3.8 percent. The management fee
rate was 24.75 percent for the fourth quarter 2006 and 23.75 percent for
the fourth quarter 2005.
* The Property and Casualty Group's adjusted statutory combined ratio for
the fourth quarter 2006 was 99.8 percent, compared to 93.1 percent a
year earlier.
* The GAAP combined ratio was 100.0 in the fourth quarter of 2006.
* Income from investment operations increased to $30.7 million from $23.6
million for the fourth quarters of 2006 and 2005, respectively,
principally due to an increase of $5.4 million in earnings generated
from limited partnership investments.
* The low effective income tax rate of 26.8 percent in the fourth quarter
2006 was influenced by the effect of favorable IRS audit adjustments and
a downward adjustment to the effective income tax rate recorded through
the first three quarters of 2006. Our actual annual effective income tax
rate was 32.8 percent in 2006. The Company's estimated effective income
tax rate is about 33.5 percent.
Key points for the full-year 2006:
* Net income was down by 11.7 percent to $204.0 million, from $231.1
million at the end of 2005.
* Net income per share-diluted decreased to $3.13 per share at December
31, 2006, from $3.34 at year-end 2005. The decline in net income per
share-diluted in 2006 was impacted by lower income from management
operations and reduced investment earnings, which are a result of the
stock repurchase program.
* Net income, excluding net realized gains on investments and related
federal income taxes, decreased by 8.1 percent to $203.2 million, or
$3.12 per share in 2006 from $221.0 million, or $3.19 per share, for the
same period one year ago.
* Management fee revenue for the year was $942.8 million, up 0.3 percent
from 2005, based on a 3.9 percent decline in direct written premium of
the Property & Casualty Group. The management fee rate was 24.75 percent
for 2006 and 23.75 percent for 2005, which offset the 3.9 percent
decline in direct written premium of the Property and Casualty Group.
* Policies in force increased by 1.0 percent, or 38,698 policies in 2006
with personal lines increasing by 32,265 policies and commercial lines
increasing by 6,433 policies from 2005.
* The Property and Casualty Group's adjusted statutory combined ratio for
2006 was 89.4 percent, compared to 85.7 percent a year earlier.
* The Company's reported GAAP combined ratio was 93.7 for 2006 compared to
93.1 in 2005.
* The Company repurchased 4.0 million shares of its common stock in 2006
at a cost of $217.4 million
"While the softening market has prompted moderated pricing across the entire insurance industry, ERIE successfully executed our pricing strategy to enhance unit growth which has favorably positioned our Company going forward," noted Jeffrey A. Ludrof, president and chief executive officer. "Our strategic pricing decisions in 2006 and our continued focus on retention and generating quality new business helped increase ERIE's total policies in force from year-end 2005. The fundamental strength of our business and our dedication to superior, personalized service will deliver enhanced value for Erie Indemnity Company shareholders over the long term."
Details of Fourth Quarter 2006 Results - Segment Basis:
Management operations
Management fee revenue increased 0.1 percent to $214.1 million for the quarter ended December 31, 2006, from $213.8 million for the quarter ended December 31, 2005. The total direct written premiums of the Property and Casualty Group, upon which management fee revenue is calculated, decreased 3.8 percent to $860.9 million in the fourth quarter 2006, from $894.5 million in the fourth quarter of 2005 reflecting the impact of rate reductions and changes to risk characteristics of policyholders and coverages provided.
New premiums written increased 2.7 percent to $85.7 million in the fourth quarter of 2006 from $83.4 million in the fourth quarter of 2005. In the fourth quarter of 2006, personal lines new premiums written increased 4.7 percent, while commercial lines new premiums written decreased 0.7 percent compared to the same period in 2005. The fourth quarter of 2006 policy retention rate increased slightly to 89.5 percent from 89.2 percent at the end of the third quarter of 2006.
The cost of management operations increased 5.2 percent to $190.3 million in the fourth quarter of 2006, from $181.0 million for the same period in 2005. Commission costs, the largest component of the cost of management operations, increased 1.9 percent to $131.5 million from $129.0 million in the fourth quarter 2005. Normal commissions decreased, but were offset by higher agent bonuses which increased to $25.5 million in the fourth quarter of 2006 from $20.6 million in 2005. There were $1.4 million in additional commission costs in the fourth quarter of 2006 compared to 2005 resulting from the new incentive program effective in July 2006, where agents receive a $50 bonus for each new eligible private passenger auto policy issued through December 2007.
Fourth quarter costs of management operations, excluding commissions, increased 13.0 percent to $59.8 million in 2006 from $52.9 million in 2005. Personnel costs totaled $34.8 million for the fourth quarter 2006 versus $30.8 million in the same period in 2005, an increase of 13.2 percent. Contributing to this increase was an increase in salaries and wages of 16.1 percent to $27.0 million in the fourth quarter of 2006, from $23.2 million in the fourth quarter of 2005, due to higher average pay rates, increased staffing levels resulting from additional information technology personnel assigned to Company projects and increases in management bonuses. Professional fees increased $1.5 million in the fourth quarter of 2006 to $4.0 million primarily due to information technology system upgrades and the implementation of a new financial planning software. Survey and underwriting costs included a $0.5 million increase due to a greater number of audits of workers compensation policies.
Insurance underwriting operations
No underwriting gains or losses in the fourth quarter 2006 resulted in a GAAP combined ratio of 100.0. In the fourth quarter of 2005, insurance underwriting operations generated gains of $2.1 million.
The Company's 5.5 percent share of the Property and Casualty Group's development of prior accident year loss reserves on a direct basis, excluding salvage and subrogation recoveries, contributed 4.2 points to the fourth quarter 2006 GAAP combined ratio, compared to 7.3 points in the comparable quarter of 2005. The adverse development in the fourth quarter of 2006 resulted primarily from modest reserve strengthening to the Company's pre-1986 catastrophic injury liability reserves. The Company changed its medical inflation rate assumption for these reserves in 2006 from a flat 5.0 percent medical inflation assumption to a 10.0 percent increase in 2007 grading down 1.0 percent per year to an ultimate rate of 5.0 percent thereafter. In 2005, the adverse development of the fourth quarter resulted from additional increases in reserves related to pre-1986 automobile catastrophic injury and non-catastrophic injury liability claims for higher estimated costs of future attendant care services and additional workers compensation reserves for prior years.
The Company's share of catastrophe losses totaled $2.6 million and $0.4 million for the three-month periods ended December 31, 2006 and 2005, respectively. Fourth quarter catastrophes related to further development of the wind and hailstorms in Ohio and Indiana from previous quarters and ice and snowstorms in Pennsylvania in December.
Recoveries recorded under the excess-of-loss reinsurance agreement with the Exchange were $0.2 million in the fourth quarter 2006 compared to charges of $0.1 million in the fourth quarter 2005. Fourth quarter 2006 recoveries included the commutation of the 2001 accident year that was being ratably charged over the four quarters.
Investment operations
Net revenue from investment operations increased 30.1 percent in the fourth quarter of 2006 to $30.7 million.
Equity in earnings of limited partnerships increased 74.8 percent to $12.7 million in the fourth quarter of 2006, of which $5.1 million resulted from gains on limited partnership real estate sales.
Net investment income, which includes primarily interest and dividends on the Company's fixed maturity and equity security portfolios, decreased by 14.0 percent to $14.1 million for the quarter ended December 31, 2006, from $16.4 million for the same period in 2005. The use of funds during the year to repurchase shares of our outstanding Class A non-voting common stock in connection with our stock repurchase program has reduced the capital available for investment operations.
Net realized gains on investments were $2.1 million in the fourth quarter of 2006 compared to losses of $0.8 million in 2005. Net realized gains on investments generally pertain to gains and losses on bonds, preferred stocks and common stocks. During the fourth quarter of 2006, impairment charges of $1.1 million and $.3 million were recorded on bonds and common stock, respectively. During the fourth quarter of 2005, impairment charges of $0.5 million were recorded on bonds and $0.2 million on common stock.
As part of our capital management plan, the Company repurchased 17,479 shares of our Class A common stock at a cost of $0.9 million during the fourth quarter of 2006.
Details of 2006 Year-end Results - Segment Basis:
Management operations
Management fee revenue increased 0.3 percent to $942.8 million in 2006 from $940.3 million in 2005. The direct written premiums of the Property and Casualty Group, upon which management fee revenue is calculated, decreased 3.9 percent to $3.8 billion in 2006 from $4.0 billion in 2005. The 3.9 percent decline in the direct written premiums of the Property and Casualty Group was primarily rate-driven. The Property and Casualty Group took more significant rate reductions in 2006 in certain lines of business, particularly those under competitive pressure, such as private passenger auto. The effect of the 2005 and 2006 rate actions resulted in a net decrease in written premiums of $119.5 million in 2006. Rate actions planned for 2007 could reduce direct written premiums by $83.8 million in 2007. Offsetting the decrease in management fee revenue, which was driven by rate reductions, was a higher management fee rate of 24.75 percent for 2006 compared to 23.75 percent in 2005. At its December 2006 meeting, the Company's Board of Directors set the management fee rate at 25 percent, its maximum permissible level, effective January 1, 2007.
While overall direct written premiums declined, in 2006 the Property and Casualty Group experienced growth in its policies in force and improvements in its policy retention ratio. In 2005, our segmented pricing model was implemented for personal lines. As the segmented pricing model was refined in 2005 and 2006, policies in force stabilized during the latter portion of 2005 and began to grow in 2006. The Property and Casualty Group's total policies in force increased 1.0 percent in 2006 to 3,798,297. The Property and Casualty Group's policy retention ratio improved to 89.5 percent at December 31, 2006, compared to 88.6 percent at December 31, 2005. New policies in force increased 3.6 percent to 437,625, and renewal policies in force increased slightly.
The Company implemented a new incentive program in July 2006 to stimulate growth of new policies. Agents now receive a $50 bonus for each new eligible private passenger auto policy issued through December 2007. Additionally, the Company continued to appoint new agencies, adding 139 during 2006, with another 200 new agency appointments expected in 2007.
The cost of management operations increased by 4.5 percent during 2006. Commission costs increased 2.7 percent to $554.0 million in 2006 compared to $539.4 million in 2005. Agent bonuses increased $23.7 million, as the bonus structure focuses predominately on underwriting profitability, which improved dramatically over the measurement period used for the bonus formula. Normal scheduled commissions decreased $11.9 million, primarily due to the 3.9 percent decrease in direct written premiums of the Property and Casualty Group. This premium decrease was concentrated in the personal lines of business, which have lower commission rates than commercial lines of business. Promotional incentive programs that began in 2005 and additional agent incentives offered in 2006, aimed at stimulating premium growth, contributed $3.4 million in additional costs in 2006.
The cost of management operations excluding commissions increased 9.2 percent to $231.6 million in 2006, from $212.1 million in 2005, mainly as a result of increased personnel and underwriting costs. Personnel costs increased $11.7 million as a result of higher average pay rates and increased staffing levels resulting from additional information technology personnel being utilized by the Company. Underwriting costs rose $3.1 million in 2006 resulting from modest growth in application activity and more audits of workers compensation policies.
Insurance underwriting operations
The Company's 5.5 percent share of the Property & Casualty Group's underwriting gains totaled $13.4 million in 2006 compared to $15.0 million in 2005, yielding a GAAP combined ratio of 93.7 for 2006 compared to 93.1 in 2005. The adjusted statutory combined ratio for the Property & Casualty Group was 89.4 for 2006, compared to 85.7 for 2005.
Catastrophe losses contributed 4.0 points to the 2006 combined ratio compared to 0.5 points in 2005. The Company's share of catastrophe losses, as defined by the Property and Casualty Group, totaled $8.5 million and $1.2 million in 2006 and 2005, respectively. Storm-related losses were at more normalized levels in 2006, with wind and hailstorms concentrated primarily in Indiana and Ohio driving a majority of these catastrophe losses.
The normalized catastrophe level of the Property and Casualty Group is about 5 loss ratio points per accident year.
Moderating pricing and improving frequency and severity trends improved accident year loss ratios in 2006 and 2005. The Company's share of the Property and Casualty Group's positive development of prior accident year losses on a direct basis, excluding salvage and subrogation, was $4.0 million in 2006 compared to adverse development on a direct basis of $2.6 million in 2005.
Charges for the year under the excess-of-loss reinsurance agreement with the Exchange totaled $1.0 million in 2006 compared to charges of $2.2 million for 2005. The 2001 accident year was commuted in 2006 resulting in net charges of $0.9 million. The Property and Casualty Group did not renew the excess-of- loss agreement for the 2006 accident year and no premium was paid to the Exchange in 2006 for this coverage. The premium paid the Exchange in 2005 for this agreement was $3.3 million. The Company will not renew the treaty for the 2007 accident year.
The policyholders' surplus of the Exchange has shown steady growth in recent years, and rose $705 million to almost $4.1 billion at December 31, 2006, further strengthening the Exchange's financial position.
Investment operations
For the year ended December 31, 2006, net revenue from investment operations decreased by 12.8 percent to $103.6 million from $118.9 million at December 31, 2005.
Net investment income totaled $55.9 million for the year ended December 31, 2006, and $61.6 million for 2005, down 9.2 percent. In 2006, 4.0 million shares of Company Class A common stock were repurchased at a total cost of $217.4 million compared to 1.9 million shares repurchased in 2005 at a total cost of $99.0 million. During the second quarter of 2006, repurchases of 1.8 million shares of our Class A common stock from the Black Interest Limited Partnership were made totaling $106.0 million. Approximately $130 million of outstanding repurchase authority remains under the program at December 31, 2006.
Net realized gains on investments were $1.3 million for the year ended December 31, 2006, compared to $15.6 million at December 31, 2005. In 2005, the Company continued to sell common stocks in completing its transition to the use of external equity managers. In 2006, total impairment charges were $6.4 million compared to $4.4 million in 2005.
For the year ended December 31, 2006, equity in earnings of limited partnership investments amounted to $41.8 million, compared to $38.1 million in 2005. Limited partnerships experienced favorable earnings in 2006 driven by market value appreciation and realized gains due to the strong financial markets.
In December, the Board of Directors increased the regular quarterly dividend from $0.36 to $0.40 on each Class A share and from $54.00 to $60.00 on each Class B share. The dividend increase is a result of the Company's continuing strong financial results and capitalization. Based on the year-end market price, the 2007 dividend results in a dividend yield of about 2.8 percent and represents an 11.1 percent increase in the payout per share over the current dividend rate.
During the fourth quarter of 2006, the Company adopted Financial Accounting Standard Statement No. (FAS) 158, "Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FAS Statements No. 87, 88, 106 and 132(R)." The adoption of FAS 158 decreased accumulated other comprehensive income, a component of shareholders' equity, by $21.1 million, net of tax, and improved return on equity by 0.1 points.
Erie Indemnity Company provides management services to the member companies of the Erie Insurance Group, which includes the Erie Insurance Exchange, Flagship City Insurance Company, Erie Insurance Company, Erie Insurance Property and Casualty Company, Erie Insurance Company of New York and Erie Family Life Insurance Company.
According to A.M. Best Company, Erie Insurance Group, based in Erie, Pennsylvania, is the 15th largest automobile insurer in the United States based on direct premiums written and the 22nd largest property/casualty insurer in the United States based on total lines net premium written. The Group, rated A+ (Superior) by A.M. Best Company, has almost 3.8 million policies in force and operates in 11 states and the District of Columbia. Erie Insurance Group ranked 421 on the FORTUNE 500 and Erie Indemnity Company is included in Forbes Magazine's PLATINUM 400 list of the best-managed companies in America.
News releases and more information about Erie Insurance Group are available at http://www.erieinsurance.com/
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: Certain forward-looking statements contained herein involve risks and uncertainties. These statements include certain discussions relating to management fee revenue, cost of management operations, underwriting, premium and investment income volume, business strategies, profitability and business relationships and the Company's other business activities during 2006 and beyond. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "expect," "plan," "intend," "anticipate," "believe," "contemplate," "estimate," "project," "predict," "potential" and similar expressions. These forward-looking statements reflect the Company's current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that may cause results to differ materially from those anticipated in those statements. Many of the factors that will determine future events or achievements are beyond our ability to control or predict.
Erie Indemnity Company
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
Operating revenue
Management fee revenue
- net $202,348 $202,083 $891,071 $888,558
Premiums earned 52,797 54,102 213,665 215,824
Service agreement
revenue 7,738 5,128 29,246 20,568
Total operating
revenue 262,883 261,313 1,133,982 1,124,950
Operating expenses
Cost of management
operations 179,897 171,008 742,526 710,237
Losses and loss
adjustment expenses
incurred 38,369 36,927 139,630 140,386
Policy acquisition and
other underwriting
expenses 13,143 13,274 52,048 50,108
Total operating
expenses 231,409 221,209 934,204 900,731
Investment income -
unaffiliated
Investment income, net
of expenses 14,102 16,397 55,920 61,555
Net realized gains
(losses) on
investments 2,056 (837) 1,335 15,620
Equity in earnings of
limited partnerships 12,717 7,274 41,766 38,062
Total investment
income -
unaffiliated 28,875 22,834 99,021 115,237
Income before income taxes
and equity in earnings of
Erie Family Life
Insurance Company 60,349 62,938 298,799 339,456
Provision for income taxes 16,542 19,492 99,055 111,733
Equity in earnings of Erie
Family Life Insurance
Company, net of tax 1,712 714 4,281 3,381
Net income $45,519 $44,160 $204,025 $231,104
Net income per
share:
Class A
common
stock -
basic $0.78 $0.71 $3.45 $3.69
Class A
common
stock -
diluted 0.71 0.64 3.13 3.34
Class B
common
stock -
basic
and
diluted 119.65 107.45 524.87 558.34
Weighted average
shares
outstanding:
Class A
common
stock -
basic 57,782,967 61,620,457 58,827,987 62,392,860
Class A
common
stock -
dilut-
ed 64,000,388 68,506,846 65,256,608 69,293,649
Class B
common
stock -
basic
and
diluted 2,573 2,837 2,661 2,843
Dividends declared
per share:
Class A
common
stock $0.40 $0.36 $1.48 $1.335
Class B
common
stock 60.00 54.00 222.00 200.25
Erie Indemnity Company
Consolidated Statements of Operations - Segment Basis
(Amounts in thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
Management Operations
Management fee revenue $214,067 $213,845 $942,845 $940,274
Service agreement revenue 7,738 5,128 29,246 20,568
Total revenue from management
operations 221,805 218,973 972,091 960,842
Cost of management operations 190,332 180,962 785,683 751,573
Income from management
operations 31,473 38,011 186,408 209,269
Insurance Underwriting Operations
Premiums earned 52,797 54,102 213,665 215,824
Losses and loss adjustment
expenses incurred 38,369 36,927 139,630 140,386
Policy acquisition and other
underwriting expenses 14,427 15,081 60,665 60,488
Total losses and expenses 52,796 52,008 200,295 200,874
Underwriting gain 1 2,094 13,370 14,950
Investment Operations
Investment income, net of expenses 14,102 16,397 55,920 61,555
Net realized gains (losses) on
investments 2,056 (837) 1,335 15,620
Equity in earnings of limited
partnerships 12,717 7,274 41,766 38,062
Equity in earnings of Erie Family
Life Insurance Company 1,841 768 4,604 3,636
Net revenue from investment
operations 30,716 23,602 103,625 118,873
Income before income taxes 62,190 63,707 303,403 343,092
Provision for income taxes 16,671 19,547 99,378 111,988
Net income $45,519 $44,160 $204,025 $231,104
Net income per share - Class A
basic $0.78 $0.71 $3.45 $3.69
Net income per share - Class A
diluted 0.71 0.64 3.13 3.34
Net income per share - Class B
basic and diluted 119.65 107.45 524.87 558.34
Weighted average shares
outstanding - Class A diluted 64,000 68,507 65,257 69,294
Amounts presented on a segment basis are gross of
intercompany/intersegment items
Erie Indemnity Company
Reconciliation of Operating Income to Net Income
Definition of Non-GAAP and Operating Measures
We believe that investors' understanding of our performance is enhanced by the disclosure of the following non-GAAP financial measure. Our method of calculating this measure may differ from those used by other companies and therefore comparability may be limited.
Operating income is net income excluding realized capital gains and losses and related federal income taxes. Equity in earnings or losses of Erie Family Life Insurance Company and equity in earnings or losses of limited partnerships are not excluded from the calculation of operating income. Both of these categories include the respective investment's realized capital gains and losses, as well as unrealized gains and losses, as these investments are accounted for under the equity method.
Net income is the GAAP measure that is most directly comparable to operating income.
We use operating income to evaluate the results of operations. It reveals trends in our management services, insurance underwriting and investment operations that may be obscured by the net effects of realized capital gains and losses. Realized capital gains and losses may vary significantly between periods and are generally driven by business decisions and economic developments such as capital market condition, the timing of which is unrelated to our management services and insurance underwriting processes. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. We are aware that the price to earnings multiple commonly used by investors as a forward-looking valuation technique uses operating income as the denominator. Operating income should not be considered as a substitute for net income and does not reflect our overall profitability.
The following table reconciles operating income and net income for the periods ended December 31, 2006 and 2005:
(Unaudited) (Unaudited)
Three months ended Twelve months ended
December 31, December 31,
(in thousands, except per share
data) 2006 2005 2006 2005
Operating income $44,183 $44,704 $203,157 $220,951
Net realized gains (losses) on
investments 2,056 (837) 1,335 15,620
Income tax (expense) benefit on
realized gains (losses) (720) 293 (467) (5,467)
Realized gains (losses), net
of income taxes 1,336 (544) 868 10,153
Net income $45,519 $44,160 $204,025 $231,104
(Unaudited) (Unaudited)
Three months ended Twelve months ended
December 31, December 31,
Per Class A Share - Diluted 2006 2005 2006 2005
Operating income $0.69 $0.65 $3.12 $3.19
Net realized gains (losses) on
investments 0.03 (0.02) 0.02 0.23
Income tax (expense) benefit on
realized gains (losses) (0.01) 0.01 (0.01) (0.08)
Realized gains (losses), net
of income taxes 0.02 (0.01) 0.01 0.15
Net income $0.71 $0.64 $3.13 $3.34
Erie Indemnity Company
Consolidated Statements of Financial Position
(Amounts in thousands, except per share data)
December 31, December 31,
2006 2005
ASSETS
Investments
Fixed maturities $836,738 $972,210
Equity securities
Preferred stock 133,401 170,773
Common stock 117,246 95,561
Other invested assets 235,672 158,044
Total investments 1,323,057 1,396,588
Cash and cash equivalents 60,241 31,666
Equity in Erie Family Life Insurance
Company 57,162 55,843
Premiums receivable from
policyholders 247,187 267,632
Receivables from affiliates 1,220,058 1,175,152
Other assets 131,656 174,380
Total assets $3,039,361 $3,101,261
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Unpaid losses and loss adjustment
expenses $1,073,570 $1,019,459
Unearned premiums 424,282 454,409
Other liabilities 379,661 348,791
Total liabilities 1,877,513 1,822,659
Total shareholders' equity* 1,161,848 1,278,602
Total liabilities and
shareholders' equity $3,039,361 $3,101,261
Book value per share $18.17 $18.81
Shares outstanding 63,952 67,962
* Initially applying the recognition provisions of Statement of Financial
Accounting Standards No. 158, "Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans" in 2006 reduced shareholders'
equity by $21.1 million, net of tax, and book value per share by $.33.
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