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PNC » Topics » P RO F ORMA E FFECTS

This excerpt taken from the PNC 10-K filed Feb 29, 2008.

PRO FORMA EFFECTS

A table is included in Note 1 Accounting Policies that sets forth pro forma net income and basic and diluted earnings per share as if compensation expense had been recognized under SFAS 123 and 123R, as amended, for stock options for 2005.

For purposes of computing stock option expense and 2005 pro forma results, we estimated the fair value of stock options using the Black-Scholes option pricing model. The model requires the use of numerous assumptions, many of which are very subjective. Therefore, the 2005 pro forma results are estimates of results of operations as if compensation expense had been recognized for all stock-based compensation awards and are not indicative of the impact on future periods.


 

103

We used the following assumptions in the option pricing model for purposes of estimating 2005 pro forma results as well as to determine actual stock option expense:

  •  

The risk-free interest rate is based on the US Treasury yield curve,

  •  

The dividend yield represents average yields over the previous three-year period,

  •  

Volatility is measured using the fluctuation in month-end closing stock prices over a period which corresponds with the average expected option life, but in no case less than a five-year period, and

  •  

The expected life assumption represents the period of time that options granted are expected to be outstanding and is based on a weighted average of historical option activity.

This excerpt taken from the PNC 10-K filed Feb 4, 2008.

PRO FORMA EFFECTS

A table is included in Note 1 Accounting Policies that sets forth pro forma net income and basic and diluted earnings per share as if compensation expense had been recognized under SFAS 123 and 123R, as amended, for stock options for 2006, 2005 and 2004.

For purposes of computing stock option expense and pro forma results, we estimated the fair value of stock options using the Black-Scholes option pricing model. The model requires the use of numerous assumptions, many of which are very subjective. Therefore, the pro forma results are estimates of results of operations as if compensation expense had been recognized for all stock-based compensation awards and are not indicative of the impact on future periods.

We used the following assumptions in the option pricing model for purposes of estimating pro forma results as well as to determine actual stock option expense:

  •  

The risk-free interest rate is based on the US Treasury yield curve,

  •  

The dividend yield represents average yields over the previous three-year period,

  •  

Volatility is measured using the fluctuation in month-end closing stock prices over a five-year period, and

  •  

The expected life assumption represents the period of time that options granted are expected to be outstanding and is based on a weighted-average of historical option activity.

This excerpt taken from the PNC 10-K filed Mar 1, 2007.

PRO FORMA EFFECTS

A table is included in Note 1 Accounting Policies that sets forth pro forma net income and basic and diluted earnings per share as if compensation expense had been recognized under SFAS 123 and 123R, as amended, for stock options for 2006, 2005 and 2004.

For purposes of computing stock option expense and pro forma results, we estimated the fair value of stock options using the Black-Scholes option pricing model. The model requires the use of numerous assumptions, many of which are very subjective. Therefore, the pro forma results are estimates of results of operations as if compensation expense had been recognized for all stock-based compensation awards and are not indicative of the impact on future periods.

We used the following assumptions in the option pricing model for purposes of estimating pro forma results as well as to determine actual stock option expense:

  •  

The risk-free interest rate is based on the US Treasury yield curve,

  •  

The dividend yield represents average yields over the previous three-year period,

  •  

Volatility is measured using the fluctuation in month-end closing stock prices over a five-year period, and

  •  

The expected life assumption represents the period of time that options granted are expected to be outstanding and is based on a weighted-average of historical option activity.

EXCERPTS ON THIS PAGE:

10-K
Feb 29, 2008
10-K
Feb 4, 2008
10-K
Mar 1, 2007

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