Year Ended December 31, 2007 Compared With Year Ended December 31, 2006
Net income was $148.7 million, or $2.19 per common share ($2.17 on a diluted basis) in 2007, compared with net income of $131.5 million, or $1.92 per common share ($1.91 on a diluted basis) for 2006, representing an increase of 13%, largely due to the higher revenue partially offset by higher expenses and income taxes.
Earnings per share prior to a reduction in the value of the future tax asset* was $2.41 ($2.39 on a diluted basis) for 2007, a 16% increase (15% on a diluted basis) over the 2006 earnings per share prior to a reduction in the value of the future tax asset* of $2.08 ($2.07 on a diluted basis). In 2007, the future tax asset was reduced, and income tax expense increased by $15.1 million, primarily as a result of decreases in federal corporate income tax rates which were enacted in June and December 2007. The adjustment resulted in a reduction in net income of $15.1 million, or 22 cents per common share (on both a basic and diluted basis). In 2006, the future tax asset was reduced, and income tax expense increased primarily as a result of decreases in federal corporate income tax rates enacted in June 2006. The adjustment resulted in a reduction in net income of $11.0 million, or 16 cents per common share (on both a basic and diluted basis).
The following is a reconciliation of earnings per share to earnings per share prior to a reduction in the value of the future tax asset*:
Reconciliation for 2007 and 2006
| 2007 | 2006 | |||||||
| Basic | Diluted | Basic | Diluted | |||||
| Earnings per share | $ | 2.19 | $ | 2.17 | $ | 1.92 | $ | 1.91 |
| Adjustment related to reduction of the future tax asset | $ | 0.22 | $ | 0.22 | $ | 0.16 | $ | 0.16 |
| Earnings per share prior to a reduction in the value of the future tax asset* | $ | 2.41 | $ | 2.39 | $ | 2.08 | $ | 2.07 |
| * | See discussion under the heading Non-GAAP Financial Measures. |