EXHIBIT 11
AMBAC INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1995 1994
---------- --------- ----------
Net income.............................. $276,317 $167,595 $141,105
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Fully diluted shares:
Average number of common shares
outstanding.......................... 34,965 35,101 35,207
Assumed exercise of dilutive stock
options (1).......................... 935 540 416
-------- -------- --------
35,900 35,641 35,623
-------- -------- --------
Earnings per share assuming full
dilution (2)........................... $ 7.70 $ 4.70 $ 3.96
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(1) As of December 31, 1996, approximately 2,175,000 stock options and
restricted stock units had been granted and were outstanding. Based upon
various exercise prices, the total consideration for the options and
restricted stock units will be approximately $82.3 million. The dilution
would be the equivalent of approximately 935,000 shares, using the Treasury
Stock Method, based upon a market value of $66.38 per share.
(2) In accordance with Accounting Principles Board Opinion No. 15, any
reduction of less than 3% need not be considered as dilution. Accordingly,
the Consolidated Statements of Operations on page 31 of the 1996 Annual
Report to Stockholders reflect net income per common share of $7.90 for the
year ended December 31, 1996.
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