The Company's executive offices and certain subsidiary and branch facilities are located at Two Pierce Place, Itasca, Illinois where the Company leases approximately 200,000 square feet of space. The lease commitment on the above mentioned property expires February 28, 2006. The Company operates all of its branch and service offices in leased premises. Certain of these leases for office space have options permitting renewals for additional periods. In addition to minimum fixed rentals, a number of leases contain escalation clauses related to increases in the cost of living in future years. See Note 10 of Notes to Consolidated Financial Statements for information with respect to the Company's lease commitments at December 31, 1996.
The Company's results of operations for all periods prior to December 31, 1996 have been restated to include the results of Morgan, Read & Coleman Ltd., Lamberson Koster & Company and The Levitt/Kristan Company on a combined basis as if they had operated as part of the Company. The Company continues to search for merger partners which complement existing business and provide entry into new market niches and new geographic areas. For the effect of such restatements in the aggregate on year-to-year comparisons, see Note 2 of the Notes to Consolidated Financial Statements. In January, 1997, the Company acquired two benefit consulting firms, Byerly & Company, Inc., and Arnold & Company, Inc. These acquisitions will be accounted for as poolings of interests and were neither singly nor in the aggregate material to the Company.
In 1988, the Company adopted a plan, which has been extended through June 30, 1997, to repurchase its common stock. Under the plan, the Company repurchased 645,000 shares at a cost of $21.3 million, 437,000 shares at a cost of $15.1 million and 1.4 million shares at a cost of $43.8 million in 1996, 1995 and 1994, respectively. The repurchases were funded entirely by internally generated funds and are held for reissuance in connection with exercises of options under its stock option plans. Under the provisions of the plan, the Company is authorized to repurchase approximately 290,000 additional shares through June 30, 1997. The Company is under no commitment or obligation to repurchase any particular amount of common stock and at its discretion may suspend the repurchase plan at any time.
Commission income is generally recognized as of the effective date of insurance policies except for commissions on installment premiums which are recognized periodically as billed. Contingent commissions are recognized when received. Fee income is recognized ratably as services are rendered. The income effects of subsequent premium and fee adjustments are recorded when the adjustments become known. Premiums and fees receivable are net of allowance for doubtful accounts of $889,000 and $729,000 at December 31, 1996 and 1995, respectively.
Earnings per share are computed based on the weighted average number of common and common equivalent shares outstanding during the respective period. Common equivalent shares include incremental shares from dilutive stock options since the date of grant using the treasury stock method. There is no material difference between primary and fully diluted per share amounts.
The discount rate used to measure the accumulated postretirement benefit obligation was 7.5% at December 31, 1996 and 1995. The transition obligation is being amortized over 20 years.
Minimum aggregate rental commitments at December 31, 1996 under noncancelable operating leases having an initial term of more than one year are as follows: