Aetna 2012 Annual Report Download - page 98

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Annual Report- Page 92
4. Earnings Per Common Share
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common
shares outstanding during the reporting period. Diluted EPS is computed in a similar manner, except that the
weighted average number of common shares outstanding is adjusted for the dilutive effects of our outstanding
stock-based compensation awards, but only if the effect is dilutive.
The computations of basic and diluted EPS for 2012, 2011 and 2010 are as follows:
(Millions, except per common share data) 2012 2011 2010
Net income $ 1,657.9 $ 1,985.7 $ 1,766.8
Weighted average shares used to compute basic EPS 340.1 372.5 415.7
Dilutive effect of outstanding stock-based compensation awards (1) 4.9 7.7 7.2
Weighted average shares used to compute diluted EPS 345.0 380.2 422.9
Basic EPS $ 4.87 $ 5.33 $ 4.25
Diluted EPS $ 4.81 $ 5.22 $ 4.18
(1) Stock-based compensation awards are not included in the calculation of diluted EPS if the exercise price is greater than the average
market price of Aetna common shares during the period (i.e., the awards are anti-dilutive). Approximately 8.3 million, 12.4 million and
18.6 million stock appreciation rights (“SARs”) were not included in the calculation of diluted EPS for 2012, 2011 and 2010,
respectively. The stock options not included in the calculation of diluted EPS for 2012 and 2011 were not material. Approximately 5.7
million stock options were not included in the calculation of diluted EPS for 2010.
5. Operating Expenses
For 2012, 2011 and 2010, selling expenses (which include broker commissions, the variable component of our
internal sales force compensation and premium taxes) and general and administrative expenses were as follows:
(Millions) 2012 2011 2010
Selling expenses $ 1,105.5 $ 1,104.8 $ 1,226.6
General and administrative expenses:
Salaries and related benefits (1) 3,115.3 3,284.3 3,076.4
Other general and administrative expenses (2) 2,655.6 2,415.3 2,216.0
Total general and administrative expenses (3) 5,770.9 5,699.6 5,292.4
Total operating expenses $ 6,876.4 $ 6,804.4 $ 6,519.0
(1) In 2012, we recorded a severance charge of $37.0 million. In 2011, we recorded a charge of $137.0 million related to the voluntary early
retirement program that we announced in July 2011.
(2) In 2012, includes: $16.2 million of transaction and integration-related costs related to the proposed acquisition of Coventry and a
litigation-related charge of $120.0 million. In 2010, includes: transaction-related costs of $66.2 million and litigation-related insurance
proceeds of $156.3 million.
(3) In 2010, we recorded severance and facilities charges $47.4 million.
Refer to the reconciliation of operating earnings to net income in Note 19 beginning on page 128 for additional
information.