Travelers 2006 Annual Report Download - page 213

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
201
9. EARNINGS PER SHARE
Basic EPS was computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding during the period. The computation of diluted EPS
reflected the effect of potentially dilutive securities.
Income from continuing operations per diluted share for the year ended December 31, 2004 excluded
the weighted average effects of the Company’s $893 million, 4.50% convertible junior subordinated notes
convertible into 16.7 million shares of the Company’s common stock, as the impact would have been anti-
dilutive.
The following is a reconciliation of the income and share data used in the basic and diluted earnings
per share computations:
(for the year ended December 31, in millions, except per share amounts) 2006 2005 2004
Basic
Income fromcontinuing operations, as reported .......................... $4,208 $2,061 $ 867
Preferredstock dividends, net of taxes ................................... (5 )(6) (6)
Income fromcontinuing operations available to common
shareholders—basic............................................... $4,203
$2,055 $ 861
Diluted
Income from continuing operations available to common shareholders ...... $4,203
$2,055 $ 861
Effect of dilutive securities:
Convertible preferred stock.......................................... 5 6 4
Zero coupon convertible notes....................................... 4 4 2
Convertible junior subordinatednotes................................. 26 26 —
Equity unit stock purchase contracts .................................. — 9 12
Income from continuing operations available to common
shareholders—diluted. .......................................... $4,238
$2,100 $ 879
Common Shares
Basic
Weighted average shares outstanding.................................... 687.1 676.3 608.3
Diluted
Weighted average shares outstanding.................................... 687.1 676.3 608.3
Weighted average effects of dilutive securities:
Stock optionsand other incentive plans................................ 7.1 3.7 2.9
Convertible preferred stock.......................................... 3.4 4.2 3.8
Zero coupon convertible notes....................................... 2.4 2.4 1.8
Convertible junior subordinatednotes................................. 16.7 16.7 —
Equity unit stock purchase contracts .................................. — 9.5 11.5
Total............................................................ 716.7 712.8 628.3
Income from Continuing Operations Per Common Share
Basic................................................................ $6.12 $3.04 $1.42
Diluted .............................................................. $5.91 $2.95 $1.40