Earnings Per Share

9 Months Ended

Sep. 30, 2011

Earnings Per Share

Earnings Per Share

Note 11 – Earnings Per Share

Basic earnings per common share attributable to CVS Caremark is computed by dividing: (i) net income attributable to CVS Caremark by (ii) the weighted average number of common shares outstanding in the period (the “Basic Shares”).

Diluted earnings per common share attributable to CVS Caremark is computed by dividing: (i) net income attributable to CVS Caremark by (ii) Basic Shares plus the additional shares that would be issued assuming that all dilutive stock awards are exercised. Options to purchase approximately 34.1 million and 40.9 million shares of common stock were outstanding, but were not included in the calculation of diluted earnings per share for the three and nine months ended September 30, 2011, respectively, because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. For the same reason, options to purchase approximately 38.4 million and 33.4 million shares of common stock were outstanding, but were not included in the calculation of diluted earnings per share for the three and nine months ended September 30, 2010, respectively.

The following is a reconciliation of basic and diluted earnings per common share for the respective periods:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
In millions, except per share amounts	2011	2010	2011	2010
Numerators for earnings per common share calculations:
Income from continuing operations	$  867	$ 815	$ 2,389	$ 2,402
Net loss attributable to noncontrolling interest	1	1	3	2
Income from continuing operations attributable to CVS Caremark	868	816	2,392	2,404
Income (loss) from discontinued operations, net of tax	-	(7)	5	(3)
Net income attributable to CVS Caremark, basic and diluted	$  868	$ 809	$ 2,397	$ 2,401
Denominators for earnings per common share calculations:
Weighted average common shares, basic	1,332	1,360	1,350	1,368
Effect of dilutive securities:
Stock options	6	6	5	7
Restricted stock units	2	2	1	3
Weighted average common shares, diluted	1,340	1,368	1,356	1,378
Basic earnings per common share:
Income from continuing operations attributable to CVS Caremark	$  0.65	$ 0.60	$ 1.77	$ 1.76
Income (loss) from discontinued operations attributable to CVS Caremark	—	(0.01)	0.01	(0.01)
Net income attributable to CVS Caremark	$  0.65	$ 0.59	$ 1.78	$ 1.75
Diluted earnings per common share:
Income from continuing operations attributable to CVS Caremark	$  0.65	$ 0.60	$ 1.76	$ 1.75
Income (loss) from discontinued operations attributable to CVS Caremark	¾	(0.01)	0.01	(0.01)
Net income attributable to CVS Caremark	$  0.65	$ 0.59	$ 1.77	$ 1.74