EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Earnings per share (“EPS”) is calculated under the two-class method under which all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities based on their respective rights to receive dividends. Coventry grants restricted stock to certain employees under its stock-based compensation program, which entitles recipients to receive non-forfeitable cash dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. The application of the two-class method resulted in an immaterial decrease of $0.05 and $0.03 to previously reported basic and diluted EPS, respectively, for the year ended December 31, 2011 and $0.04 and $0.03 to previously reported basic and diluted EPS, respectively, for the year ended December 31, 2010.

Basic EPS is calculated using the weighted average number of common shares outstanding during the period. Diluted EPS assumes the exercise of all options. Options issued under the stock-based compensation program that have an antidilutive effect are excluded from the computation of diluted EPS. Potential common stock equivalents to purchase 5.6 million, 6.5 million and 10.0 million common shares for the year ended December 31, 2012, 2011 and 2010, respectively, were excluded from the computation of diluted earnings per common share because the potential common stock equivalents were antidilutive.

The table below provides the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share (in thousands, except for per share data).

	Year Ended December 31,
	2012			2011			2010
Basic earnings per common share
Net earnings	$	487,063		$	543,105		$	438,616
Less: Distributed and undistributed earnings allocated to participating securities		(5,571	)		(8,038	)		(6,592	)
Net earnings allocable to common shares	$	481,492		$	535,067		$	432,024
Basic weighted average common shares outstanding		136,042			144,775			146,169
Basic earnings per common share	$	3.54		$	3.70		$	2.96
Diluted earnings per common share
Net earnings	$	487,063		$	543,105		$	438,616
Less: Distributed and undistributed earnings allocated to participating securities		(5,545	)		(7,979	)		(6,564	)
Net earnings allocable to common shares	$	481,518		$	535,126		$	432,052
Basic weighted average common shares outstanding		136,042			144,775			146,169
Effect of dilutive options		736			1,098			651
Diluted weighted average common shares outstanding		136,778			145,873			146,820
Diluted earnings per common share	$	3.52		$	3.67		$	2.94