| Earnings Per Share |
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Basic earnings per common share (“EPS”) is computed by dividing net income attributable to the
common shareholders of the Company by the weighted-average number of common shares outstanding.
Diluted EPS is computed in the same manner as basic EPS, except the number of shares is
increased to include additional common shares that would have been outstanding if potential
common shares with a dilutive effect had been issued. Potential common shares consist primarily
of stock options, restricted stock and restricted stock units calculated using the treasury
stock method. The calculation for basic and diluted EPS for the periods ended September 30 is as
follows: |
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Three Months |
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Nine Months |
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2011 |
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2010 |
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2011 |
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2010 |
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Amounts attributable to The McGraw-Hill Companies, Inc.
common shareholders:
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Income from continuing operations
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$ |
366.7 |
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$ |
379.2 |
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$ |
698.3 |
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$ |
673.3 |
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Loss from discontinued operations, net of tax
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(1.1 |
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0.7 |
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(1.7 |
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0.9 |
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Net income attributable to the Company
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$ |
365.6 |
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$ |
379.9 |
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$ |
696.6 |
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$ |
674.2 |
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Basic weighted-average number of common shares outstanding
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297.8 |
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307.2 |
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302.2 |
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310.6 |
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Effect of stock options and other dilutive securities
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5.8 |
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2.1 |
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5.2 |
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2.3 |
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Diluted weighted-average number of common shares outstanding
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303.6 |
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309.3 |
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307.4 |
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312.9 |
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Basic EPS:
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Income from continuing operations
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$ |
1.23 |
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$ |
1.23 |
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$ |
2.31 |
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$ |
2.17 |
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Loss from discontinued operations, net of tax
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— |
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0.01 |
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$ |
— |
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— |
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Net income
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$ |
1.23 |
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$ |
1.24 |
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$ |
2.31 |
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$ |
2.17 |
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Diluted EPS:
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Income from continuing operations
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$ |
1.21 |
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$ |
1.23 |
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$ |
2.27 |
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$ |
2.15 |
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Loss from discontinued operations, net of tax
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— |
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— |
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— |
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— |
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Net income
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$ |
1.21 |
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$ |
1.23 |
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$ |
2.27 |
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$ |
2.15 |
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Restricted performance shares outstanding of 1.6 million and 3.2 million as of September
30, 2011 and September 30, 2010, respectively, were not included in the computation of diluted
EPS because the necessary vesting conditions had not been met. |
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The effect of the potential exercise of stock options is excluded from the computation of
diluted EPS when the average market price of our common stock is lower than the exercise price
of the related option during the period because the effect would have been antidilutive. For the
three months ended September 30, 2011 and 2010, the number of stock options excluded from the
computation was 9.9 million and 24.4 million, respectively, and 10.2 million and 23.9 million
for the nine months ended September 30, 2011 and 2010, respectively. |
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