Notes to Consolidated Financial Statements
NOTE 13
EARNINGS PER SHARE AND SHAREOWNERS’ INVESTMENT
Earnings Per Share
The following table is a reconciliation of the numerators and denominators used in computing earnings per common share:
(dollars and shares in millions, except per share amounts) |
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Years Ended December 31, |
2007 |
2006 |
2005 |
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|---|---|---|---|---|---|---|---|---|---|
Income Before Discontinued |
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Operations, Extraordinary Item and |
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Cumulative Effect of Accounting |
|||||||||
Change |
$ |
5,510 |
|
$ |
5,480 |
|
$ |
6,027 |
|
After-tax minority interest expense related |
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to exchangeable equity interest |
|
— |
|
|
20 |
|
|
32 |
|
After-tax interest expense related to zero — |
|||||||||
coupon convertible notes |
|
— |
|
|
11 |
|
|
28 |
|
Income Before Discontinued |
|||||||||
Operations, Extraordinary Item and |
|||||||||
Cumulative Effect of Accounting |
|||||||||
Change — after assumed conversion |
|||||||||
of dilutive securities |
$ |
5,510 |
|
$ |
5,511 |
|
$ |
6,087 |
|
|
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Weighted-average shares |
|||||||||
outstanding — basic |
|
2,898 |
|
|
2,912 |
|
|
2,766 |
|
Effect of dilutive securities: |
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Stock options |
|
4 |
|
|
1 |
|
|
5 |
|
Exchangeable equity interest |
|
— |
|
|
18 |
|
|
29 |
|
Zero-coupon convertible notes |
|
— |
|
|
7 |
|
|
17 |
|
Weighted-average shares |
|||||||||
outstanding — diluted |
|
2,902 |
|
|
2,938 |
|
|
2,817 |
|
|
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Earnings Per Common Share from |
|||||||||
Income Before Discontinued |
|||||||||
Operations, Extraordinary Item and |
|||||||||
Cumulative Effect of Accounting |
|||||||||
Change |
|||||||||
Basic |
$ |
1.90 |
|
$ |
1.88 |
|
$ |
2.18 |
|
Diluted |
$ |
1.90 |
|
$ |
1.88 |
|
$ |
2.16 |
|
Certain outstanding options to purchase shares were not included in the computation of diluted earnings per common share because they were not dilutive, including approximately 170 million weighted-average shares during 2007, 228 million weighted-average shares during 2006 and 250 million shares during 2005.
The zero-coupon convertible notes were retired on May 15, 2006 and the exchangeable equity interest was converted on August 15, 2006 by issuing 29.5 million Verizon shares (see Notes 7 and 11).
Shareowners’ Investment
Our certificate of incorporation provides authority for the issuance of up to 250 million shares of Series Preferred Stock, $.10 par value, in one or more series, with such designations, preferences, rights, qualifications, limitations and restrictions as the Board of Directors may determine.
We are authorized to issue up to 4.25 billion shares of common stock.
On February 7, 2008, the Board of Directors replaced the prior share buy back program with a new program for the repurchase of up to 100 million shares of Verizon common stock through the earlier of February 28, 2011 or when the total number of shares repurchased under the new buy back program aggregates to 100 million.
During 2007, 2006 and 2005, we repurchased approximately 68 million, 50 million and 7.9 million common shares under programs previously authorized by the Board of Directors.