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)

Years Ended December 31,

2007

 

2006

 

2005

 

Income Before Discontinued

Operations, Extraordinary Item and

Cumulative Effect of Accounting

Change

$

5,510

 

$

5,480

 

$

6,027

 

After-tax minority interest expense related

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

 

 

Weighted-average shares

outstanding — basic

 

2,898

 

 

2,912

 

 

2,766

 

Effect of dilutive securities:

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

 

 

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.