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,

2008

 

2007

 

2006

 

Income Before Discontinued Operations, Extraordinary Item and

Cumulative Effect of Accounting Change

$

6,428

 

$

5,510

 

$

5,480

 

After-tax minority interest expense related to exchangeable

equity interest

 

 

 

 

 

20

 

After-tax interest expense related to zero — coupon convertible notes

 

 

 

 

 

11

 

Income Before Discontinued Operations, Extraordinary Item and

Cumulative Effect of Accounting Change — after assumed conversion

of dilutive securities

$

6,428

 

$

5,510

 

$

5,511

 

 

Weighted-average shares outstanding — basic

 

2,849

 

 

2,898

 

 

2,912

 

Effect of dilutive securities:

Stock options

 

1

 

 

4

 

 

1

 

Exchangeable equity interest

 

 

 

 

 

18

 

Zero-coupon convertible notes

 

 

 

 

 

7

 

Weighted-average shares outstanding — diluted

 

2,850

 

 

2,902

 

 

2,938

 

 

Earnings Per Common Share from Income Before Discontinued Operations,

Extraordinary Item and Cumulative Effect of Accounting Change

Basic

$

2.26

 

$

1.90

 

$

1.88

 

Diluted

$

2.26

 

$

1.90

 

$

1.88

 

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 158 million weighted-average shares during 2008, 170 million weighted-average shares during 2007 and 228 million weighted-average shares during 2006.

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 Note 8).

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 approved a share buy back program which authorized the repurchase of up to 100 million shares of Verizon common stock terminating no later than the close of business on February 28, 2011. During 2008, 2007 and 2006, we repurchased approximately 37 million, 68 million and 50 million common shares under programs previously authorized by the Board of Directors.