Verizon Wireless 2006 Annual Report Download - page 63

Notes to Consolidated Financial Statements continued
61
Certain outstanding options to purchase shares were not included
in the computation of diluted earnings per common share because
to do so would have been anti-dilutive for the period, including
approximately 228 million shares during 2006, 250 million shares
during 2005 and 262 million shares during 2004.
The zero-coupon convertible notes were retired on May 15, 2006.
(see Note 11).
The exchangeable equity interest was converted on August 15,
2006 by issuing 29.5 million Verizon shares (see Note 9).
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 January 22, 2004, the Board of Directors authorized the repur-
chase of up to 80 million common shares terminating no later than the
close of business on February 28, 2006. We repurchased 7.9 million
and 9.5 million common shares during 2005 and 2004, respectively.
On January 19, 2006, the Board of Directors determined that no
additional common shares may be purchased under the previously
authorized program and gave authorization to repurchase of up to
100 million common shares terminating no later than the close of
business on February 28, 2008. We repurchased approximately 50
million common shares under this authorization during 2006.
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, 2006 2005 2004
Net Income Used For Basic Earnings
Per Common Share
Income before discontinued operations
and cumulative effect of accounting
change $5,480 $6,027 5,899
Income on discontinued operations,
net of tax 759 1,370 1,932
Cumulative effect of accounting change,
net of tax (42) ––
Net income $6,197 $7,397 $ 7,831
Net Income Used For Diluted Earnings
Per Common Share
Income before discontinued operations
and cumulative effect of accounting
change $5,480 $6,027 $ 5,899
After-tax minority interest expense related
to exchangeable equity interest 20 32 27
After-tax interest expense related to
zero-coupon convertible notes 11 28 41
Income before discontinued operations
and cumulative effect of accounting
change – after assumed conversion
of dilutive securities 5,511 6,087 5,967
Income on discontinued operations,
net of tax 759 1,370 1,932
Cumulative effect of accounting change,
net of tax (42) ––
Net income – after assumed conversion
of dilutive securities $6,228 $7,457 $ 7,899
Basic Earnings Per Common Share(1)
Weighted-average shares outstanding –
basic 2,912 2,766 2,770
Income before discontinued operations
and cumulative effect of accounting
change $1.88$2.18$2.13
Income on discontinued operations,
net of tax .26 .50 .70
Cumulative effect of accounting change,
net of tax (.01) ––
Net income $2.13$2.67$2.83
Diluted Earnings Per Common Share(1)
Weighted-average shares outstanding 2,912 2,766 2,770
Effect of dilutive securities:
Stock options 155
Exchangeable equity interest 18 29 29
Zero-coupon convertible notes 717 27
Weighted-average shares – diluted 2,938 2,817 2,831
Income before discontinued operations
and cumulative effect of accounting
change $1.88$2.16$2.11
Income on discontinued operations,
net of tax .26 .49 .68
Cumulative effect of accounting change,
net of tax (.01) ––
Net income $2.12$2.65$2.79
(1) Total per share amounts may not add due to rounding.