Dish Network 2002 Annual Report Download - page 80

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-20
For purposes of this pro forma presentation, the fair value of each option grant was estimated at the date of the
grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
Year Ended December 31,
2000 2001 2002
Risk-free interest rate ........................................... 6.19% 4.94% 4.08%
Volatility factor .................................................... 98% 64% 54%
Dividend yield...................................................... 0.00% 0.00% 0.00%
Expected term of options......................................... 6 years 6 years 6 years
Weighted-average fair value of options granted ..... $ 30.41 $ 15.75 $ 5.11
The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options
which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the
existing models do not necessarily provide a reliable single measure of the fair value of stock-based compensation
awards.
Basic and Diluted Loss Per Share
Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“FAS 128”) requires entities
to present both basic earnings per share (“EPS”) and diluted EPS. Basic EPS excludes dilution and is computed by
dividing income (loss) available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock options were
exercised or convertible securities were converted to common stock. EchoStar had net losses for the years ending
December 31, 2000, 2001 and 2002. Therefore, the effect of the common stock equivalents and convertible
securities is excluded from the computation of diluted earnings (loss) per share since the effect is anti-dilutive.
Earnings per share amounts for all periods are presented below in accordance with the requirements of FAS
128.
Year Ended December 31,
2000 2001 2002
(In thousands, except per share data)
Numerator:
Net loss ............................................................................................. $ (650,326) $ (215,498) $ (881,650)
6 3/4% Series C Cumulative Convertible Preferred Stock
dividends ...................................................................................... (1,146) (337) –
Gain on repurchase of Series D Convertible Preferred Stock
(Note 1)......................................................................................... – – 437,433
Numerator for basic and diluted loss per share – loss attributable
to common shareholders .............................................................. $ (651,472) $ (215,835) $ (444,217)
Denominator:
Denominator for basic and diluted loss per share – weighted-
average common shares outstanding............................................ 471,023 477,172 480,429
Basic and diluted loss per share ............................................................ $ (1.38) $ (0.45) $ (0.92)
Shares of Class A Common Stock issuable upon conversion of:
6 3/4% Series C Cumulative Convertible Preferred Stock.............. 3,593 – –
4 7/8% Convertible Subordinated Notes ..................................... 22,007 22,007 22,007
5 3/4% Convertible Subordinated Notes ......................................... – 23,100 23,100