Dish Network 2003 Annual Report Download - page 86

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–19
For the Years Ended December 31,
2002
As Restated
2003 (Note 3) 2001
(In thousands, except per share data)
Numerator:
Net income (loss) ............................................................................................ $ 224,506 $(852,034) $(215,498)
6 3/4% Series C Cumulative Convertible Preferred Stock dividends ............ - - (337)
Gain on repurchase of Series D Convertible Preferred Stock.......................... - 437,433 -
Numerator for basic and diluted loss per share – loss attributable
to common shareholders ............................................................................
$
224,506
$
(414,601)
$
(215,835)
Denominator:
Denominator for basic income (loss) per share - weighted-average
common shares outstanding.......................................................................... 483,098 480,429 477,172
Impact of dilutive options outstanding............................................................ 5,216 - -
Denominator for diluted income (loss) per share - weighted-average
common shares outstanding.......................................................................... 488,314 480,429 477,172
Net income (loss) per common share:
Basic income (loss) per share ...................................................................... $ 0.46 $
(
0.86
)
$
(
0.45
)
Diluted income (loss) per share ................................................................... $ 0.46 $
(
0.86
)
$
(
0.45
)
Shares of Class A Common Stock issuable upon conversion of:
4 7/8% Convertible Subordinated Notes due 2007....................................... - 22,007 22,007
5 3/4% Convertible Subordinated Notes due 2008....................................... 23,100 23,100 23,100
3% Convertible Subordinated Notes due 2010............................................. 6,866 - -
As of December 31, 2003, 2002 and 2001 there were approximately 12.5 million, 20.8 million and 22.7 million
options for shares of class A common stock outstanding, respectively, not included in the above denominator as
their effect is antidilutive. Our 5 3/4% Convertible Subordinated Notes due 2008 and our 3% Convertible
Subordinated Note due 2010 are not included in the diluted EPS calculation as the effect of the conversion of the
notes would be anti-dilutive. Of the options outstanding as of December 31, 2003, options to purchase
approximately 8.0 million shares were outstanding under a long term incentive plan. Vesting of these options is
contingent upon meeting certain longer-term goals which have not yet been achieved. As such, the long-term
incentive options are not included in the diluted EPS calculation.
3. Financial Statement Restatement
During February 2004, we consulted with the Securities and Exchange Commission (“SEC”) regarding our accrual
for the replacement of smart cards. Those cards, which provide security that only paying customers can receive
programming delivered by us, become obsolete as a result of piracy. During the consultation process, the SEC
informed us that it believes we over reserved approximately $30.2 million for the replacement of certain smart
cards. During prior years, ending in 2002, we accrued the estimated cost to replace those cards, which are included
in satellite receivers that we sell and lease to consumers. The SEC did not object to the accruals to replace the smart
cards in satellite receivers sold to and owned by consumers. However, the SEC believes that we over reserved
approximately $30.2 million, on a pre-tax basis, for the replacement of smart cards in satellite receivers owned by us
and leased to consumers.
On March 12, 2004, the SEC informed us it would not object if we restated our financial statements for 2002 to
record a reversal of the accruals for the replacement of these smart cards of approximately $4.2 million,
$17.2 million and $8.8 million which were originally accrued in 2000, 2001 and from January 2002 through June
2002, respectively. As a result, we have restated our financial statements for 2002 as follows: