FairPoint Communications 2004 Annual Report Download - page 91

(r) Earnings Per Share
Earnings per share has been computed in accordance with SFAS No. 128,  Basic earnings per
share is computed by dividing net income (loss) less dividends accrued on series A preferred shares subject to mandatory
redemption and plus discounts on the redemption of such shares by the weighted average number of common shares
outstanding for the period. Except when the effect would be anti-dilutive, the diluted earnings per share calculation includes the
impact of restricted stock units and shares that could be issued under outstanding stock options.
The number of potential common shares excluded from the calculation of diluted net loss per share, prior to the application
of the treasury stock method, is as follows (amounts in thousands):


 





Contingent stock options 833 833 836
Shares excluded as effect would be anti-dilutive:
Stock options 356 416 348
Restricted stock units 26 27 —
1,215 1,276 1,184
(s) New Accounting Pronouncements
In March 2004, the EITF reached a consensus on the remaining portions of EITF 03-01, 
 with an effective date of June 15, 2004. EITF 03-01
provides new disclosure requirements for other-than-temporary impairments on debt and equity investments, including cost
method investments. Investors are required to disclose quantitative information about: (i) the aggregate amount of unrealized
losses, and (ii) the aggregate related fair values of investments with unrealized losses, segregated into time periods during
which the investment has been in an unrealized loss position of less than 12 months and greater than 12 months. In addition,
investors are required to disclose the qualitative information that supports their conclusion that the impairments noted in the
qualitative disclosure are not other-than-temporary. The Company has determined that EITF 03-01 did have a material impact
on the financial statements and has enhanced its disclosures as required by this consensus.
In December 2004, the FASB issued SFAS No. 123(R). This new standard requires companies to adopt the fair value
methodology of valuing stock-based compensation and recognizing that valuation in the financial statements from the date of
grant. Accordingly, the adoption of SFAS No. 123(R)'s fair value method will have a significant impact on the Company's result
of operations, although it will have no impact on the Company's overall financial position. The impact of adoption of SFAS
No. 123(R) cannot be predicted at this time because it will partially depend on levels of share-based payments granted in the
future. However, had the Company adopted SFAS No. 123(R) in prior periods, the impact of that standard would have
approximated the impact of SFAS No. 123 as shown in the note 1(o).
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