Ryanair 2004 Annual Report Download - page 67

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(vi) Share option compensation expense
Under US GAAP, any excess of the fair market value over the exercise price under a share option plan on the date of the grant is
recognised as compensation expense over the period the services are provided. Under Irish and UK GAAP, in effect in May 1997, when
these share options were granted, compensation was not recognised for stock issued at a price less than market price.
Under US GAAP, the group applies Accounting Principles Board Opinion No. 25 (APB 25) in accounting for its stock option plans and,
accordingly, except for the grant in May 1997, no compensation cost has been recognised for its stock option grants. Had Ryanair
Holdings plc determined compensation cost based on the fair value of the options at the grant date for its stock options under
Statement of Financial Accounting Standard No. 123 (SFAS 123), its US GAAP net income and earnings per share would have been
reduced by 6,124,448 and 13,085,399 for the years ended March 31, 2004, and March 31, 2003, and the corresponding earnings
per share and diluted earnings per share would have been reduced by nil, 0.02 and 0.01 respectively as presented below.
2004 2003
000 000
Net income in accordance with US GAAP (as reported) 215,430 241,810
Total stock based employee compensation expense as determined under fair-value method (6,124) (13,085)
Pro-forma net income 209,306 228,725
Basic earnings per ordinary share (as reported) 0.27 0.32
Pro-forma basic earnings per ordinary share 0.27 0.30
Diluted earnings per ordinary share (as reported) 0.27 0.31
Pro-forma diluted earnings per ordinary share 0.27 0.30
The weighted average fair value of the individual options granted during the year ended March 31, 2004 is estimated based on the
following assumptions.
OPTIONS GRANTED
2004 2003 2002
Date granted July 4, 2003 July 3, 2002 July 5, 2001
Date of earliest exercise July 4, 2008 June 23, 2003 June 23, 2003
Date of expiration July 4, 2010 June 30, 2009 June 30, 2008
Fair value 2.69 2.61 2.18
Assumptions:
Risk-free interest rate 4.64% 4.11% 4.48%
Volatility 40% 40% 40%
Dividend yield nil nil nil
Maximum life (years) 77 7
(vii) Capitalised interest
Under US GAAP interest costs associated with the cost of acquiring and making ready for their intended use certain ‘qualifying’
assets must be capitalised as part of the acquisition cost of the asset. Ryanair pays deposits in respect of its aircraft acquisition
programme and in accordance with US GAAP capitalises interest costs which could have been avoided if the expenditure had not
been made.
Under Irish and UK GAAP there is no mandatory requirement to capitalise interest costs in such circumstances.
(Continued)
Summary of differences between Irish, United Kingdom and
United States generally accepted accounting principles 67
A N N U A L R E P O RT & F I N A N C I A L S T A T E M E N T S 2 0 0 4