iHeartMedia 2003 Annual Report Download - page 66

Stock Based Compensation
The Company accounts for its stock-based award plans in accordance with Accounting Principles Board (“APB”) Opinion No. 25, Accounting
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or Stock Issued to Employees, and related interpretations, under which compensation expense is recorded to the extent that the current market
price of the underlying stock exceeds the exercise price. Note J provides the assumptions used to calculate the pro forma net income (loss) and
pro forma earnings (loss) per share disclosures as if the stock-based awards had been accounted for using the provisions of Statement of
Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation. The required pro forma disclosures are as
follows:
(In thousands, except per share data)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates,
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udgments, and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its
estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results
could differ from those estimates.
New Accounting Pronouncements
On January 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations
(“Statement 143”). Statement 143 applies to legal obligations associated with the retirement of long-lived assets that result from acquisition,
construction, development and/or the normal operation of a long-lived asset. Adoption of this statement did not materially impact the
Company’s financial position or results of operations.
On January 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or
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isposal Activities (“Statement 146”). Statement 146 addresses the accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (“EITF”) Issue No. 94-3, “Liability Recognition for Certain Employee Terminations Benefits and
Other Costs to Exit an Activity.” It also substantially nullifies EITF Issue No. 88-10, “Costs Associated with Lease Modification or
Termination.” Adoption of this statement did not materially impact the Company’s financial position or results of operations.
On January 1, 2003, the Company adopted Financial Accounting Standards Board Interpretation No. 45, Guarantor’s Accounting and
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isclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”). FIN 45 applies to contracts or
indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an
underlying that is related to an asset, liability, or an equity security of the guaranteed party. FIN 45’s disclosure requirements were effective for
financial statements of interim or annual periods ending after December 15, 2002. FIN 45’s initial recognition and initial measurement
provisions were applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s
fiscal year-end. The Company adopted the disclosure requirements of this Interpretation for its 2002 annual report. Adoption of the initial
recognition and initial measurement requirements of FIN 45 did not materially impact the Company’s financial position or results of
operations.
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2003 2002 2001
Net income (loss) before extraordinary item
As reported $1,145,591 $724,823 $(1,144,026)
Pro form stock compensation expense, net of tax (43,788)(52,611)(49,469)
Pro Forma $1,101,803 $672,212 $(1,193,495)
Net income (loss) before extraordinary item per common share
Basic:
As reported $1.86 $1.20 $(1.93)
Pro Forma $ 1.79 $ 1.11 $ (2.02)
Diluted:
As reported $ 1.85 $ 1.18 $ (1.93)
Pro Forma $1.78 $1.10 $(2.02)