Charter 2003 Annual Report Download - page 110

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 and 2001
(dollars in millions, except where indicated)
method under which the Company will recognize compensation expense of a stock-based award to an
employee over the vesting period based on the fair value of the award on the grant date consistent with the
method described in Financial Accounting Standards Board Interpretation (""FIN'') No. 28, Accounting for
Stock Appreciation Rights and Other Variable Stock Option or Award Plans. Adoption of these provisions
resulted in utilizing a preferable accounting method as the consolidated Ñnancial statements will present the
estimated fair value of stock-based compensation in expense consistently with other forms of compensation
and other expense associated with goods and services received for equity instruments. In accordance with
SFAS No. 148, Accounting for Stock-Based Compensation Ì Transition and Disclosure, the fair value
method will be applied only to awards granted or modiÑed after January 1, 2003, whereas awards granted prior
to such date will continue to be accounted for under APB No. 25, unless they are modiÑed or settled in cash.
Management believes the adoption of these provisions will not have a material impact on the consolidated
results of operations or Ñnancial condition of the Company. The ongoing eÅect on consolidated results of
operations or Ñnancial condition will be dependent upon future stock-based compensation awards granted by
the Company.
SFAS No. 123 requires pro forma disclosure of the impact on earnings as if the compensation expense for
these plans had been determined using the fair value method. The following table presents the Company's net
loss and loss per share as reported and the pro forma amounts that would have been reported using the fair
value method under SFAS No. 123 for the years presented:
Year Ended December 31,
2003 2002 2001
Net loss applicable to common stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (242) $(2,517) $(1,168)
Add back stock-based compensation expense (income) related to
stock options included in reported net loss (net of minority
interest) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2 2 (2)
Less employee stock-based compensation expense determined
under fair value based method for all employee stock option
awards (net of minority interest) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (14) (56) (56)
Pro formaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (254) $(2,571) $(1,226)
Loss per common shares, basic and dilutedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(0.82) $ (8.55) $ (4.33)
Add back stock-based compensation expense (income) related to
stock options included in reported net loss (net of minority
interest) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.01 0.01 (0.01)
Less employee stock-based compensation expense determined
under fair value based method for all employee stock option
awards (net of minority interest) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.05) (0.19) (0.21)
Pro formaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(0.86) $ (8.73) $ (4.55)
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-
pricing model. The following weighted average assumptions were used for grants during the years ended
December 31, 2003, 2002 and 2001, respectively: risk-free interest rates of 3.0%, 3.6%, and 4.7%; expected
volatility of 93.6%, 64.2% and 56.2%; and expected lives of 3.5 years, 3.3 years and 3.7 years, respectively. The
valuations assume no dividends are paid.
F-12