sufficient taxable income within the carryback, carryforward period available under tax law. The Company evaluates, on a quarterly basis whether, based on all available evidence, it is probable that the deferred income tax assets are realizable. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized. The evaluation, as prescribed by Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused.  In the 2003 fourth quarter, based upon this quarterly analysis, the Company recorded a $138.5 million valuation allowance for a portion of its net deferred tax assets.  Basic and diluted loss per share are calculated by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding during the year. The calculation of diluted loss per share excludes the potentially dilutive effect of outstanding stock options since the inclusion in the calculation of loss of per share would result in a lower loss per share and therefore be anti-dilutive. The Company accounts for its stock option plans and other stock-based compensation in accordance with APB Opinion 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Under APB Opinion No. 25, for awards which vest without a performance-based contingency, no compensation expense is recognized when the exercise price of the Company’s employee stock options equals the market price of the underlying stock at the date of the grant. Compensation expense for fixed stock-based awards, generally awards of non-vested stock, is recognized over the associated employment service period based on the fair value of the stock at the date of the grant. The Company also has performance-based stock award programs which are accounted for under the variable plan rules of APB Opinion No. 25. Compensation expense for these awards of stock, which are earned based on performance-based criteria, is recognized at the measurement date based on the stock price at the end of the performance period, with compensation expense recognized at interim dates based on performance criteria achieved and the Company’s stock price at the interim dates. The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). For comparative presentation purposes, the effect of the 2003 deferred tax valuation allowance is excluded from the 2003 net of tax amounts. Effective January 1, 2003, as required, the Company adopted Statement of Financial Accounting Standards  No. 143, “Accounting for Asset Retirement Obligations” (“SFAS 143”). Under SFAS 143, obligations associated with the retirement of tangible long-lived assets, such as landfill and other facility closure costs, are capitalized and amortized to expense over an asset’s useful life using a systematic and rational allocation method.  The Company’s adoption of SFAS 143 resulted in recognizing a charge of $1.3 million, net of income taxes of $0.7 million, or $0.02 per share, principally for asset retirement obligations related to landfills in the Company’s Flat-Rolled Products segment. This charge is reported in the consolidated statement of operations for the year ended December 31, 2003 as a cumulative effect of a change in accounting principle. The pro forma effects of the application of SFAS 143 as if the Statement had been adopted on January 1, 2001 were not material. ATI Annual Report 2003 39 Loss Per Common Share Stock-based Compensation (In millions, except per share amounts) 2003) 2002) 2001) Net loss as reported $(314.6) $(65.8) $(25.2) Add: Stock-based compensation expense included in net loss,  net of tax 7.9) 0.5) 0.8) Deduct: Net impact of SFAS 123, net of tax (11.2) (4.3) (5.8) Pro forma loss $(317.9) $(69.6) $(30.2) Net loss per common share: Basic and diluted – as reported $0(3.89) $(0.82) $(0.31) Basic and diluted – pro forma $0(3.93) $(0.86) $(0.38) New Accounting Pronouncements