Notes to Consolidated Financial Statements Year Ended December 31, 2003 2002 2001 (as restated) (as restated) (Dollars and shares in thousands) Basic Earnings per Share Income (Loss) used in  Basic Earnings per Share $ 57,006 $(18,385) $173,876 Cumulative effect of accounting change (14,346) (8,560) — $ 42,660 $(26,945) $173,876 Diluted Earnings per Share Income (Loss) used in  Basic Earnings per Share $ 57,006 $(18,385) $173,876 Interest expense eliminated as a  result of the pro forma conversion  of Convertible Debentures, net of tax — — 5,507 Income (Loss) used in  Diluted Earnings per Share 57,006 (18,385) 179,383 Cumulative effect of accounting change (14,346) (8,560) — $ 42,660 $(26,945) $179,383 Weighted Average Number of Common Shares used in  Basic Earnings per Share 86,136 86,086 86,200 Effect of Dilutive Securities: Stock options and  stock appreciation rights (1) 466 — 233 Conversion of convertible debentures (2) — — 3,544 Weighted Average Number of  Common Shares used in  Diluted Earnings per Share 86,602 86,086 89,977 Basic Earnings per Share  Income (Loss) before cumulative  effect of accounting change $ 0.67 $ (0.22) $ 2.02 Cumulative effect of accounting change (0.17) (0.09) — $ 0.50 $( 0.31) $ 2.02 Diluted Earnings per Share Income (Loss) before cumulative  effect of accounting change $ 0.66 $ (0.22) $ 1.99 Cumulative effect of accounting change (0.17) (0.09) — $ 0.49 $( 0.31) $ 1.99 (1) Stock options and restricted stock convertible into 1,322,132 Common Shares in 2003, 1,753,950 Common Shares in 2002 and 185,580 Common Shares in 2001 were not included in computing Diluted Earnings per Share because their effects were anti-dilutive. (2) Convertible debentures convertible into 2,944,347 Common Shares in 2003 and 2,945,256 Common Shares in 2002 were not included in computing Diluted Earnings  per Share because their effects were anti-dilutive. NOTE 4 INVESTMENT IN LICENSES AND GOODWILL Changes in investment in licenses and goodwill are primarily the result of the acquisition or divestiture of wireless markets by U.S. Cellular. See Note 11 – Acquisitions, Divestitures and Exchanges for the details of the changes in investment in licenses and goodwill. A schedule of investment in licenses activity follows: Y ear Ended December 31, 2003 2002 (as restated) (as restated) (Dollars in thousands) Balance , beginning of year $1,247,197 $ 858,791 Restatements under SFAS No. 142 — 229,562 Acquisitions (1) 178,609 181,510 Divestitures (76,905) — Allocation to assets of operations held for sale (63,569) — Impairment loss (2) (53,095) (20,921) Other (874) (1,745) Balance , end of year (1) $1,231,363 $1,247,197 (1) Includes $42.0 million of License rights from the AT&T Wireless transaction in 2003. (2) Upon adoption of SFAS No. 142 on January 1, 2002, U.S. Cellular recorded a $20.9 million impairment loss on intangible assets related to its investment in licenses. The loss was recorded as a cumulative effect of accounting change. In 2003, U.S. Cellular recorded  an additional impairment loss of $49.6 million on its investment in licenses in two report- ing units and a $3.5 million loss on impairment of its investment in a non-operating wireless license. A schedule of investment in goodwill activity follows: Y ear Ended December 31, 2003 2002 (as restated) (as restated) (Dollars in thousands) Balance , beginning of year $504,744 $473,975 Restatements under SFAS No. 142 — (138,885) Additions 7,516 172,263 Divestitures (69,961) — Allocation to assets of operations held for sale (7,565) — Other (4,478) (2,609) Balance , end of year $430,256 $504,744 Y ear Ended December 31, 2003 2002 2001 (as restated) (as restated) (Dollars in thousands) Net Income (Loss) $42,660 $(26,945) $173,876 Amortization, net of tax and  minority interest effect of Licenses — — 16,104 Goodwill — — 9,744 Goodwill for equity  method investments — — 513 Adjusted Net Income (Loss) $42,660 $(26,945) $200,237 Basic earnings per share: Net Income (Loss) $ 0.50 $ (0.31) $ 2.02 Amortization, net of tax  and minority interest — — 0.31 Adjusted Earnings per Share $ 0.50 $ (0.31) $ 2.33 Diluted earnings per share: Net Income (Loss) $ 0.49 $( 0.31) $ 1.99 Amortization, net of tax  and minority interest — — 0.29 Adjusted Earnings per Share $ 0.49 $( 0.31) $ 2.28 Pursuant to SFAS No. 142, U.S. Cellular ceased amortization of  licenses and goodwill as of January 1, 2002. Net income (loss) and  Basic and Diluted earnings per share adjusted to exclude license and goodwill amortization expense, net of tax, recorded in the year ended December 31, 2001, is summarized below, together with the actual amounts of such measures in 2003 and 2002, for comparison purposes. 52