Notes to Consolidated Financial Statements 52 Had the Company accounted for these plans under the fair value method allowed by SFAS 123, the Company’s net income and earnings per share would have been reduced to recognize the fair value of employee stock options. The following are required disclosures under SFAS 123 and SFAS 148: Reported net income includes $5 million, $5 million and $3 million, net of tax, of amortization of restricted stock and non-employee stock option compensation for the years ended December 31, 2004, 2003 and 2002, respectively. For purposes of com- puting the pro forma compensation, the fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: risk-free interest rates of 3% in 2004, 3% in 2003, and 4% in 2002; no expected dividend yields for the years presented; expected lives of 5 years for the years presented; and expected volatility of 42% in 2004, 42% in 2003 and 50% in 2002. The estimated weighted average fair value of options granted in 2004, 2003 and 2002 was $19.10, $10.64 and $16.32, respectively. In June 2003, the Company entered into an agreement to sell the Golden Nugget Subsidiaries, including substantially all of the assets and liabilities of those resorts, for approximately $215 million, subject to certain working capital adjustments. This transaction closed in January 2004, with net proceeds to the Company of $210 million. Also in June 2003, the Company ceased operations of  PLAYMGMMIRAGE.com, its online gaming website (“Online”). In February 2004, the Company entered into an agreement to sell the subsidiaries that own  Reclassifications. The consolidated financial statements for prior years reflect cer- tain reclassifications, which have no effect on previously reported net income, to conform to the current year presentation.  Comprehensive income. Comprehensive income includes net income and all other non-stockholder changes in equity, or other comprehensive income. Elements of the Company’s other comprehensive income are reported in the accompanying  consolidated statement of stockholders’ equity, and the cumulative balance of these elements consisted of the following: Currency translation.  The Company accounts for currency translation in accor- dance with Statement of Financial Accounting Standards No. 52, “Foreign Currency Translation”. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss). NOTE 3 — DISCONTINUED OPERATIONS (In thousands, except per share amount) Y ear Ended December 31 2004 2003 2002 Net income As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 412,332 243,697 $ 292,435 Stock-based compensation under SFAS 123 . . . . (22,963) (43,310) (47,761) Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 389,369 $ 200,387 $ 244,674 Basic earnings per share As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 2.95 $ 1.64 $ 1.85 Stock-based compensation under SFAS 123 . . . .  (0.16) (0.29) (0.30) Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 2.79 $ 1.35 $ 1.55 Diluted earnings per share As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 2.85 $ 1.61 $ 1.83 Stock-based compensation under SFAS 123 . . . . (0.16) (0.29) (0.30) Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 2.69 $ 1.32 $ 1.53 At December 31 (In thousands) 2004 2003 Derivative loss from unconsolidated affiliate, net. . . . . . . . . . . . . . . . . . . .  $ (1,863) $ (4,687) Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . .  696 11,032 $ (1,167) $ 6,345