SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies (Continued) potentially dilutive securities would be antidilutive to the net loss per share from continuing operations. In 2003 and 2001, all options were dilutive. There were no adjustments to net income (loss) in the computation of diluted earnings per share for any of the years presented. The following tables show the computation of basic and diluted earnings per share for 2003, 2002 and 2001: In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003),“Consolidation of Variable Interest Entities,” which addresses how a business enterprise should evaluate whether it has a contro lling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” (VIE), which was issued in January 2003. The Company will be required to apply FIN 46R to variable interests in VIEs created after December 31, 2003. For variable interests in VIEs created before January 1, 2004, the Interpretation will be applied beginning on January 1, 2005, except it must be applied in the fourth quarter of 2003 for any VIE’s that are considered to be special purpose entities. For any VIEs that must be consolidated under FIN 46R that were created before January 1, 2004, the assets, liabilities and non-controlling interests of the VIE initially would be measured at their carrying amounts with any difference between the net amount added to the balance sheet and any previously recognized interest being recognized as the cumulative effect of an accounting change. If determining the carrying amounts is not practicable, fair value at the date FIN 46R first applies may be used to measure the assets, liabilities and non-controlling interest of the VIE. The Company is evaluating the impact of applying FIN 46R to existing VIEs in which it has variable interests and does not believe the application will have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards: In May 2003, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Liabilities and Equity,” which was effective at the beginning of the first interim period beginning after June 15, 2003. This Statement establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The Statement also includes required disclosures for financial instruments within its scope. For the Company, the Statement was effective for instruments entered into or modified after May 31, 2003 and otherwise will be effective as of January 1, 2004, except for mandatorily redeemable financial instruments. For certain mandatorily redeemable financial instruments, the Statement will be effective for the Company on January 1, 2005. The effective date has been deferred indefinitely for certain other types of mandatorily redeemable financial instruments. The Company currently does not have any financial instruments that are within the scope of this Statement. In December 2003, the Financial Accounting Standards Board issued FASB Statement No. 132(R). Statement No. 132(R) is a revision of Statement No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” SFAS 132(R) is effective for financial statements with fiscal years ending after December 15, 2003. SFAS 132(R) requires additional disclosures including information describing the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. The objectives of the revisions are to provide qualitative information about the items in the financial statements, quantitative information about items recognized or disclosed in the financial statements, information that enables users of financial statements to assess the effect that pension plans and other postretirement benefit plans have on entities’ results of operations, and information to facilitate assessments of future earnings and cash flows. The Company has adopted this statement effective December 31, 2003 with disclosures included in Note 9. SHENANDOAH TELECOMMUNICATIONS COMPANY ■  22 2003 2002 2001 Basic income (loss) per share (in thousands, except per share amounts) Net income (loss) from continuing operations $ 9,761 $ (2,893) $ 9,694 Weighted average shares outstanding 7,577 7,542 7,523 Basic income (loss) per share - continuing operations $ 1.29 $ (0.38) $ 1.29 Effect of stock options outstanding: Weighted average shares outstanding 7,577 7,542 7,549 Assumed exercise, at the strike price at the beginning of year 172 - 104 Assumed repurchase of options under treasury stock method (141) - (78) Diluted weighted average shares 7,608 7,542 7,548 Diluted income (loss) per share - continuing operations $ 1.28 $ (0.38) $ 1.28 7,522 7,549 $ 9,761