Summary
U.S. Bancorp (USB) filed an 8-K on January 9, 2004, to announce a significant change in its accounting practices regarding stock-based compensation. Effective for its full year 2003 results, the company will adopt the "fair value" method for accounting for employee stock options. This change will require the recognition of compensation expense based on the estimated fair value of granted, modified, or settled stock options. The company is implementing this change retroactively, restating financial statements for fiscal years beginning after December 15, 1994, to reflect this new standard. This adoption is in accordance with Statement of Financial Accounting Standard No. 148. The primary impact of this accounting change, as disclosed, is an estimated reduction in diluted earnings per share (EPS) by approximately $0.06 for both fiscal years 2003 and 2002. This retroactive restatement will affect previously reported financial statements for 1999 through 2002 and quarterly results for 2002 and 2003. Investors should note that this is a change in accounting method rather than a reflection of new operational performance, although it will directly impact reported EPS figures.
Key Highlights
- 1U.S. Bancorp is adopting the "fair value" method for stock-based compensation, effective for its full year 2003 results.
- 2This accounting change requires recognizing compensation expense for the estimated fair value of employee stock options.
- 3The company will implement this change retroactively, restating financial statements for periods beginning after December 15, 1994.
- 4The adoption is in accordance with Statement of Financial Accounting Standard No. 148.
- 5The estimated impact is a reduction of approximately $0.06 in diluted EPS for both 2003 and 2002.
- 6Previously reported financial statements from 1999-2002 and quarterly results for 2002-2003 will be adjusted.