Delta Airlines 2004 Annual Report Download - page 104

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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes all stock option activity for the years ended December 31, 2004, 2003 and 2002:
2004 2003 2002
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
(shares in thousands) Shares Price Shares Price Shares Price
Outstanding at the beginning of the year 37,893 $ 31 58,806 $ 44 51,537 $ 48
Granted 70,763 6 11,894 12 8,478 21
Exercised (3) 11 (38) 11 (9) 27
Forfeited (2,720) 38 (32,769) 47 (1,200) 48
Outstanding at the end of the year 105,933 15 37,893 31 58,806 44
Exercisable at the end of the year 33,337 $ 33 22,846 $ 44 45,996 $ 48
The following table summarizes information about stock options outstanding and exercisable at December 31, 2004:
Stock Options
Stock Options Outstanding Exercisable
Weighted Weighted Weighted
Number Average Average Number Average
Outstanding Remaining Exercise Exercisable Exercise
Stock Options (000) Life (years) Price (000) Price
$4-$20 85,846 10 $ 7 13,279 $ 11
$21-$35 3,997 3 $ 34 3,991 $ 34
$36-$50 15,008 3 $ 49 14,985 $ 49
$51-$70 1,082 5 $ 55 1,082 $ 55
Payment of Dividends
The determination to pay cash dividends on our ESOP Preferred Stock and our common stock is at the discretion of our Board of Directors, and is also
subject to the provisions of Delaware General Corporation Law ("Delaware Law"). Delaware Law provides that a company may pay dividends on its stock
only (1) out of its "surplus", which is generally defined as the excess of the company's net assets over the aggregate par value of its issued stock, or (2) from
its net profits for the fiscal year in which the dividend is paid or from its net profits for the preceding fiscal year.
In July 2003, our Board of Directors discontinued the payment of quarterly cash dividends on our common stock due to the financial challenges facing
Delta. We had previously paid a quarterly dividend of $0.025 per common share.
Effective December 2003, our Board of Directors suspended indefinitely the payment of dividends on our ESOP Preferred Stock to comply with Delaware
Law. At December 31, 2004 and 2003, we had a negative "surplus" (as defined above) and we did not have net profits in any of the years ended December 31,
2004, 2003 and 2002. The terms of the ESOP Preferred Stock provide for cumulative dividends on that stock and prohibit the payment of dividends on our
common stock until all cumulative dividends on the ESOP Preferred Stock have been paid. Unpaid dividends on the ESOP Preferred Stock will accrue
without interest, until paid, at a rate of $4.32 per share per year. At December 31, 2004 and 2003, accumulated but unpaid dividends on the
F-47