Kodak 2004 Annual Report Download - page 88

Financials
86
EASTMAN KODAK COMPANY
fi ed, could not have prices less than 50% of the per share fair market value
on the date of grant; however, no options below fair market value were
granted. The options generally expire ten years from the date of grant, but
may expire sooner if the optionee’s employment terminates. The 1990 Plan
also provided that options with dividend equivalents, tandem SARs and
freestanding SARs could be granted. At December 31, 2004, no freestand-
ing SARs were outstanding.
In January 2002, the Company’s shareholders voted in favor of a
voluntary stock option exchange program for its employees. Under the
program, employees were given the opportunity, if they so chose, to cancel
outstanding stock options previously granted to them at exercise prices
ranging from $26.90 to $92.31, in exchange for new options to be granted
on or shortly after August 26, 2002, over six months and one day from
February 22, 2002, the date the old options were canceled. The number of
shares subject to the new options was determined by applying an exchange
ratio in the range of 1:1 to 1:3 (i.e., one new option share for every three
canceled option shares) based on the exercise price of the canceled option.
As a result of the exchange program, approximately 23.7 million old op-
tions were canceled on February 22, 2002, with approximately 16 million
new options granted on, or shortly after, August 26, 2002. The exchange
program did not result in variable accounting, as it was designed to comply
with FASB Interpretation No. 44 (FIN 44), “Accounting for Certain Transac-
tions Involving Stock-Based Compensation.” Also, the new options had an
exercise price equal to the fair market value of the Company’s common
stock on the new grant date, so no compensation expense was recorded as
a result of the exchange program.
Further information relating to options is as follows: Weighted-
Average Exercise
(Amounts in thousands, except per share amounts) Shares Under Option Range of Price Per Share Price Per Share
Outstanding on December 31, 2001 50,455 $25.92 - $92.31 $57.53
Granted 20,155 $26.30 - $38.04 $32.72
Exercised 1,581 $26.90 - $37.74 $32.05
Terminated, Canceled or Surrendered 26,752 $26.90 - $92.31 $54.58
Outstanding on December 31, 2002 42,277 $25.92 - $92.31 $48.52
Granted 1,595 $22.58 - $38.85 $28.45
Exercised 392 $29.31 - $32.50 $31.28
Terminated, Canceled or Surrendered 3,931 $26.82 - $86.94 $44.49
Outstanding on December 31, 2003 39,549 $22.58 - $92.31 $48.30
Granted 800 $24.92 - $33.32 $30.18
Exercised 157 $22.58 - $31.30 $30.84
Terminated, Canceled or Surrendered 2,982 $22.58 - $75.66 $41.70
Outstanding on December 31, 2004 37,210 $22.58 - $92.31 $48.51
Exercisable on December 31, 2002 31,813 $25.92 - $92.31 $52.49
Exercisable on December 31, 2003 32,593 $22.58 - $92.31 $51.30
Exercisable on December 31, 2004 33,196 $22.58 - $92.31 $50.32
The table above excludes approximately 68 (in thousands) options granted by the Company in 2001 at an exercise price of $.05-$21.91 as part of an
acquisition. At December 31, 2004, approximately 21 (in thousands) stock options were outstanding in relation to this acquisition.
The following table summarizes information about stock options at December 31, 2004:
(Number of options in thousands) Options Outstanding Options Exercisable
Range of Exercise Prices Weighted-Average
At Less Remaining Weighted-Average Weighted-Average
Least Than Options Contractual Life Exercise Price Options Exercise Price
$20 - $30 1,655 6.80 $26.83 987 $27.85
$30 - $40 18,512 5.69 $32.42 15,393 $32.17
$40 - $50 591 6.04 $41.86 565 $41.84
$50 - $60 3,414 3.01 $55.41 3,257 $55.47
$60 - $70 6,058 3.50 $65.42 6,014 $65.42
$70 - $80 4,651 2.03 $73.26 4,651 $73.26
Over $80 2,329 2.17 $89.94 2,329 $89.94
37,210 33,196