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MERRILL CORPORATION ABLIJDE// 7-MAR-06 14:42 DISK126:[06CHI5.06CHI1135]DY1135A.;6
mrll.fmt Free: 180D*/300D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0
DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;51
KRAFT FOODS-FSC CERTIFIED-10K/AR Proj: P1102CHI06 Job: 06CHI1135 File: DY1135A.;6
Merrill Corporation/Chicago (312) 786-6300 Page Dim: 8.250X 10.750Copy Dim: 38. X 54.3
Stock option activity was as follows for the years ended December 31, 2003, 2004 and 2005:
Weighted
Shares Subject Average Options
to Option Exercise Price Exercisable
Balance at January 1, 2003 ..................... 19,291,672 $31.00 696,615
Options exercised .......................... (346,868) 31.00
Options canceled ........................... (663,027) 31.00
Balance at December 31, 2003 ................... 18,281,777 31.00 17,032,740
Options exercised .......................... (1,405,312) 31.00
Options canceled ........................... (687,601) 31.00
Balance at December 31, 2004 ................... 16,188,864 31.00 15,190,716
Options exercised .......................... (338,774) 31.00
Options canceled ........................... (704,250) 31.00
Balance at December 31, 2005 ................... 15,145,840 31.00 14,457,609
The following table summarizes the status of the Company’s stock options outstanding and
exercisable as of December 31, 2005:
Options Outstanding Options Exercisable
Average Weighted Weighted
Remaining Average Average
Number Contractual Exercise Number Exercise
Range of Exercise Prices Outstanding Life Price Exercisable Price
$30.54—$39.51 .................. 15,145,840 5 years $31.00 14,457,609 $31.00
Prior to the IPO, certain employees of the Company participated in Altria Group, Inc.’s stock
compensation plans. Altria Group, Inc. does not intend to issue additional Altria Group, Inc. stock
compensation to the Company’s employees, except for reloads of previously issued options. Altria
Group, Inc. accounts for its plans in accordance with the intrinsic value-based method permitted by
SFAS No. 123, ‘‘Accounting for Stock-Based Compensation,’’ which did not result in compensation cost
for stock options.
The Company’s employees held options to purchase the following number of shares of Altria
Group, Inc. stock at December 31, 2005:
Options Outstanding Options Exercisable
Average Weighted Weighted
Remaining Average Average
Number Contractual Exercise Number Exercise
Range of Exercise Prices Outstanding Life Price Exercisable Price
$21.34 ........................ 3,528,660 4 years $21.34 3,528,660 $21.34
34.90—52.20 .................. 15,553,022 4 42.27 15,553,022 42.27
52.84—74.35 .................. 1,162,409 4 63.61 888,740 61.53
20,244,091 39.85 19,970,422 39.43
At December 31, 2004 and 2003, the Company’s employees held options to purchase the following
number of shares of Altria Group, Inc. stock: 29,487,149 shares at an average exercise price of $38.38
per share at December 31, 2004; and 39,241,651 shares at an average exercise price of $37.25 per share
at December 31, 2003. Of these amounts, the following were exercisable at each date: 29,033,020 at an
average exercise price of $38.19 per share at December 31, 2004; and 39,025,325 at an average
exercise price of $37.19 per share at December 31, 2003.
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6 C Cs: 22086