notes to consolidated financial statements

The company's stock incentive and option plans provide for grants of stock options and stock awards. Common shares available for grant as of December 31 were 8,674,459 for 2003, 12,305,052 for 2002 and 3,799,142 for 2001. Common shares available for grant reflect 12 million shares approved by shareholders during 2002 for issuance under the plans.

Options may be granted to purchase shares of the company's stock at not less than fair market value at the date of grant. Options granted in 2003, 2002 and 2001 generally become exercisable over three years from date of grant and expire within ten years from date of grant. A summary of stock option activity and average exercise prices is as follows:

Shares	2003	2002	2001
Granted	4,765,823	4,912,674	5,334,052
Exercised	(6,383,227)	(4,432,722)	(3,128,274)
Canceled	(379,634)	(1,473,670)	(1,112,668)
December 31:   Outstanding	21,867,726	23,864,764	24,858,482
Exercisable	12,823,743	14,444,562	15,393,806

Average exercise price per share	2003	2002	2001
Granted	$27.18	$24.24	$19.32
Exercised	19.84	10.27	6.19
Canceled	21.87	21.08	22.34
December 31:   Outstanding	20.87	19.35	16.87
Exercisable	$17.96	$17.77	$15.46

Information related to stock options outstanding and stock options exercisable as of December 31, 2003, is as follows:

Options Outstanding
Range of   Exercise Prices	Options   Outstanding	Weighted-Average   Remaining   Contractual Life	Weighted-Average   Exercise   Price
$ 5.38-$10.31	1,418,002	1.9 years	$ 7.07
$10.95-$18.96	5,370,187	6.9 years	17.81
$19.27-$20.06	5,176,870	6.4 years	19.49
$20.23-$24.34	5,206,844	8.7 years	23.98
$24.55-$27.39	4,695,823	10.0 years	$27.23

Options Exercisable
Range of   Exercise Prices	Options   Exercisable	Weighted-Average   Exercise Price
$ 5.38-$10.31	1,418,002	$ 7.07
$10.95-$18.96	4,060,166	17.40
$19.27-$20.06	5,151,290	19.48
$20.23-$24.34	2,072,012	23.56
$24.55-$27.39	122,273	$25.29

The weighted-average grant-date fair value of options granted in 2003, 2002 and 2001, and the significant assumptions used in determining the underlying fair value of each option grant, on the date of grant, utilizing the Black-Scholes option-pricing model, were as follows:

	2003	2002	2001
Weighted-average grant-date fair value of options granted
Granted at market prices	$ 7.85	$ 7.10	$ 5.63
Granted at prices exceeding market	---	---	$ 2.37
Assumptions
Risk-free interest rate	3.5%	3.6%	4.7%
Expected life	6 years	6 years	6 years
Expected volatility	26.8%	26.5%	24.8%
Expected dividend yield	1.2%	1.1%	1.3%

The expense associated with shares of restricted stock issued under the company's stock incentive plan is based on the market price of the company's stock at the date of grant and is amortized on a straight-line basis over the periods during which the restrictions lapse. Restricted stock awards generally vest over a 4-year period with 50 percent vesting 2 years after grant and the remaining 50 percent vesting 4 years after grant. Stock awards are not performance based and vest with continued employment. Stock awards are subject to forfeiture in the event of termination of employment. The company granted 10,500 shares in 2003, 67,200 shares in 2002 and 11,600 shares in 2001 under its restricted stock award program.

The company uses the intrinsic value-based method of accounting to measure compensation expense for its stock incentive and option plans. See Note 2 to the consolidated financial statements for the pro forma net income and related basic and diluted per common share amounts had the company used the fair value-based method of accounting to measure compensation expense.