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Options outstanding at December 31, 2003 were as follows: 

(shares in thousands) 

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The Company sponsors other stock-based compensation programs, which resulted in compensation expense of $12.6 million in 2003, $0.8 million in 2002 and $1.2 million in 2001. These recognized amounts included reversals of $1.9 million in 2002 and $2.2 million in 2001 for adjustments to prior years incentive compensation expenses based on changes to estimates of compensation made at interim measurement dates. 

As described in the Company’s 2003 annual meeting proxy statement, until the effective date of the Sarbanes- Oxley Act of 2002 (“Sarbanes-Oxley”), the Company maintained a Stock Acquisition and Retention Program ("SARP"). Under the SARP, certain executives could purchase shares of the Company’s common stock in exchange for a promissory note payable to the Company, and the Company would match the purchase with a grant of a certain number of shares of non-vested (“restricted”) common stock. After the enactment of Sarbanes-Oxley, the Board of Directors effectively terminated the SARP and no further loans or purchases were permitted. In connection with the winding up of the SARP, on September 11, 2003 an aggregate of 691,339 shares, previously purchased under the SARP between 1995 and the effective date of Sarbanes-Oxley, were sold by participants to a financial institution in a market transaction; all net proceeds were used to reduce balances due under SARP promissory notes. In addition, all of the restricted shares granted to the participants under the SARP in prior years, an aggregate of 501,970 shares, as well as options to purchase an aggregate of 836,466 shares of common stock previously granted, were forfeited by SARP participants. In addition, the Company paid the participants a SARP Termination Payment in cash, which was used by each participant, net of individual tax consequences, to repay to the Company all remaining balances owing on the SARP loans. The Board of Directors also determined that no equity compensation would be granted to SARP participants for at least six months from the date of the SARP Termination Payment. As a net result of the termination of the SARP, the Company received approximately $0.5 million in cash and recorded $5.6 million of expenses, which is included in selling and administrative expenses in the statement of operations. 

In the 2003 third quarter, the Company initiated a stock option repurchase program whereby stock option plan participants, not including statutory insiders and certain other executives, could elect to sell to the Company, for $0.10 per option share, vested stock options with exercise prices in excess of $20.00 per share. Approximately 1.8 million stock option shares were repurchased by the Company under this program, which expired in October 2003. The Board of Directors has also determined that no equity compensation would be granted to participants for at least six months following the stock option repurchase program. 

In 2003, the Company granted 547,290 shares of restricted stock with an aggregate grant date fair value of $2.3 million. The shares vest over service periods ranging from three to five years. For the year ended December 31, 2003, 176,399 shares of restricted stock relating to the 2003 grants and other prior grants had vesting accelerate due to participant retirements, in accordance with retirement provisions in the Incentive Plan. Compensation expense recognized for this vesting acceleration was $0.5 million. There were 422,800 shares of unvested restricted stock outstanding at December 31, 2003. 

The Company sponsors a Total Shareholder Return Plan (“TSRP”), which measures the Company’s stock price performance compared to a peer group. The TSRP measures stock price performance over cumulative three-year periods. Compensation to participants is payable in the form of stock. Interim measures of stock price performance are recorded quarterly. Based on the Company’s 2003 stock price performance, $4.1 million of compensation expense for the TSRP was recognized in the fourth quarter of 2003. 

At December 31, 2003, approximately 3.2 million shares of common stock were available for future awards under the Incentive Plan. 

