Details on various stock option exercise price ranges are as follows: Outstanding Options Exercisable Options Weighted- Weighted- Weighted- Range of  Shares Average Life Average Shares Average Exercise Prices (millions) (years) Exercise Price (millions) Exercise Price $ 7.40 – $10.58 29.9 8.2 $ 8.04 8.9 $ 8.11  10.62 15.81 67.7 4.7 12.84 41.5 12.53  15.91 – 23.88 91.3 5.6 20.07 76.3 20.70  23.97 35.79 55.8 5.2 30.88 55.6 30.91  41.03 – 42.52 0.7 3.3 41.42 0.7 41.42 Total options 245.4 183.0 The estimated fair value of stock options at the time of grant using the Black-Scholes option pricing model was as follows: See Note 2 for a discussion of the impact on earnings of our adoption of SFAS No. 123 in respect to stock option awards, effective January 1, 2003.  SFAS No. 133 establishes accounting and reporting standards for derivative instruments and requires that all derivatives be  recorded at fair value on our balance sheet, including embedded derivatives. Our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates,  certain commodity prices and interest rates. The objective of our risk management program is to manage the financial and  operational exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses  on derivatives used to hedge them. We have hedge documentation that defines the hedging objectives, practices, procedures,  and accounting treatment. Our hedging program and our derivative positions and strategy are reviewed on a regular basis by  our management. We have elected to apply hedge accounting to a portion of our derivatives. Hedges that receive designated hedge accounting  treatment are evaluated for effectiveness at the time they are designated as well as throughout the hedge period. Some  derivatives do not qualify for hedge accounting under SFAS No. 133; for others, we elect not to apply hedge accounting  treatment. For both of these, the mark to fair value is reported currently through earnings. Regardless of hedge accounting  treatment, derivative positions are used only to manage identified exposures. The use of derivatives to manage market risk results in counterparty risk, or the risk of a counterparty defaulting on a derivative  contract. We enter into master netting agreements with counterparties that usually allow for netting of certain exposures. We  establish exposure limits for each counterparty to minimize risk and provide counterparty diversification. Substantially all our  counterparty exposures are with counterparties that have long-term debt ratings of single-A or better. Cash Flow Hedges. We use forward contracts and options, which qualify as cash flow hedges to manage our exposure to foreign  currency exchange and commodity price risks. The effective portion of changes in the fair value of cash flow hedges is deferred in  Accumulated Other Comprehensive Income  (“OCI”) and is recognized in  Cost of sales  when the hedged item affects earnings. Derivatives used to manage financial exposures for foreign exchange and commodity price risks generally mature within three  years or less, with a maximum maturity of five years. Cash flow hedges are discontinued when it is probable that the original  forecasted transaction will not occur. The impact to earnings associated with hedge ineffectiveness from cash flow hedges was  recorded in  Cost of sales  as a gain of $1 million in 2004 and a gain of $36 million in 2003.  7 9 Automotive Sector NOTE 19. DERIVATIVE FINANCIAL INSTRUMENTS  2004  2003  2002 Fair value per option  $ 4.71 $  2.07 $  5.76 Assumptions: Annualized dividend yield 3.0% 5.1% 2.5% Expected volatility 42.2% 39.3% 35.0% Risk-free interest rate 3.4% 3.7% 5.1% Expected option term (in years) 7 7 7 NOTES TO THE FINANCIAL STATEMENTS