NOTE 17. Capital Stock and Amounts Per Share (Continued) Amounts Per Share of Common and Class B Stock  2004  2003  2002 Basic and Diluted Income/(Loss) Income/(loss) from continuing operations $ 3,634 $  902 $  355 Preferred Stock dividends - - (15) Basic income/(loss) from continuing operations attributable to Common and Class B Stock 3,634 902 340 Effect of dilutive convertible preferred securities 199 - - Diluted income/(loss) from continuing operations attributable to Common and Class B Stock $ 3,833 $  902 $  340 Diluted Shares Average shares outstanding 1,830 1,832 1,819 Restricted and uncommitted-ESOP shares (4) (2) (1) Basic shares 1,826 1,830 1,818 Net dilutive options and restricted and uncommitted ESOP shares 18 13 11 Dilutive convertible preferred securities  282 -* -* Diluted shares 2,126 1,843 1,829 The calculation of diluted income per share of Common and Class B Stock takes into account the effect of obligations, such as  stock options and convertible securities, considered to be potentially dilutive. Basic and diluted income/(loss) per share were  calculated using the following number of shares (in millions): * Not included in calculation of diluted earnings per share due to their antidilutive effect are 282 million shares related to convertible preferred securities in 2003 and 2002. NOTE 18. STOCK OPTIONS We have stock options outstanding under two Long-term Incentive Plans (“LTIP”), the 1990 LTIP and the 1998 LTIP. No further  grants may be made under the 1990 LTIP and all outstanding options are exercisable. Grants may be made under the 1998  LTIP through April 2008. All outstanding options under the 1990 LTIP continue to be governed by the terms and conditions of  the existing option agreements for those grants. Under the 1998 LTIP, 33% of the options are generally exercisable after the first  anniversary of the date of grant, 66% after the second anniversary, and 100% after the third anniversary. Stock options expire  ten years from the grant date and, beginning January 1, 2003, are expensed. Additionally, we have outstanding performance  stock rights, restricted stock units, restricted stock grants and equivalents, and stock appreciation rights. Under the 1998 LTIP, 2% of our issued common stock as of December 31 becomes available for granting plan awards in the  succeeding calendar year. Any unused portion is available for later years. The limit may be increased up to 3% in any year,  with a corresponding reduction in shares available for grants in future years. At December 31, 2004, the number of unused  shares carried forward aggregated to 49.7 million shares.  2004  2003  2002 Weighted- Weighted- Weighted-  Average  Average  Average  Shares Exercise  Shares Exercise  Shares Exercise Stock Option Activity  (millions)  Price (millions)  Price (millions)  Price Outstanding, beginning of year 234.7 $ 19.34 212.9 $  20.88 172.1 $  22.01 Granted 26.7 13.46 31.3 7.93 50.6 16.29 Exercised* (11.7) 10.60 (4.2) 11.06 (4.3) 7.63 Terminated/expired or surrendered (4.3) 18.68 (5.3) 19.90 (5.5) 24.37 Outstanding, end of year 245.4 19.13 234.7 19.34 212.9 20.88 Exercisable, end of year 183.0 21.41 161.7 21.44 134.0 21.02 * Exercised at option prices ranging from $7.55 to $12.53 during 2004, $10.99 to $13.54 during 2003, and $7.09 to $12.53 during 2002. 7 8 NOTES TO THE FINANCIAL STATEMENTS