offset by a decrease in property related liabilities of $31 million. Our current year postretirement health care and deferred compensation plan activity is discussed below. We have stock option plans for key employees and non-employee members of our Board of Directors. Our long-term incentive plans provide for the granting of stock options, performance share awards, restricted stock awards, or a combination of awards. Performance share awards represent shares issuable in the future based upon attainment of specified levels of future financial performance. A majority of the awards are non-qualified stock options that vest annually in equal amounts over a four-year period. These options expire no later than ten years after the date of the grant. Options granted to the non-employee members of our Board of Directors vest after one year and have a ten-year term. In early 2003, we stopped issuing new shares for our stock option plan and began purchasing shares from the market. The number of unissued common shares reserved for future grants under the stock option plans was 19,279,658 at January 31, 2004 and 24,091,318 at February 1, 2003. *Weighted average exercise price. **Weighted average contractual life remaining in years. Employees who meet certain eligibility requirements can participate in a defined contribution 401(k) plan by investing up to 80 percent of their compensation. We match 100 percent of each employeeGLYPH<213>s contribution up to 5 percent of respective total compensation. Our contribution to the plan is initially invested in Target Corporation common stock. Benefits expense related to these matching contributions was $117 million, $111 million and $97 million in 2003, 2002 and 2001, respectively. The Black-Scholes model was used to estimate the fair value of the options at grant date based on the following assumptions: Awards granted in fiscal year 2002 and earlier will continue to be accounted for under the intrinsic value method prescribed in APB No. 25. No compensation expense related to options was recognized because the exercise price of our employee stock options equaled the market price of the underlying stock on the grant date. The expense related to the intrinsic value of performance-based and restricted stock awards issued was not significant to 2003 net earnings, cash flows or financial position. The pro forma impact of accounting for those awards at fair value will continue to be disclosed until the last of those awards vest in January of 2007. If we had elected to recognize compensation cost based on the fair value of the awards at the grant date, net earnings would have been the pro forma amounts shown below. In the first quarter of 2003, we adopted SFAS No. 123 in accordance with the prospective transition method prescribed in SFAS No. 148. The adoption of this method increased compensation expense by less than $.01 per share in 2003. The requirements of SFAS No. 123 and SFAS No. 148 are discussed in ManagementGLYPH<213>s Discussion and Analysis on page 24. *Weighted average exercise price. Stock Option Plans Options and Performance Share Awards Outstanding Options Outstanding Defined Contribution Plans Pro Forma Earnings Options Total Outstanding Currently Exercisable Performance Shares Number of Average Number of Average Potentially (options and shares in thousands) Options Price * Options Price * Issuable February 3, 2001 32,258 $ 19.30 18,662 $12.36 — Granted 4,805 40.52 Canceled (437) 30.41 Exercised (5,311) 9.42 February 2, 2002 31,315 $24.07 17,629 $17.04 — Granted 6,096 30.60 552 Canceled (561) 35.55 Exercised (2,063) 12.22 February 1, 2003 34,787 $25.73 21,931 $ 20.89 552 Granted 4,638 38.34 573 Canceled (407) 34.77 Exercised (2,859) 12.58 January 31, 2004 36,159 $28.28 23,689 $24.48 1,125 2003 2002 2001 Dividend yield .8% .8% .6% Volatility 29% 35% 30% Risk-free interest rate 3.0% 3.0% 4.3% Expected life in years 5.0 5.0 5.0 Weighted average fair value  at grant date $11.04 $10.07 $13.09 Options Outstanding Currently Exercisable Range of Exercise Number Average Average Number Average (options in thousands) Prices Outstanding Life ** Price * Exercisable Price * $ 5.53—$ 9.99 5,058 2.2 $ 7.79 5,058 $ 7.79 $10.00—$19.99 4,718 3.7 18.31 4,718 18.31 $20.00—$29.99 3,500 4.5 25.92 3,467 25.92 $30.00—$39.99 18,473 7.9 33.91 8,266 33.30 $40.00—$44.83 4,410 7.8 40.84 2,180 40.81 Total $ 5.53—$44.83 36,159 6.2 $28.28 23,689 $24.48 (millions, except per share data) 2003 2002 2001 Net earningsGLYPH<209>as reported $1,841 $1,654 $1,368 Stock-based employee  compensation expense  included in reported  net earnings, net of tax 3 — — Stock-based employee  compensation expense  determined under fair value  based method, net of tax (35) (31) (28) Net earningsGLYPH<209>pro forma $1,809 $1,623 $1,340 Earnings per share: BasicGLYPH<209>as reported $ 2.02 $ 1.82 $ 1.52 BasicGLYPH<209>pro forma $ 1.99 $ 1.79 $ 1.49 DilutedGLYPH<209>as reported $ 2.01 $ 1.81 $ 1.50 DilutedGLYPH<209>pro forma $ 1.97 $ 1.78 $ 1.47 35