RAYTHEON COMPANY 333 33333333333333333333333333333333333333333333 Notes to Consolidated Financial Statements (Continued) 333 NOTE K: STOCKHOLDERS’ EQUITY The weighted-average shares outstanding for basic and diluted EPS were as follows: were reset at 7%. Neither the Company nor RCTI received any pro- ceeds from the remarketing. The proceeds were pledged to collat- eralize the holders’ obligations under the contract to purchase the Company’s common stock on May 15, 2004. Stock options to purchase 30.6 million, 23.7 million, and 20.5 mil- lion shares of common stock outstanding at December 31, 2003, 2002, and 2001, respectively, did not affect the computation of diluted EPS. The exercise prices for these options were greater than the average market price of the Company’s common stock during the respective years. Stock options to purchase 15.3 million, 17.9 million, and 15.5 million shares of common stock outstanding at December 31, 2003, 2002, and 2001, respectively, had exercise prices that were less than the average market price of the Company’s common stock during the respective periods and are included in the dilutive effect of stock options and restricted stock in the table above.  In 1995, the Board of Directors authorized the repurchase of up to 12 million shares of the Company’s common stock to allow the Company to repurchase shares from time to time when warranted by market conditions. In 1998, the Board of Directors ratified and reauthorized the repurchase of 2.5 million shares that remained under the original authorization. There have been 11.8 million shares purchased under these authorizations through December 31, 2003. There were no shares repurchased under this program during 2003, 2002, and 2001.  In 1998, the Board of Directors authorized the purchase of up to 5 million shares of the Company’s common stock per year to counter the dilution due to the exercise of stock options. There were no shares repurchased under this program during 2003, 2002, and 2001.  The Board of Directors is authorized to issue up to 200,000,000 shares of preferred stock, $0.01 par value per  share, in multiple series with terms as determined by the Board  of Directors. The Company had a shareholder rights plan that protected the Company and its stockholders against hostile takeover tactics. In February 2004, the Company amended its shareholder rights plan. As a result of this amendment, the shareholder rights plan automat- ically expired at the close of business on March 1, 2004. Basic earnings per share (EPS) is computed by dividing net income by the weighted-average shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exer- cised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.  In May 2001, the Company issued 14,375,000 shares of com- mon stock for $27.50 per share. In October 2001, the Company issued 31,578,900 shares of common stock for $33.25 per share. The proceeds of the offerings were $1,388 million, net of $56 mil- lion of offering costs, and were used to reduce debt and for general corporate purposes. The Company issued 6,486,000 and 5,100,000 shares of com- mon stock in 2003 and 2002, respectively, to fund the Company Match and Company Contributions, as described in Note O, Pension and Other Employee Benefits. In addition, employee- directed 401(k) plan purchases (Employee Contributions) of the Company stock fund were funded through the issuance of 2,491,000 and 4,118,000 shares of common stock in 2003 and 2002, respectively. The Company issued 855,000 shares of com- mon stock and 6,809,000 shares out of treasury in 2001 to fund the Company Match and Company Contributions. The changes in shares of common stock outstanding were as follows: (In thousands) 2003 2002 2001 Average common shares  outstanding for basic EPS 412,686 401,444 356,717 Dilutive effect of stock options, restricted stock, and equity security units 2,743 6,587 4,606 Shares for diluted EPS 415,429 408,031 361,323 (In thousands) Balance at December 31, 2000 340,620 Issuance of common stock 46,809 Common stock plan activity 1,230 Treasury stock activity 6,773 Balance at December 31, 2001 395,432 Issuance of common stock 9,218 Common stock plan activity 3,638 Treasury stock activity (79) Balance at December 31, 2002 408,209 Issuance of common stock 8,977 Common stock plan activity 1,021 Treasury stock activity (71) Balance at December 31, 2003 418,136