Raytheon 2006 Annual Report Download - page 104

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 10: Stockholders’ Equity
The changes in shares of common stock outstanding were as follows:
(In thousands)
Balance at December 31, 2003 418,136
Issuance of common stock 29,472
Common stock plan activity 5,715
Treasury stock activity (227)
Balance at December 31, 2004 453,096
Issuance of common stock —
Common stock plan activity 4,589
Treasury stock activity (11,312)
Balance at December 31, 2005 446,373
Issuance of common stock —
Common stock plan activity 7,621
Treasury stock activity (8,124)
Balance at December 31, 2006 445,870
On November 30, 2004, our Board of Directors authorized the repurchase, between January 1, 2005 and December 31,
2006, of up to $700 million of our common stock. This program was completed during 2006. In March 2006, our Board
of Directors authorized the repurchase of up to an additional $750 million of our outstanding common stock
commencing in 2006. We have repurchased 1.9 million shares of common stock for $88 million under this program. In
December 2006, our Board of Directors, subject to the closing of our sale of Raytheon Aircraft, authorized an increase to
our existing repurchase program of up to an additional $750 million of our outstanding common stock to our existing
repurchase program.
We issued 2,325,000 shares of common stock in 2004 to fund the Company Match and Company Contributions, as
described in Note 14, Pension and Other Employee Benefits. In addition, employee-directed 401(k) plan purchases
(Employee Contributions) of our common stock fund were funded through the issuance of 134,000 shares of common
stock in 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 exercised or converted into common stock or resulted in the issuance of common stock that then shared in the
earnings of the entity.
The weighted-average shares outstanding for basic and diluted EPS were as follows:
(In thousands) 2006 2005 2004
Average common shares outstanding for basic EPS 441,751 446,958 438,149
Dilutive effect of stock options, restricted stock, LTPP and warrants 9,124 6,344 4,052
Shares for diluted EPS 450,875 453,302 442,201
Stock options to purchase 6.8 million, 16.5 million and 18.7 million shares of common stock outstanding at
December 31, 2006, 2005 and 2004, respectively, did not affect the computation of diluted EPS. The exercise prices for
these options were greater than the average market price of our common stock during the respective years.
Stock options to purchase 18.8 million, 17.2 million and 19.5 million shares of common stock outstanding at
December 31, 2006, 2005 and 2004, respectively, had exercise prices that were less than the average market price of our
common stock during the respective periods and are included in the dilutive effect of stock options, restricted stock,
LTPP and warrants in the table above.
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