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Shareholders' Equity and Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2012
Shareholders' Equity and Stock-Based Compensation |
Shareholders' Equity and Stock-Based Compensation | (15) Shareholders' Equity and Stock-Based Compensation Earnings Per Share The following table sets forth the computations of the components used for the calculation of basic and diluted earnings per share:
|  | Year Ended December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2010 |
Numerator: |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | (78.4 | ) | $ | 155.6 |  | $ | 178.0 |
Less: Net income (loss) attributable to noncontrolling interests |  |  | 2.8 |  |  | 5.0 |  |  | (2.8 | )
Income (loss) from continuing operations attributable to SPX Corporation common shareholders for calculating basic and diluted earnings per share |  | $ | (81.2 | ) | $ | 150.6 |  | $ | 180.8 |
Income from discontinued operations |  | $ | 340.4 |  | $ | 30.0 |  | $ | 24.8 |
Less: Net income (loss) attributable to noncontrolling interest |  |  | — |  |  | — |  |  | — |
Income from discontinued operations attributable to SPX Corporation common shareholders for calculating basic and diluted earnings per share |  | $ | 340.4 |  | $ | 30.0 |  | $ | 24.8 |
Denominator: |  |  |  |  |  |  |  |  |  |
Weighted-average number of common shares used in basic earnings per share |  |  | 50.031 |  |  | 50.499 |  |  | 49.718 |
Dilutive securities — Employee stock options and restricted stock units |  |  | — |  |  | 0.447 |  |  | 0.629 |
Weighted-average number of common shares and dilutive securities used in diluted earnings per share |  |  | 50.031 |  |  | 50.946 |  |  | 50.347 |
The total number of stock options that were not included in the computation of dilutive earnings per share because their exercise price was greater than the average market price of common shares was 0.003, 0.117 and 0.405 for the years ended December 31, 2012, 2011 and 2010, respectively. The total number of unvested restricted stock and restricted stock units that were not included in the computation of diluted earnings per share because required market thresholds for vesting (as discussed below) were not met was 1.031, 0.633 and 0.102 at December 31, 2012, 2011 and 2010, respectively. Accumulated Other Comprehensive Loss The components of the balance sheet caption "Accumulated other comprehensive loss" were as follows:
|  | December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |
Foreign currency translation adjustment |  | $ | 298.1 |  | $ | 199.7 |
Net unrealized losses on qualifying cash flow hedges, net of tax benefit of $2.5 and $2.9, respectively |  |  | (3.3 | ) |  | (4.4 | )
Net unrealized losses on available-for-sale securities, |  |  | (3.1 | ) |  | (1.5 | )
Pension and postretirement liability adjustment and other, net of tax benefit of $318.5 and $274.3, respectively(1) |  |  | (520.6 | ) |  | (440.3 | )
Accumulated other comprehensive loss |  | $ | (228.9 | ) | $ | (246.5 | )
(1) As of December 31, 2012 and 2011, included $3.8 for each year, related to our share of the pension liability adjustment for EGS. Common Stock and Treasury Stock At December 31, 2012, we had 200.0 authorized shares of common stock (par value $10.00). Common shares issued, treasury shares and shares outstanding are summarized in the table below.
|  | Common Stock Issued |  | Treasury Stock |  | Shares Outstanding |
--- | --- | --- | --- | --- | --- | --- | ---
Balance at December 31, 2009 |  |  | 97.284 |  |  | (47.916 | ) |  | 49.368 |
Stock options exercised |  |  | 0.238 |  |  | — |  |  | 0.238 |
Restricted stock and restricted stock units |  |  | 0.278 |  |  | 0.142 |  |  | 0.420 |
Other |  |  | 0.268 |  |  | — |  |  | 0.268 |
Balance at December 31, 2010 |  |  | 98.068 |  |  | (47.774 | ) |  | 50.294 |
Stock options exercised |  |  | 0.154 |  |  | — |  |  | 0.154 |
Restricted stock and restricted stock units |  |  | 0.209 |  |  | 0.145 |  |  | 0.354 |
Other |  |  | 0.271 |  |  | — |  |  | 0.271 |
Balance at December 31, 2011 |  |  | 98.702 |  |  | (47.629 | ) |  | 51.073 |
Stock options exercised |  |  | 0.174 |  |  | — |  |  | 0.174 |
Share repurchases |  |  | — |  |  | (3.606 | ) |  | (3.606 | )
Restricted stock and restricted stock units |  |  | 0.311 |  |  | 0.085 |  |  | 0.396 |
Other |  |  | 0.267 |  |  | — |  |  | 0.267 |
Balance at December 31, 2012 |  |  | 99.454 |  |  | (51.150 | ) |  | 48.304 |
Stock-Based Compensation Under the 2002 Stock Compensation Plan, as amended in 2006, 2011 and 2012, up to 3.468 shares of our common stock were available for grant at December 31, 2012. The 2002 Stock Compensation Plan permits the issuance of new shares or shares from treasury upon the exercise of options, vesting of restricted stock units, or granting of restricted stock. Each share of restricted stock and restricted stock unit granted reduces availability by two shares. During the years ended December 31, 2012, 2011 and 2010, we classified excess tax benefits from stock-based compensation of $3.8, $6.6 and $4.2, respectively, as financing cash flows and included such amounts in "Proceeds from the exercise of employee stock options and other, net of minimum withholdings paid on behalf of employees for net share settlements" within our consolidated statements of cash flows. Restricted stock or restricted stock units may be granted to certain eligible employees or non-employee directors in accordance with applicable equity compensation plan documents and agreements. Subject to participants' continued employment and other plan terms and conditions, the restrictions lapse and awards generally vest over three years. Performance thresholds have been instituted for vesting a substantial portion of restricted stock and restricted stock unit awards. This vesting is based on SPX shareholder return versus the S&P 500 composite index. On each vesting date, we compare the SPX shareholder return to the performance of the S&P 500 composite index for the prior year and for the cumulative period since the date of the grant. If SPX outperforms the S&P 500 composite index for the prior year, the one-third portion of the grant associated with that year will vest. If SPX outperforms the S&P composite index for the cumulative period, any unvested portion of the grant that was subject to vesting on or prior to the vesting date will vest. Additionally, a portion of our restricted stock and restricted stock unit awards vest based on the passage of time since the grant date. Restricted stock and restricted stock units that do not vest within the three-year vesting period are forfeited. We grant restricted stock to non-employee directors under the 2006 Non-Employee Directors' Stock Incentive Plan (the "Directors' Plan"). Under the Directors' Plan, up to 0.013 shares of our common stock were available for grant at December 31, 2012. Restricted stock grants have a three-year vesting period based on SPX shareholder return versus the S&P 500 composite index and are subject to the same company performance thresholds for employee awards described in the preceding paragraph. Restricted stock that does not vest within the three-year vesting period in accordance with these performance requirements is forfeited. Stock options may be granted to key employees in the form of incentive stock options or nonqualified stock options. The option price per share may be no less than the fair market value of our common stock at the close of business day prior to the date of grant. Upon exercise, the employee has the option to surrender previously owned shares at current value in payment of the exercise price and/or for withholding tax obligations, and, subject to certain restrictions, may receive a reload option having an exercise price equal to the current market value for the number of shares so surrendered. The reload option expires at the same time that the exercised option would have expired. Any future issuances of options under the plan will not have a reload feature, pursuant to the terms of the plan. We have not granted options to any of our employees since 2004. All outstanding options are vested as of December 31, 2012. The recognition of compensation expense for share-based awards, including stock options, is based on their grant date fair values. The fair value of each award is amortized over the lesser of the award's requisite or derived service period, which is generally up to three years. There was no stock option expense for the years ended December 31, 2012, 2011 and 2010. Compensation expense within income from continuing operations related to restricted stock and restricted stock units totaled $39.4, $39.2 and $29.9 for the years ended December 31, 2012, 2011 and 2010, respectively, with the related tax benefit being $15.0, $14.7 and $11.1 for the years ended December 31, 2012, 2011 and 2010, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. There were no option grants in 2012, 2011 and 2010. We use the Monte Carlo simulation model valuation technique to determine fair value of our restricted stock and restricted stock units as they contain a "market condition." The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculates the fair value of each restricted stock and restricted stock unit award. We used the following assumptions in determining the fair value of the awards granted on January 3, 2012 and March 1, 2011:
|  | Annual expected stock price volatility |  | Annual expected dividend yield |  | Risk-free interest rate |  | Correlation between total shareholder return for SPX and S&P 500 Composite Index |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
January 3, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |
SPX Corporation |  |  | 44.3 | % |  | 1.60 | % |  | 0.44 | % |  | 0.7365 |
S&P 500 Composite Index |  |  | 23.1 | % |  | n/a |  |  | 0.44 | % |  |  |
March 1, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |
SPX Corporation |  |  | 61.0 | % |  | 1.27 | % |  | 1.03 | % |  | 0.7559 |
S&P 500 Composite Index |  |  | 30.3 | % |  | n/a |  |  | 1.03 | % |  |  |
Annual expected stock price volatility is based on the three-year historical volatility. The annual expected dividend yield is based on annual expected dividend payments and the stock price on the date of grant. The average risk-free interest rate is based on the one-year through three-year daily treasury yield curve rate as of the grant date. Restricted Stock and Restricted Stock Unit Awards The following table summarizes the restricted stock and restricted stock unit activity from December 31, 2009 through December 31, 2012:
|  | Unvested Restricted Stock and Restricted Stock Units |  | Weighted-average Grant-Date Fair Value per share |
--- | --- | --- | --- | --- | ---
Outstanding at December 31, 2009 |  |  | 1.435 |  | $ | 51.75 |
Granted |  |  | 0.738 |  |  | 48.91 |
Vested |  |  | (0.626 | ) |  | 50.46 |
Forfeited |  |  | (0.031 | ) |  | 47.82 |
Outstanding at December 31, 2010 |  |  | 1.516 |  |  | 50.97 |
Granted |  |  | 0.836 |  |  | 62.72 |
Vested |  |  | (0.636 | ) |  | 51.47 |
Forfeited |  |  | (0.276 | ) |  | 67.21 |
Outstanding at December 31, 2011 |  |  | 1.440 |  |  | 54.38 |
Granted |  |  | 0.823 |  |  | 50.64 |
Vested |  |  | (0.264 | ) |  | 39.75 |
Forfeited |  |  | (0.064 | ) |  | 57.77 |
Outstanding at December 31, 2012 |  |  | 1.935 |  |  | 54.70 |
As of December 31, 2012, there was $17.7 of unrecognized compensation cost related to restricted stock and restricted stock unit compensation arrangements. We expect this cost to be recognized over a weighted-average period of 1.7 years. Stock Options The following table shows stock option activity from December 31, 2009 through December 31, 2012:
|  | Shares |  | Weighted- Average Exercise Price |
--- | --- | --- | --- | --- | ---
Options outstanding and exercisable at December 31, 2009 |  |  | 0.881 |  | $ | 59.86 |
Exercised |  |  | (0.238 | ) |  | 48.21 |
Terminated |  |  | (0.008 | ) |  | 90.23 |
Options outstanding and exercisable at December 31, 2010 |  |  | 0.635 |  |  | 63.82 |
Exercised |  |  | (0.154 | ) |  | 65.44 |
Terminated |  |  | (0.117 | ) |  | 89.10 |
Options outstanding and exercisable at December 31, 2011 |  |  | 0.364 |  |  | 54.87 |
Exercised |  |  | (0.174 | ) |  | 39.58 |
Terminated |  |  | (0.177 | ) |  | 69.42 |
Options outstanding and exercisable at December 31, 2012 |  |  | 0.013 |  |  | 62.45 |
The weighted-average remaining term, in years, of stock options outstanding and exercisable at December 31, 2012 was 0.7. The total number of in-the-money options exercisable on December 31, 2012 was 0.010. Aggregate intrinsic value (market value of stock less option exercise price) represents the total pre-tax intrinsic value, based on our closing stock price on December 31, 2012, which would have been received by the option holders had all in-the-money option holders exercised their options as of that date. The aggregate intrinsic value of the options outstanding and exercisable at December 31, 2012 was $0.207. The aggregate intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010 was $5.9, $2.5 and $4.1, respectively. Treasury Stock On February 16, 2012, we entered into a written trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, to facilitate the repurchase of up to $350.0 of shares of our common stock on or before February 14, 2013, in accordance with a share repurchase program authorized by our Board of Directors. During the first half of 2012, 1.0 shares of our common stock were repurchased for $75.0, with the remainder scheduled to be repurchased following the consummation of the sale of Service Solutions business, in accordance with the share repurchase program. During December 2012, and following the completion of the sale of our Service Solutions business, we repurchased 2.6 shares of our common stock for $170.6, resulting in total repurchases for 2012 of $245.6. During January 2013, we completed the repurchases authorized under the trading plan. Preferred Stock None of our 3.0 shares of authorized no par value preferred stock was outstanding at December 31, 2012, 2011 or 2010.

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Also includes disclosure of compensation-related costs for equity-based compensation which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details, and employee stock purchase plan details. + References No definition available. + Details
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