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EQUITY AND STOCK-BASED COMPENSATION | 3 Months Ended
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Mar. 29, 2014
EQUITY AND STOCK-BASED COMPENSATION |
EQUITY AND STOCK-BASED COMPENSATION | (12) EQUITY AND STOCK-BASED COMPENSATION Income Per Share The following table sets forth the number of weighted-average shares outstanding used in the computation of basic and diluted income per share:
|  | Three months ended |
|  | March 29, |  | March 30, |
|  | 2014 |  | 2013 |
Weighted-average number of common shares used in basic income per share |  | 44.236 |  | 46.418 |
Dilutive securities — Employee stock options, restricted stock shares and restricted stock units |  | 0.846 |  | 1.032 |
Weighted-average number of common shares and dilutive securities used in diluted income per share |  | 45.082 |  | 47.450 |
There were no stock options outstanding during the three months ended March 29, 2014. All stock options outstanding were included in the computation of diluted income per share during the three months ended March 30, 2013. All unvested restricted stock shares and restricted stock units were included in the computation of diluted income per share at March 29, 2014 because required market thresholds for vesting (as discussed in our 2013 Annual Report on Form 10-K) were met. The total number of unvested restricted stock shares and restricted stock units that were not included in the computation of diluted income per share because required market thresholds for vesting were not met was 0.225 at March 30, 2013. Stock-based Compensation Stock-based compensation awards may be granted to certain eligible employees or non-employee directors under the 2002 Stock Compensation Plan, or to non-employee directors under the 2006 Non-Employee Director’s Stock Incentive Plan. A detailed description of the awards granted under these plans is included in our 2013 Annual Report on Form 10-K. Compensation expense within income from continuing operations related to restricted stock shares and restricted stock units totaled $24.7 and $20.3 for the three months ended March 29, 2014 and March 30, 2013, respectively, with a related tax benefit of $8.9 and $7.3 for the three months ended March 29, 2014 and March 30, 2013, respectively. We use the Monte Carlo simulation model valuation technique to determine fair value of our restricted stock shares and restricted stock units that 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 share and restricted stock unit award. We used the following assumptions to determine the fair value of the awards granted on the dates indicated below:
|  |  |  |  |  |  |  | Correlation between total |
|  | Annual expected |  |  |  |  |  | shareholder return for SPX |
|  | stock price |  | Annual expected |  | Risk-free |  | and the applicable S&P |
|  | volatility |  | dividend yield |  | interest rate |  | Composite Index |
January 2, 2014: |  |  |  |  |  |  |  |  |
SPX Corporation |  | 33.7 | % | 1.02 | % | 0.76 | % | 0.7631 |
S&P Composite 1500 Industrials Index |  | 19.9 | % | n/a |  | 0.76 | % |  |
April 1, 2013: |  |  |  |  |  |  |  |  |
SPX Corporation |  | 35.5 | % | 1.29 | % | 0.33 | % | 0.7668 |
S&P Composite 1500 Industrials Index |  | 21.2 | % | n/a |  | 0.33 | % |  |
January 2, 2013: |  |  |  |  |  |  |  |  |
SPX Corporation |  | 36.3 | % | 1.42 | % | 0.37 | % | 0.7778 |
S&P Composite 1500 Industrials Index |  | 22.4 | % | n/a |  | 0.37 | % |  |
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 Share and Restricted Stock Unit Awards The following table summarizes the restricted stock share and restricted stock unit activity from December 31, 2013 through March 29, 2014:
|  |  |  | Weighted-Average |
|  | Unvested Restricted Stock Shares |  | Grant-Date Fair |
|  | and Restricted Stock Units |  | Value Per Share |
Outstanding at December 31, 2013 |  | 1.537 |  | $ | 58.39 |
Granted |  | 0.510 |  | 86.70 |
Vested |  | (0.537 | ) | 58.57 |
Forfeited |  | (0.226 | ) | 62.15 |
Outstanding at March 29, 2014 |  | 1.284 |  | 68.78 |
As of March 29, 2014, there was $38.7 of unrecognized compensation cost related to restricted stock share and restricted stock unit compensation arrangements. We expect this cost to be recognized over a weighted-average period of 2.3 years. Accumulated Other Comprehensive Income The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended March 29, 2014 were as follows:
|  | Foreign Currency Translation Adjustment |  | Net Unrealized Losses on Qualifying Cash Flow Hedges (1) |  | Net Unrealized Losses on Available-for- Sale Securities |  | Pension and Postretirement Liability Adjustment and Other (2) |  | Total |
Balance at beginning of period |  | $ | 296.8 |  | $ | (0.8 | ) | $ | (3.7 | ) | $ | (4.8 | ) | $ | 287.5 |
Other comprehensive income (loss) before reclassifications |  | (2.0 | ) | (0.8 | ) | 3.8 |  | 0.2 |  | 1.2 |
Amounts reclassified from accumulated other comprehensive income |  | — |  | 0.1 |  | (0.3 | ) | 5.0 |  | 4.8 |
Current-period other comprehensive income (loss) |  | (2.0 | ) | (0.7 | ) | 3.5 |  | 5.2 |  | 6.0 |
Balance at end of period |  | $ | 294.8 |  | $ | (1.5 | ) | $ | (0.2 | ) | $ | 0.4 |  | $ | 293.5 |
(1) Net of tax benefit of $1.2 and $1.0 as of March 29, 2014 and December 31, 2013, respectively. (2) Net of tax (provision) benefit of $(0.1) and $2.2 as of March 29, 2014 and December 31, 2013, respectively. The balance as of December 31, 2013 primarily includes $(5.0), net of tax, related to our share of the pension liability adjustment for EGS as of December 31, 2013. In connection with the sale of our interest in EGS during the first quarter of 2014, as described in Note 1, we recognized our share of the pension liability adjustment for EGS as a component of the gain on sale of our investment interest. The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended March 30, 2013 were as follows:
|  | Foreign Currency Translation Adjustment |  | Net Unrealized Losses on Qualifying Cash Flow Hedges (1) |  | Net Unrealized Losses on Available-for- Sale Securities |  | Pension and Postretirement Liability Adjustment and Other (2) |  | Total |
Balance at beginning of period |  | $ | 293.8 |  | $ | (3.3 | ) | $ | (3.1 | ) | $ | (2.6 | ) | $ | 284.8 |
Other comprehensive income (loss) before reclassifications |  | (87.2 | ) | 3.6 |  | (0.5 | ) | (1.2 | ) | (85.3 | )
Amounts reclassified from accumulated other comprehensive income |  | — |  | 0.4 |  | — |  | (0.3 | ) | 0.1 |
Current-period other comprehensive income (loss) |  | (87.2 | ) | 4.0 |  | (0.5 | ) | (1.5 | ) | (85.2 | )
Balance at end of period |  | $ | 206.6 |  | $ | 0.7 |  | $ | (3.6 | ) | $ | (4.1 | ) | $ | 199.6 |
(1) Net of tax benefit of $2.5 as of December 31, 2012. (2) Net of tax benefit of $1.8 and $1.2 as of March 30, 2013 and December 31, 2012, respectively. Includes $(5.0) and $(3.8) related to our share of the pension liability adjustment for EGS as of March 30, 2013 and December 31, 2012, respectively. The following summarizes amounts reclassified from each component of accumulated comprehensive loss for the three months ended March 29, 2014 and March 30, 2013:
|  | Amount Reclassified from AOCI |  |  |
|  | Three months ended |  | Affected Line Item in the Condensed |
|  | March 29, 2014 |  | March 30, 2013 |  | Consolidated Statements of Operations |
Losses on qualifying cash flow hedges: |  |  |  |  |  |  |
Commodity contracts |  | $ | 0.1 |  | $ | — |  | Cost of products sold |
FX forward contracts |  | — |  | 0.6 |  | Revenues |
Pre-tax |  | 0.1 |  | 0.6 |  |  |
Income taxes |  | — |  | (0.2 | ) |  |
|  | $ | 0.1 |  | $ | 0.4 |  |  |
Gain on available-for-sale securities |  | $ | 0.3 |  | $ | — |  | Other income, net |
Losses (gains) on pension and postretirement items: |  |  |  |  |  |  |
Recognition of our share of the pension liability adjustment for EGS |  | $ | 7.4 |  | $ | — |  | Other income, net |
Amortization of unrecognized prior service credits |  | — |  | (0.4 | ) | Selling, general and administrative |
Pre-tax |  | 7.4 |  | (0.4 | ) |  |
Income taxes |  | (2.4 | ) | 0.1 |  |  |
|  | $ | 5.0 |  | $ | (0.3 | ) |  |
Common Stock in Treasury On December 18, 2013, 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 $500.0 of shares of our common stock on or before December 31, 2014, in accordance with a share repurchase program authorized by our Board of Directors. During the first quarter of 2014, we repurchased 1.316 shares of our common stock for $134.3 under this trading plan. We repurchased 0.115 shares of our common stock for $11.2 under this trading plan during December 2013. During the first quarter of 2013, we repurchased 1.514 shares of our common stock for $104.4, which completed the repurchases under a trading plan that we entered into during 2012. In addition, we repurchased 0.333 shares of our common stock on the open market for $27.0 during the first quarter of 2013. During the three months ended March 29, 2014, “Common stock in treasury” was decreased by the settlement of restricted stock units issued from treasury stock of $12.0 and increased by $7.9 for common stock that was surrendered by recipients of restricted stock as a means of funding the related minimum income tax withholding requirements. During the three months ended March 30, 2013, “Common stock in treasury” was decreased by the settlement of restricted stock units issued from treasury stock of $13.6 and increased by $9.0 for common stock that was surrendered by recipients of restricted stock as a means of funding the related minimum income tax withholding requirements. Dividends On February 10, 2014, we effected a dividend increase effective with the first quarterly dividend payment of 2014. Our annual dividend is now $1.50 per share (previously $1.00 per share), payable quarterly. The dividends declared during the first quarters of 2014 and 2013 totaled $16.3 and $11.4, respectively. We paid first quarter dividends on April 2, 2014 and April 2, 2013. Changes in Equity A summary of the changes in equity for the three months ended March 29, 2014 and March 30, 2013 is provided below:
|  | March 29, 2014 |  | March 30, 2013 |
|  | SPX |  |  |  |  |  | SPX |  |  |  |  |
|  | Corporation |  |  |  |  |  | Corporation |  |  |  |  |
|  | Shareholders’ |  | Noncontrolling |  | Total |  | Shareholders’ |  | Noncontrolling |  | Total |
|  | Equity |  | Interests |  | Equity |  | Equity |  | Interests |  | Equity |
Equity, beginning of period |  | $ | 2,158.0 |  | $ | 14.0 |  | $ | 2,172.0 |  | $ | 2,224.2 |  | $ | 11.3 |  | $ | 2,235.5 |
Net income (loss) |  | 318.2 |  | (0.4 | ) | 317.8 |  | 8.7 |  | 1.3 |  | 10.0 |
Net unrealized gains (losses) on qualifying cash flow hedges, net of tax (provision) benefit of $0.2 and $(2.5) for the three months ended March 29, 2014 and March 30, 2013, respectively |  | (0.7 | ) | — |  | (0.7 | ) | 4.0 |  | — |  | 4.0 |
Net unrealized gains (losses) on available-for-sale securities |  | 3.5 |  | — |  | 3.5 |  | (0.5 | ) | — |  | (0.5 | )
Pension liability adjustment, net of tax (provision) benefit of $(2.3) and $0.7 for the three months ended March 29, 2014 and March 30, 2013, respectively |  | 5.2 |  | — |  | 5.2 |  | (1.5 | ) | — |  | (1.5 | )
Foreign currency translation adjustments |  | (2.0 | ) | (0.1 | ) | (2.1 | ) | (87.2 | ) | (0.6 | ) | (87.8 | )
Total comprehensive income (loss), net |  | 324.2 |  | (0.5 | ) | 323.7 |  | (76.5 | ) | 0.7 |  | (75.8 | )
Dividends declared |  | (16.3 | ) | — |  | (16.3 | ) | (11.4 | ) | — |  | (11.4 | )
Exercise of stock options and other incentive plan activity, including related tax benefit of $8.8 and $5.8 for the three months ended March 29, 2014 and March 30, 2013, respectively |  | 13.6 |  | — |  | 13.6 |  | 10.1 |  | — |  | 10.1 |
Amortization of restricted stock and restricted stock unit grants |  | 24.7 |  | — |  | 24.7 |  | 20.3 |  | — |  | 20.3 |
Restricted stock and restricted stock unit vesting, net of tax withholdings |  | (20.3 | ) | — |  | (20.3 | ) | (20.5 | ) | — |  | (20.5 | )
Common stock repurchases |  | (134.3 | ) | — |  | (134.3 | ) | (131.4 | ) | — |  | (131.4 | )
Other changes in noncontrolling interests |  | — |  | — |  | — |  | — |  | (0.2 | ) | (0.2 | )
Equity, end of period |  | $ | 2,349.6 |  | $ | 13.5 |  | $ | 2,363.1 |  | $ | 2,014.8 |  | $ | 11.8 |  | $ | 2,026.6 |

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income, and compensation-related costs for equity-based compensation. Includes, but is not limited to, disclosure of policies, compensation plan details, equity-based arrangements to obtain goods and services, deferred compensation arrangements, and employee stock purchase plan details. + References No definition available. + Details
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