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Shareholders' Equity and Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2014
Shareholders' Equity and Stock-Based Compensation |
Shareholders' Equity and Stock-Based Compensation | (15) Shareholders' Equity and Stock-Based Compensation Income Per Share The following table sets forth the computations of the components used for the calculation of basic and diluted income per share:
|  | Year ended December 31, |
|  | 2014 |  | 2013 |  | 2012 |
Numerator: |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | 380.1 |  | $ | 211.3 |  | $ | (165.2 | )
Less: Net income (loss) attributable to noncontrolling interests |  |  | (9.5 | ) |  | 2.2 |  |  | 3.0 |
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Income (loss) from continuing operations attributable to SPX Corporation common shareholders for calculating basic and diluted income per share |  | $ | 389.6 |  | $ | 209.1 |  | $ | (168.2 | )
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Income from discontinued operations |  | $ | 8.3 |  | $ | 1.3 |  | $ | 348.4 |
Less: Net income (loss) attributable to noncontrolling interest |  |  | — |  |  | 0.2 |  |  | (0.2 | )
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Income from discontinued operations attributable to SPX Corporation common shareholders for calculating basic and diluted income per share |  | $ | 8.3 |  | $ | 1.1 |  | $ | 348.6 |
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Denominator: |  |  |  |  |  |  |  |  |  |
Weighted-average number of common shares used in basic income per share |  |  | 42.400 |  |  | 45.384 |  |  | 50.031 |
Dilutive securities — Employee stock options, restricted stock shares and restricted stock units |  |  | 0.631 |  |  | 0.622 |  |  | — |
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Weighted-average number of common shares and dilutive securities used in diluted income per share |  |  | 43.031 |  |  | 46.006 |  |  | 50.031 |
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There were no stock options outstanding during the year ended December 31, 2014, and all stock options outstanding were included in the computation of diluted income per share for the year ended December 31, 2013. The total number of stock options not included in the computation of diluted income per share because their exercise price was greater than the average market price of common shares was 0.003 for the year ended December 31, 2012. 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 (as discussed below) were not met was 0.226, 0.647 and 1.031 at December 31, 2014, 2013 and 2012, respectively. Common Stock and Treasury Stock At December 31, 2014, 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, 2011 |  |  | 98.702 |  |  | (47.629 | ) |  | 51.073 |
Stock options exercised |  |  | 0.174 |  |  | — |  |  | 0.174 |
Share repurchases |  |  | — |  |  | (3.606 | ) |  | (3.606 | )
Restricted stock shares and restricted stock units |  |  | 0.311 |  |  | 0.085 |  |  | 0.396 |
Other |  |  | 0.267 |  |  | — |  |  | 0.267 |
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Balance at December 31, 2012 |  |  | 99.454 |  |  | (51.150 | ) |  | 48.304 |
Stock options exercised |  |  | 0.008 |  |  | — |  |  | 0.008 |
Share repurchases |  |  | — |  |  | (3.493 | ) |  | (3.493 | )
Restricted stock shares and restricted stock units |  |  | 0.133 |  |  | 0.123 |  |  | 0.256 |
Other |  |  | 0.206 |  |  | — |  |  | 0.206 |
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Balance at December 31, 2013 |  |  | 99.801 |  |  | (54.520 | ) |  | 45.281 |
Share repurchases |  |  | — |  |  | (4.852 | ) |  | (4.852 | )
Restricted stock shares and restricted stock units |  |  | 0.096 |  |  | 0.166 |  |  | 0.262 |
Other |  |  | 0.167 |  |  | — |  |  | 0.167 |
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Balance at December 31, 2014 |  |  | 100.064 |  |  | (59.206 | ) |  | 40.858 |
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Stock-Based Compensation Under the 2002 Stock Compensation Plan, as amended in 2006, 2011 and 2012, up to 2.305 shares of our common stock were available for grant at December 31, 2014. 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 shares. Each share of restricted stock and restricted stock unit granted reduces availability by two shares. During the years ended December 31, 2014, 2013 and 2012, we classified excess tax benefits from stock-based compensation of $9.7, $6.3 and $3.8, respectively, as financing cash flows and included such amounts in "Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options and other" within our consolidated statements of cash flows. Restricted stock shares 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 a period of time, generally one or three years. In some instances, such as death, disability, or retirement, stock may vest concurrently with or following an employee's termination. A substantial portion of the restricted stock shares and restricted stock unit awards vest based on performance thresholds, while the remaining portion vest based on the passage of time since grant date. Eligible employees received target performance awards in 2014 and 2013 in which the employee can earn between 25% and 125% of the target performance award in the event the award meets the required vesting criteria. Vesting for the 2014 and 2013 target performance awards is based on SPX shareholder return versus the S&P Composite 1500 Industrials Index over three-year periods ending December 31, 2016 and December 31, 2015, respectively. Each eligible non-officer employee also received awards in 2014, 2013 and 2012 that vest ratably over three years, subject only to the passage of time. Officers received awards in 2014 and 2013 that vest ratably over three years, subject to an internal performance metric. Vesting for the 2012 target performance awards was based on the SPX shareholder return versus the S&P 500 Index. On each vesting date, we compared the SPX shareholder return to the performance of the S&P 500 Index for the prior year and for the cumulative period since the date of the grant. If SPX outperformed the S&P 500 Index for the prior year, the one-third portion of the grant associated with that year vested. If SPX outperformed the S&P 500 Index for the cumulative period, any unvested portion of the grant that was subject to vesting on or prior to the vesting date vested. We grant restricted stock shares to non-employee directors under the 2006 Non-Employee Directors' Stock Incentive Plan (the "Directors' Plan") and the 2002 Stock Compensation Plan. Under the Directors' Plan, up to 0.022 shares of our common stock were available for grant at December 31, 2014. The 2014 and 2013 restricted stock grants to non-employee directors generally vest over a one-year vesting period. The 2012 restricted stock grants to non-employee directors had a three-year vesting period based on SPX shareholder return versus the S&P 500 Index, and were subject to the same company performance thresholds as the employee 2012 awards described above. Restricted stock shares and restricted stock units that do not vest within the applicable vesting period are 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 the 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. As of December 31, 2014, we had not granted options to any of our employees since 2004, and there were no options outstanding as of December 31, 2014 and 2013. 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, 2014, 2013 and 2012. Compensation expense within income from continuing operations related to restricted stock shares and restricted stock units totaled $38.4, $32.9 and $38.9 for the years ended December 31, 2014, 2013 and 2012, respectively, with the related tax benefit being $14.1, $12.1 and $14.8 for the years ended December 31, 2014, 2013 and 2012, respectively. We use the Monte Carlo simulation model valuation technique to determine fair value of our restricted stock shares 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 share and restricted stock unit award. We used the following assumptions in determining the fair value of the awards granted on the dates indicated below:
|  | Annual Expected Stock Price Volatility |  | Annual Expected Dividend Yield |  | Risk-free Interest Rate |  | Correlation Between Total Shareholder Return for SPX and the Applicable S&P 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 | % |  |  |
January 3, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |
SPX Corporation |  |  | 44.3 | % |  | 1.60 | % |  | 0.44 | % |  | 0.7365 |
S&P 500 Index |  |  | 23.1 | % |  | n/a |  |  | 0.44 | % |  |  |
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, 2011 through December 31, 2014:
|  | Unvested Restricted Stock Shares and Restricted Stock Units |  | Weighted-Average Grant-Date Fair Value Per Share |
Outstanding at December 31, 2011 |  |  | 1.440 |  | $ | 54.38 |
Granted |  |  | 0.823 |  |  | 50.64 |
Vested |  |  | (0.264 | ) |  | 39.75 |
Forfeited |  |  | (0.064 | ) |  | 57.77 |
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Outstanding at December 31, 2012 |  |  | 1.935 |  |  | 54.70 |
Granted |  |  | 0.652 |  |  | 61.66 |
Vested |  |  | (0.754 | ) |  | 54.34 |
Forfeited |  |  | (0.296 | ) |  | 52.20 |
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Outstanding at December 31, 2013 |  |  | 1.537 |  |  | 58.39 |
Granted |  |  | 0.519 |  |  | 86.99 |
Vested |  |  | (0.604 | ) |  | 59.49 |
Forfeited |  |  | (0.284 | ) |  | 63.76 |
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Outstanding at December 31, 2014 |  |  | 1.168 |  |  | 69.22 |
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As of December 31, 2014, there was $22.1 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 1.7 years. Stock Options The following table shows stock option activity from December 31, 2011 through December 31, 2013. There was no stock option activity during the year ended December 31, 2014.
|  | Shares |  | Weighted- Average Exercise Price |
Options outstanding and exercisable at December 31, 2011 |  |  | 0.364 |  | $ | 54.87 |
Exercised |  |  | (0.174 | ) |  | 39.58 |
Terminated |  |  | (0.177 | ) |  | 69.42 |
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Options outstanding and exercisable at December 31, 2012 |  |  | 0.013 |  |  | 62.45 |
Exercised |  |  | (0.008 | ) |  | 50.79 |
Terminated |  |  | (0.005 | ) |  | 85.36 |
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Options outstanding and exercisable at December 31, 2013 |  |  | — |  |  | — |
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The aggregate intrinsic value (market value of stock less the option exercise price) of options exercised during the years ended December 31, 2013 and 2012 was $0.4 and $5.9, respectively. Accumulated Other Comprehensive Income The changes in the components of accumulated other comprehensive income, net of tax, for the year ended December 31, 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 December 31, 2013 |  | $ | 296.8 |  | $ | (0.8 | ) | $ | (3.7 | ) | $ | (4.8 | ) | $ | 287.5 |
Other comprehensive income (loss) before reclassifications |  |  | (237.8 | ) |  | (1.6 | ) |  | 3.6 |  |  | 4.9 |  |  | (230.9 | )
Amounts reclassified from accumulated other comprehensive income |  |  | — |  |  | 1.1 |  |  | 0.1 |  |  | 4.8 |  |  | 6.0 |
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Current-period other comprehensive income (loss) |  |  | (237.8 | ) |  | (0.5 | ) |  | 3.7 |  |  | 9.7 |  |  | (224.9 | )
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Balance at December 31, 2014 |  | $ | 59.0 |  | $ | (1.3 | ) | $ | — |  | $ | 4.9 |  | $ | 62.6 |
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(1) | Net of tax benefit of $1.1 and $1.0 as of December 31, 2014 and 2013, respectively.
(2) | Net of tax (provision) benefit of $(3.0) and $2.2 as of December 31, 2014 and 2013, respectively. The balance as of December 31, 2014 includes unamortized prior service credits. 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 2014, as described in Note 9, we recognized our share of the pension liability adjustment for EGS as a component of the gain on the sale of our investment interest.
The changes in the components of accumulated other comprehensive income, net of tax, for the year ended December 31, 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 December 31, 2012 |  | $ | 293.8 |  | $ | (3.3 | ) | $ | (3.1 | ) | $ | (2.6 | ) | $ | 284.8 |
Other comprehensive income (loss) before reclassifications |  |  | 3.0 |  |  | (1.0 | ) |  | (0.6 | ) |  | (1.2 | ) |  | 0.2 |
Amounts reclassified from accumulated other comprehensive income |  |  | — |  |  | 3.5 |  |  | — |  |  | (1.0 | ) |  | 2.5 |
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Current-period other comprehensive income (loss) |  |  | 3.0 |  |  | 2.5 |  |  | (0.6 | ) |  | (2.2 | ) |  | 2.7 |
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Balance at December 31, 2013 |  | $ | 296.8 |  | $ | (0.8 | ) | $ | (3.7 | ) | $ | (4.8 | ) | $ | 287.5 |
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(1) | Net of tax benefit of $1.0 and $2.5 as of December 31, 2013 and 2012, respectively.
(2) | Net of tax benefit of $2.2 and $1.2 as of December 31, 2013 and 2012, respectively. Includes $(5.0) and $(3.8), net of tax, related to our share of the pension liability adjustment for EGS as of December 31, 2013 and 2012, respectively, and $0.2 and $1.2, net of tax, of unamortized prior service credits as of December 31, 2013 and 2012, respectively.
The following summarizes amounts reclassified from each component of accumulated comprehensive income for the years ended December 31, 2014 and 2013:
|  | Amount Reclassified from AOCI |  | Affected Line Items in the Consolidated Statements of Operations
|  | Year ended December 31, |  |
|  | 2014 |  | 2013 |  |
Losses on qualifying cash flow hedges: |  |  |  |  |  |  |  |
FX forward contracts |  | $ | 0.8 |  | $ | 4.0 |  | Revenues
Commodity contracts |  |  | 0.7 |  |  | 1.3 |  | Cost of products sold
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Pre-tax |  |  | 1.5 |  |  | 5.3 |  |
Income taxes |  |  | (0.4 | ) |  | (1.8 | ) |
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|  | $ | 1.1 |  | $ | 3.5 |  |
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Pension and postretirement items: |  |  |  |  |  |  |  |
Recognition of our share of the pension liability adjustment for EGS |  | $ | 7.4 |  | $ | — |  | Other income (expense), net
Amortization of unrecognized prior service credits |  |  | — |  |  | (0.1 | ) | Cost of products sold
Amortization of unrecognized prior service credits |  |  | (0.3 | ) |  | (1.3 | ) | Selling, general and administrative
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Pre-tax |  |  | 7.1 |  |  | (1.4 | ) |
Income taxes |  |  | (2.3 | ) |  | 0.4 |  |
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|  | $ | 4.8 |  | $ | (1.0 | ) |
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Common Stock in Treasury On February 16, 2012, we entered into a written trading plan under Rule 10b5-1 of the Exchange Act ("Rule 10b5-1"), 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 2012, we repurchased 3.606 shares of our common stock for $245.6. During January 2013, we repurchased 1.514 shares of our common stock for $104.4, which completed the repurchases authorized under this trading plan. In addition, we repurchased 1.864 shares of our common stock on the open market for $144.6 during the year ended December 31, 2013. On December 18, 2013, we entered into a written trading plan under Rule 10b5-1 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. We repurchased 0.115 shares of our common stock for $11.2 under this trading plan during December 2013. During 2014, we repurchased 4.852 shares of our common stock for $488.8, which completed the repurchases authorized under this trading plan. During the years ended December 31, 2014, 2013 and 2012, "Common stock in treasury" was decreased by the settlement of restricted stock units issued from treasury stock of $13.8, $14.2 and $6.1, respectively, and increased by $7.9, $11.0 and $1.8, respectively, for common stock that was surrendered by recipients of restricted stock as a means of funding the related minimum income tax withholding requirements. Dividends In February 2014, we implemented 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. Dividends declared totaled $63.2, $45.5 and $50.9 for the years ended December 31, 2014, 2013 and 2012, respectively. Preferred Stock None of our 3.0 shares of authorized no par value preferred stock was outstanding at December 31, 2014, 2013 or 2012.

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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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