Shareholders' Equity and Stock-Based Compensation

Income (Loss) Per Share

The following table sets forth the computations of the components used for the calculation of basic and diluted income (loss) per share:



	Year ended December 31,
	2015			2014			2013
Numerator:
Income (loss) from continuing operations	$	(191.2	)	$	116.1		$	9.5
Less: Net income (loss) attributable to noncontrolling interests	(33.4		)	(11.7		)	0.7
Income (loss) from continuing operations attributable to SPX Corporation common shareholders for calculating basic and diluted income per share	$	(157.8	)	$	127.8		$	8.8
Income from discontinued operations	$	74.2		$	267.8		$	202.8
Less: Net income (loss) attributable to noncontrolling interest	(0.9		)	2.2			1.7
Income from discontinued operations attributable to SPX Corporation common shareholders for calculating basic and diluted income per share	$	75.1		$	265.6		$	201.1
Denominator:
Weighted-average number of common shares used in basic income per share	40.733			42.400			45.384
Dilutive securities — Employee stock options, restricted stock shares and restricted stock units	—			0.631			0.622
Weighted-average number of common shares and dilutive securities used in diluted income per share	40.733			43.031			46.006

For the year ended December 31, 2015, 0.351 of unvested restricted stock shares/units were not included in the computation of diluted earnings per share as we incurred losses from continuing operations during the period. For the years ended December 31, 2015, 2014 and 2013, 0.553, 0.226 and 0.647 of unvested restricted stock shares/units, respectively, were not included in the computation of diluted earnings per share as the required market thresholds for vesting were not met. For the year ended December 31, 2015, 0.505 of outstanding stock options were not included in the computation of diluted earnings per share because their exercise price was greater than the average market price of common shares. 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 earnings per share for the year ended December 31, 2013.

Common Stock and Treasury Stock

At December 31, 2015, we had 200.0 authorized shares of common stock (par value $0.01). Common shares issued, treasury shares and shares outstanding are summarized in the table below.



	Common Stock Issued	Treasury Stock		Shares Outstanding
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
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
December 31, 2014	100.064	(59.206	)	40.858
Restricted stock shares and restricted stock units	0.102	0.096		0.198
Other	0.360	—		0.360
December 31, 2015	100.526	(59.110	)	41.416

Stock-Based Compensation

Under the 2002 Stock Compensation Plan, as amended in 2006, 2011, 2012 and 2015, up to 0.443 shares of our common stock were available for grant at December 31, 2015. 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, 2015, 2014 and 2013, we classified excess tax benefits from stock-based compensation of $0.8, $9.7 and $6.3, 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. In connection with the Spin-Off, the 2014 and 2013 target performance awards were modified to allow for a minimum vesting equivalent to 50% of the underlying shares at the end of the applicable remaining service periods. In connection with this modification, we recorded additional stock compensation expense of $2.1 in 2015. The remaining 2013 target performance awards (i.e., the remaining 50%) did not meet the required performance target for the three years ended December 31, 2015 and, as such, these awards have been forfeited.

Each eligible non-officer employee also received awards in 2015, 2014 and 2013 that vest ratably over three years, subject only to the passage of time. Officers received awards in 2015 and 2014 that vest ratably over three years, subject to an internal performance metric.

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 0.027 shares of our common stock were available for grant at December 31, 2015. The 2015, 2014 and 2013 restricted stock grants to non-employee directors generally vest over a one-year vesting period.

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.

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. Compensation expense within income from continuing operations related to stock options, restricted stock shares and restricted stock units totaled $34.5, $33.1 and $26.5 for the years ended December 31, 2015, 2014 and 2013, respectively, with the related tax benefit being $13.1, $12.6 and $10.1 for the years ended December 31, 2015, 2014 and 2013, respectively.

Restricted Stock Share and Restricted Stock Unit Awards

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 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	%

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.

The following table summarizes the restricted stock share and restricted stock unit activity from December 31, 2012 through December 31, 2015:



	Unvested Restricted Stock Shares and Restricted Stock Units		Weighted-Average Grant-Date Fair Value Per Share
December 31, 2012	1.935		$	54.70
Granted	0.652		61.66
Vested	(0.754	)	54.34
Forfeited	(0.296	)	52.20
December 31, 2013	1.537		58.39
Granted	0.519		86.99
Vested	(0.604	)	59.49
Forfeited	(0.284	)	63.76
December 31, 2014	1.168		69.22
Pre-spin:
Granted	0.451		81.60
Vested	(0.262	)	78.71
Canceled	(0.212	)	52.67
Impact of Spin-Off:
Terminations	(0.785	)	*
Conversions	1.010		*
Post-spin:
Granted	0.510		12.32
Canceled	(0.011	)	20.34
December 31, 2015	1.869		$	17.63

As of December 31, 2015, there was $13.1 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 2.2 years.

Stock Options

On January 2, 2015, eligible employees were granted options to purchase a total of 0.323 shares. In connection with the Spin-Off, options to purchase 0.282 shares were terminated as they related to employees who transitioned to SPX FLOW. On October 14, 2015, eligible employees were granted options to purchase a total of 0.883 shares.

The fair value of each of the stock option grants during 2015 was estimated using a Black-Scholes option-pricing model, based on the following assumptions:



	Annual Expected Stock Price Volatility		Annual Expected Dividend Yield		Risk-Free Interest Rate		Expected Life of Options (in years)
October 14, 2015:	27.86	%	—	%	1.64	%	6.0

January 2, 2015:	36.53	%	1.75	%	1.97	%	6.0

Annual expected stock price volatility was based on the six-year historical volatility of SPX’s common stock. The annual expected dividend yield for the January 2, 2015 grant was based on the then-expected annual dividend payments for SPX and SPX’s stock price at the date of grant. In connection with the Spin-Off, we discontinued dividend payments immediately following the second quarter dividend payment for 2015 and have no plans to pay a dividend in the foreseeable future. Accordingly, no annual expected dividend yield was included in the fair value estimate of the October 14, 2015 grant. The risk-free interest rate was based on the seven-year treasury constant maturity rate. The expected life of the options was based on a three-year pro-rata vesting schedule and represents the period of time the awards are expected to be outstanding.

The following table shows stock option activity from December 31, 2012 through December 31, 2015.



	Shares		Weighted- Average Exercise Price
Options outstanding and exercisable at December 31, 2012	0.013		$	62.45
Exercised	(0.008	)	50.79
Terminated	(0.005	)	85.36
Options outstanding and exercisable at December 31, 2013	—		—
No activity	—		—
Options outstanding and exercisable at December 31, 2014	—		—
Granted pre-spin	0.323		85.87
Impact of Spin-Off:
Terminations	(0.282	)	85.87
Conversion	0.123		*
Granted post-spin	0.883		12.36
Options outstanding and exercisable at December 31, 2015	1.047		$	12.91

As of December 31, 2015, there was $3.2 of unrecognized compensation cost related to the outstanding stock options. We expect this cost to be recognized over a weighted-average period of 2.7 years.

The aggregate intrinsic value (market value of stock less the option exercise price) of options exercised during the year ended December 31, 2013 was $0.4.

Accumulated Other Comprehensive Income

The changes in the components of accumulated other comprehensive income, net of tax, for the year ended December 31, 2015 were as follows:



	Foreign Currency Translation Adjustment			Net Unrealized Losses on Qualifying Cash Flow Hedges(1)			Pension and Postretirement Liability Adjustment and Other(2)			Total
December 31, 2014	$	59.0		$	(1.3	)	$	4.9		$	62.6
Other comprehensive income (loss) before reclassifications	(132.9		)	(1.8		)	0.5			(134.2		)
Amounts reclassified from accumulated other comprehensive income	—			1.2			(0.9		)	0.3
Current-period other comprehensive loss	(132.9		)	(0.6		)	(0.4		)	(133.9		)
Spin-Off of FLOW Business	354.5			0.1			—			354.6
December 31, 2015	$	280.6		$	(1.8	)	$	4.5		$	283.3

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⁽¹⁾	Net of tax benefit of $0.8 and $1.1 as of December 31, 2015 and 2014, respectively.


⁽²⁾	Net of provision of $3.1 and $3.0 as of December 31, 2015 and 2014, respectively. The balances as of December 31, 2015 and 2014 include unamortized prior service credits. The current period other comprehensive income relates to prior service credits that resulted from the amendment to the U.S. Plan and SIARP (see Note 10 for additional details).

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
Current-period other comprehensive income (loss)	(237.8		)	(0.5		)	3.7			9.7			(224.9		)
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, 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 following summarizes amounts reclassified from each component of accumulated comprehensive income for the years ended December 31, 2015 and 2014:



	Amount Reclassified from AOCI						Affected Line Items in the Consolidated Statements of Operations
	Year ended December 31,
	2015			2014
Losses on qualifying cash flow hedges:
FX forward contracts	$	(0.6	)	$	0.8		Revenues
Commodity contracts	2.8			0.7			Cost of products sold
Pre-tax	2.2			1.5
Income taxes	(1.0		)	(0.4		)
	$	1.2		$	1.1
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	(1.1		)	(0.3		)	Selling, general and administrative
Pre-tax	(1.1		)	7.1
Income taxes	0.2			(2.3		)
	$	(0.9	)	$	4.8

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 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 10b5-1to 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, 2015, 2014 and 2013, "Common stock in treasury" was decreased by the settlement of restricted stock units issued from treasury stock of $7.0, $13.8 and $14.2, respectively, and increased by $1.8, $7.9 and $11.0, 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 connection with the Spin-Off, we discontinued dividend payments immediately following the second quarter dividend payment for 2015. Dividends declared totaled $30.9, $63.2 and $45.5 for the years ended December 31, 2015, 2014 and 2013, respectively, while dividends paid during these periods were $45.9, $59.8 and $34.7, respectively.

Preferred Stock

None of our 3.0 shares of authorized no par value preferred stock was outstanding at December 31, 2015, 2014 or 2013.