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SHAREHOLDERS' EQUITY AND LONG-TERM INCENTIVE COMPENSATION | 9 Months Ended
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Sep. 30, 2017
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION |
SHAREHOLDERS' EQUITY AND LONG-TERM INCENTIVE COMPENSATION | SHAREHOLDERS’ EQUITY AND LONG-TERM INCENTIVE 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 |  | Nine months ended
| September 30, 2017 |  | October 1, 2016 |  | September 30, 2017 |  | October 1, 2016
Weighted-average number of common shares used in basic income per share | 42.540 |  |  | 41.721 |  |  | 42.347 |  |  | 41.537 |
Dilutive securities — Employee stock options, restricted stock shares and restricted stock units | 1.524 |  |  | 0.754 |  |  | 1.381 |  |  | 0.347 |
Weighted-average number of common shares and dilutive securities used in diluted income per share | 44.064 |  |  | 42.475 |  |  | 43.728 |  |  | 41.884 |
The weighted-average number of restricted stock shares/units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period was 0.452 and 0.961, respectively, for the three months ended September 30, 2017, and 0.534 and 1.009, respectively, for the nine months ended September 30, 2017. The weighted-average number of restricted stock shares/units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period was 0.992 and 1.542, respectively, for the three months ended October 1, 2016 and 1.134 and 1.346, respectively, for the nine months ended October 1, 2016. Long-Term Incentive Compensation Long-term incentive compensation awards may be granted to certain eligible employees or non-employee directors. A detailed description of the awards granted prior to 2017 is included in our 2016 Annual Report on Form 10-K. Awards granted on March 1, 2017 to executive officers and other members of senior management were comprised of performance stock units (“PSU’s”), stock options, time-based restricted stock units (“RSU’s”), and long-term cash awards, while other eligible employees were granted RSU’s and long-term cash awards. The PSU’s are eligible to vest at the end of a three-year performance period, with performance based on the total return of our stock over the three-year performance period against the S&P 600 Capital Goods Index. Stock options and RSU’s vest ratably over the three-year period subsequent to the date of grant. Long-term cash awards are eligible to vest at the end of a three-year performance measurement period, with performance based on our achieving a target segment income amount over the three-year measurement period. Effective May 8, 2017, we granted 0.024 RSU’s to our Non-employee directors, which vest in their entirety immediately prior to the annual meeting of stockholders in May 2018. Compensation expense within income from continuing operations related to long-term incentive awards totaled $3.6 and $4.1 for the three months ended September 30, 2017 and October 1, 2016, respectively, and $10.4 and $10.2 for the nine months ended September 30, 2017 and October 1, 2016, respectively. The related tax benefit was $1.4 and $1.6 for the three months ended September 30, 2017 and October 1, 2016, respectively, and $4.0 and $3.9 for the nine months ended September 30, 2017 and October 1, 2016, respectively. Accumulated Other Comprehensive Income (Loss) The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended September 30, 2017 were as follows:
| Foreign Currency Translation Adjustment |  | Net Unrealized Gains on Qualifying Cash Flow Hedges(1) |  | Pension and Postretirement Liability Adjustment(2) (3) |  | Total
Balance at beginning of period | $ | 229.3 |  |  | $ | 1.3 |  |  | $ | 3.6 |  |  | $ | 234.2 |
Other comprehensive income before reclassifications | 2.4 |  |  | 0.6 |  |  | 16.3 |  |  | 19.3 |
Amounts reclassified from accumulated other comprehensive income | — |  |  | (0.1 | ) |  | (0.1 | ) |  | (0.2 | )
Current-period other comprehensive income | 2.4 |  |  | 0.5 |  |  | 16.2 |  |  | 19.1 |
Balance at end of period | $ | 231.7 |  |  | $ | 1.8 |  |  | $ | 19.8 |  |  | $ | 253.3 |
__________________________
(1) | Net of tax provision of $1.1 and $0.8 as of September 30, 2017 and July 1, 2017, respectively.
(2) | As indicated in Note 9, we reduced our unfunded liability related to postretirement benefits and increased accumulated other comprehensive income (before tax effects) by $26.8.
(3) | Net of tax provision of $12.9 and $2.6 as of September 30, 2017 and July 1, 2017, respectively. The balances as of September 30, 2017 and July 1, 2017 represent net unamortized prior service credits.
The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended September 30, 2017 were as follows:
| Foreign Currency Translation Adjustment |  | Net Unrealized Gains on Qualifying Cash Flow Hedges(1) |  | Pension and Postretirement Liability Adjustment(2) (3) |  | Total
Balance at beginning of period | $ | 229.7 |  |  | $ | 1.5 |  |  | $ | 3.9 |  |  | $ | 235.1 |
Other comprehensive income before reclassifications | 2.0 |  |  | 1.1 |  |  | 16.3 |  |  | 19.4 |
Amounts reclassified from accumulated other comprehensive income | — |  |  | (0.8 | ) |  | (0.4 | ) |  | (1.2 | )
Current-period other comprehensive income | 2.0 |  |  | 0.3 |  |  | 15.9 |  |  | 18.2 |
Balance at end of period | $ | 231.7 |  |  | $ | 1.8 |  |  | $ | 19.8 |  |  | $ | 253.3 |
_________________________
(1) | Net of tax provision of $1.1 and $0.9 as of September 30, 2017 and December 31, 2016, respectively.
(2) | As indicated in Note 9, we reduced our unfunded liability related to postretirement benefits and increased accumulated other comprehensive income (before tax effects) by $26.8.
(3) | Net of tax provision of $12.9 and $2.7 as of September 30, 2017 and December 31, 2016. The balances as of September 30, 2017 and December 31, 2016 represent net unamortized prior service credits.
The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended October 1, 2016 were as follows:
| Foreign Currency Translation Adjustment |  | Net Unrealized Losses on Qualifying Cash Flow Hedges(1) |  | Pension and Postretirement Liability Adjustment(2) |  | Total
Balance at beginning of period | $ | 239.6 |  |  | $ | (1.6 | ) |  | $ | 4.2 |  |  | $ | 242.2 |
Other comprehensive income (loss) before reclassifications | (7.2 | ) |  | 0.3 |  |  | — |  |  | (6.9 | )
Amounts reclassified from accumulated other comprehensive income (loss) | — |  |  | 0.2 |  |  | (0.1 | ) |  | 0.1 |
Current-period other comprehensive income (loss) | (7.2 | ) |  | 0.5 |  |  | (0.1 | ) |  | (6.8 | )
Balance at end of period | $ | 232.4 |  |  | $ | (1.1 | ) |  | $ | 4.1 |  |  | $ | 235.4 |
___________________________
(1) | Net of tax benefit of $0.7 and $1.0 as of October 1, 2016 and July 2, 2016, respectively.
(2) | Net of tax provision of $2.8 and $3.0 as of October 1, 2016 and July 2, 2016, respectively. The balances as of October 1, 2016 and July 2, 2016 include net unamortized prior service credits.
The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended October 1, 2016 were as follows:
| Foreign Currency Translation Adjustment |  | Net Unrealized Losses on Qualifying Cash Flow Hedges(2) |  | Pension and Postretirement Liability Adjustment(3) |  | Total
Balance at beginning of period | $ | 280.6 |  |  | $ | (1.8 | ) |  | $ | 4.5 |  |  | $ | 283.3 |
Other comprehensive loss before reclassifications | (7.8 | ) |  | (1.4 | ) |  | — |  |  | (9.2 | )
Amounts reclassified from accumulated other comprehensive income (loss) (1) | (40.4 | ) |  | 2.1 |  |  | (0.4 | ) |  | (38.7 | )
Current-period other comprehensive income (loss) | (48.2 | ) |  | 0.7 |  |  | (0.4 | ) |  | (47.9 | )
Balance at end of period | $ | 232.4 |  |  | $ | (1.1 | ) |  | $ | 4.1 |  |  | $ | 235.4 |
__________________________
(1) | In connection with the sale of our dry cooling business, we reclassified $40.4 of other comprehensive income related to foreign currency translation to “Gain on sale of dry cooling business.”
(2) | Net of tax benefit of $0.7 and $0.8 as of October 1, 2016 and December 31, 2015, respectively.
(3) | Net of tax provision of $2.8 and $3.1 as of October 1, 2016 and December 31, 2015, respectively. The balances as of October 1, 2016 and December 31, 2015 include net unamortized prior service credits.
The following summarizes amounts reclassified from each component of accumulated comprehensive income for the three months ended September 30, 2017 and October 1, 2016:
| Amount Reclassified from AOCI |  |
| Three months ended |  |
| September 30, 2017 |  | October 1, 2016 |  | Affected Line Item in the Condensed Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges: |  |  |  |  |  |  |
FX forward contracts | $ | — |  |  | $ | — |  |  | Revenues
Commodity contracts | (0.2 | ) |  | 0.3 |  |  | Cost of products sold
Swaps | — |  |  | — |  |  | Interest expense
Pre-tax | (0.2 | ) |  | 0.3 |  |  |
Income taxes | 0.1 |  |  | (0.1 | ) |  |
| $ | (0.1 | ) |  | $ | 0.2 |  |  |
Gains on pension and postretirement items: |  |  |  |  |  |  |
Amortization of unrecognized prior service credits | $ | (0.3 | ) |  | $ | (0.3 | ) |  | Selling, general and administrative
Pre-tax | (0.3 | ) |  | (0.3 | ) |  |
Income taxes | 0.2 |  |  | 0.2 |  |  |
| $ | (0.1 | ) |  | $ | (0.1 | ) |  |
The following summarizes amounts reclassified from each component of accumulated comprehensive income for the nine months ended September 30, 2017 and October 1, 2016:
| Amount Reclassified from AOCI |  |
| Nine months ended |  |
| September 30, 2017 |  | October 1, 2016 |  | Affected Line Item in the Condensed Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges: |  |  |  |  |  |  |
FX forward contracts | $ | — |  |  | $ | 1.0 |  |  | Revenues
Commodity contracts | (1.6 | ) |  | 1.9 |  |  | Cost of products sold
Swaps | 0.3 |  |  | — |  |  | Interest expense
Pre-tax | (1.3 | ) |  | 2.9 |  |  |
Income taxes | 0.5 |  |  | (0.8 | ) |  |
| $ | (0.8 | ) |  | $ | 2.1 |  |  |
Gains on pension and postretirement items: |  |  |  |  |  |  |
Amortization of unrecognized prior service credits | $ | (0.7 | ) |  | $ | (0.7 | ) |  | Selling, general and administrative
Pre-tax | (0.7 | ) |  | (0.7 | ) |  |
Income taxes | 0.3 |  |  | 0.3 |  |  |
| $ | (0.4 | ) |  | $ | (0.4 | ) |  |
Gain on sale of dry cooling business: |  |  |  |  |  |
Recognition of foreign currency translation adjustment associated with the sale of our dry cooling business | $ | — |  |  | $ | (40.4 | ) |  | Gain on sale of dry cooling business
Common Stock in Treasury During the nine months ended September 30, 2017 and October 1, 2016, “Common stock in treasury” was decreased by the settlement of restricted stock units issued from treasury stock of $16.7 and $18.6, respectively. Changes in Equity A summary of the changes in equity for the three months ended September 30, 2017 and October 1, 2016 is provided below:
| September 30, 2017 |  | October 1, 2016
| SPX Corporation Shareholders’ Equity |  | Noncontrolling Interests |  | Total Equity |  | SPX Corporation Shareholders’ Equity |  | Noncontrolling Interests |  | Total Equity
Equity, beginning of period | $ | 208.7 |  |  | $ | — |  |  | $ | 208.7 |  |  | $ | 272.6 |  |  | $ | — |  |  | $ | 272.6 |
Net income | 22.3 |  |  | — |  |  | 22.3 |  |  | 1.9 |  |  | — |  |  | 1.9 |
Net unrealized gains on qualifying cash flow hedges, net of tax provision of $0.3 for the three months ended September 30, 2017 and October 1, 2016 | 0.5 |  |  | — |  |  | 0.5 |  |  | 0.5 |  |  | — |  |  | 0.5 |
Pension and postretirement liability adjustment, net of tax (provision) benefit of $(10.3) and $0.2 for the three months ended September 30, 2017 and October 1, 2016, respectively | 16.2 |  |  | — |  |  | 16.2 |  |  | (0.1 | ) |  | — |  |  | (0.1 | )
Foreign currency translation adjustments | 2.4 |  |  | — |  |  | 2.4 |  |  | (7.2 | ) |  | — |  |  | (7.2 | )
Total comprehensive income (loss), net | 41.4 |  |  | — |  |  | 41.4 |  |  | (4.9 | ) |  | — |  |  | (4.9 | )
Incentive plan activity | 2.0 |  |  | — |  |  | 2.0 |  |  | 2.2 |  |  | — |  |  | 2.2 |
Long-term incentive compensation expense | 3.0 |  |  | — |  |  | 3.0 |  |  | 3.5 |  |  | — |  |  | 3.5 |
Restricted stock and restricted stock unit vesting, net of tax withholdings, and related tax benefit of $0.0 for the three months ended September 30, 2017 and October 1, 2016 | (0.1 | ) |  | — |  |  | (0.1 | ) |  | — |  |  | — |  |  | — |
Equity, end of period | $ | 255.0 |  |  | $ | — |  |  | $ | 255.0 |  |  | $ | 273.4 |  |  | $ | — |  |  | $ | 273.4 |
A summary of the changes in equity for the nine months ended September 30, 2017 and October 1, 2016 is provided below:
| September 30, 2017 |  | October 1, 2016
| SPX Corporation Shareholders’ Equity |  | Noncontrolling Interests |  | Total Equity |  | SPX Corporation Shareholders’ Equity |  | Noncontrolling Interests |  | Total Equity
Equity, beginning of period | $ | 191.6 |  |  | $ | — |  |  | $ | 191.6 |  |  | $ | 345.4 |  |  | $ | (37.1 | ) |  | $ | 308.3 |
Net income (loss) | 30.7 |  |  | — |  |  | 30.7 |  |  | 18.9 |  |  | (0.4 | ) |  | 18.5 |
Net unrealized gains on qualifying cash flow hedges, net of tax provision of $0.2 and $0.1 for the nine months ended September 30, 2017 and October 1, 2016, respectively | 0.3 |  |  | — |  |  | 0.3 |  |  | 0.7 |  |  | — |  |  | 0.7 |
Pension and postretirement liability adjustment, net of tax (provision) benefit of $(10.2) and $0.3 for the nine months ended September 30, 2017 and October 1, 2016, respectively | 15.9 |  |  | — |  |  | 15.9 |  |  | (0.4 | ) |  | — |  |  | (0.4 | )
Foreign currency translation adjustments | 2.0 |  |  | — |  |  | 2.0 |  |  | (48.2 | ) |  | (1.2 | ) |  | (49.4 | )
Total comprehensive income (loss), net | 48.9 |  |  | — |  |  | 48.9 |  |  | (29.0 | ) |  | (1.6 | ) |  | (30.6 | )
Incentive plan activity | 9.4 |  |  | — |  |  | 9.4 |  |  | 6.8 |  |  | — |  |  | 6.8 |
Long-term incentive compensation expense | 8.8 |  |  | — |  |  | 8.8 |  |  | 9.4 |  |  | — |  |  | 9.4 |
Restricted stock and restricted stock unit vesting, net of tax withholdings, and related tax provision of $0.0 and $1.5 for the nine months ended September 30, 2017 and October 1, 2016, respectively | (3.7 | ) |  | — |  |  | (3.7 | ) |  | (3.2 | ) |  | — |  |  | (3.2 | )
Adjustment related to redeemable noncontrolling interest (see Note 13) | — |  |  | — |  |  | — |  |  | (56.0 | ) |  | 38.7 |  |  | (17.3 | )
Equity, end of period | $ | 255.0 |  |  | $ | — |  |  | $ | 255.0 |  |  | $ | 273.4 |  |  | $ | — |  |  | $ | 273.4 |

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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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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