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Shareholders' Equity and Long-Term Incentive Compensation | 12 Months Ended
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Dec. 31, 2017
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION |
Shareholders' Equity and Long-Term Incentive Compensation | Shareholders’ Equity and Long-Term Incentive 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,
| 2017 |  | 2016 |  | 2015
Numerator: |  |  |  |  |
Income (loss) from continuing operations | $ | 84.0 |  |  | $ | 30.3 |  |  | $ | (151.6 | )
Less: Net loss attributable to noncontrolling interests | — |  |  | (0.4 | ) |  | (33.4 | )
Adjustment related to redeemable noncontrolling interest (Note13) | — |  |  | (18.1 | ) |  | — |
Income (loss) from continuing operations attributable to SPX Corporation common shareholders for calculating basic and diluted income per share | $ | 84.0 |  |  | $ | 12.6 |  |  | $ | (118.2 | )
Income (loss) from discontinued operations, net of tax | $ | 5.3 |  |  | $ | (97.9 | ) |  | $ | 34.6 |
Less: Net loss attributable to noncontrolling interest | — |  |  | — |  |  | (0.9 | )
Income (loss) from discontinued operations attributable to SPX Corporation common shareholders for calculating basic and diluted income per share | $ | 5.3 |  |  | $ | (97.9 | ) |  | $ | 35.5 |
Denominator: |  |  |  |  |
Weighted-average number of common shares used in basic income (loss) per share | 42.413 |  |  | 41.610 |  |  | 40.733 |
Dilutive securities — Employee stock options, restricted stock shares and restricted stock units | 1.492 |  |  | 0.551 |  |  | — |
Weighted-average number of common shares and dilutive securities used in diluted income (loss) per share | 43.905 |  |  | 42.161 |  |  | 40.733 |
For the year ended December 31, 2015, 0.351 of unvested restricted stock shares/units were excluded from the computation of diluted earnings per share as we incurred losses from continuing operations during the year. For the years ended December 31, 2017, 2016, and 2015, 0.563, 1.045, and 0.553 of unvested restricted stock shares/units, respectively, were excluded from the computation of diluted earnings per share as the assumed proceeds for these instruments exceeded the average market value of the underlying common stock for the related years. For the years ended December 31, 2017, 2016 and 2015, 0.997, 1.343, and 0.505, respectively, of outstanding stock options were excluded from the computation of diluted earnings per share as the assumed proceeds for these instruments exceeded the average market value of the underlying common stock for the related years. Common Stock and Treasury Stock At December 31, 2017, 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, 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 |
Restricted stock shares and restricted stock units | 0.042 |  |  | 0.295 |  |  | 0.337 |
Retirement of treasury stock | (50.000 | ) |  | 50.000 |  |  | — |
Other | 0.187 |  |  | — |  |  | 0.187 |
December 31, 2016 | 50.755 |  |  | (8.815 | ) |  | 41.940 |
Restricted stock units | — |  |  | 0.280 |  |  | 0.280 |
Other | 0.431 |  |  | — |  |  | 0.431 |
December 31, 2017 | 51.186 |  |  | (8.535 | ) |  | 42.651 |
In 2016, we retired 50.0 shares or $2,948.1 of “Common stock in treasury.” Under the applicable state law, these shares represent authorized and unissued shares upon retirement. In accordance with our accounting policy, we allocate any excess of share repurchase over par value between “Paid-in capital” and “Retained deficit,” resulting in respective adjustments of $1,285.4 and $1,662.2. Long-Term Incentive Compensation Under the 2002 Stock Compensation Plan, as amended in 2006, 2011, 2012 and 2015, up to 1.682 shares of our common stock were available for grant at December 31, 2017. The 2002 Stock Compensation Plan permits the issuance of new shares or shares from treasury upon the exercise of options, vesting of time-based restricted stock units (“RSU’s”) and performance stock units (“PSU’s”), or the granting of restricted stock shares (“RS’s”). Each RSU and RS granted reduces availability by two shares. Each PSU granted in 2017 reduces availability by its maximum vesting attainment of 150%, or 3.0 shares. PSU’s, RSU’s and RS’s 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. PSU’s are eligible to vest at the end of the performance period, with performance based on the total return of our stock over the three-year performance period against a peer group within the S&P 600 Capital Goods Index, while the RSU’s and RS’s vest based on the passage of time since grant date. PSU’s, RSU’s, and RS’s that do not vest within the applicable vesting period are forfeited. Eligible employees received PSU’s in 2014 and 2013 as to which the employee could earn between 25% and 125% of the target performance award in the event the awards met the required vesting criteria. Vesting for the 2014 and 2013 target performance awards was based on SPX shareholder return versus the S&P Composite 1500 Industrials Index over three-year periods ended December 31, 2016 and December 31, 2015, respectively. In connection with the Spin-Off, the 2014 and 2013 PSU’s 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 2014 and 2013 PSU’s (i.e., the remaining 50%) did not meet the required performance target for the three years ended December 31, 2016 and 2015, respectively, and, as a result, these awards were forfeited. We grant RSU’s or RS’s 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, 2017. The 2017, 2016 and 2015 grants to non-employee directors generally vest over a one-year vesting period, with the 2017 grants scheduled to vest in their entirety immediately prior to the annual meeting of stockholders in May 2018. 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 PSU’s, RSU’s, RS’s and stock options totaled $12.0, $12.7 and $33.9 for the years ended December 31, 2017, 2016 and 2015, respectively, with the related tax benefit being $4.6, $4.8 and $12.9 for the years ended December 31, 2017, 2016 and 2015, respectively. During 2017 and 2016, long-term cash awards were granted to executive officers and other members of senior management. These awards are eligible to vest at the end of a three-year performance measurement period, with performance based on our achievement of a target segment income amount over the three-year measurement period. Long-term incentive compensation expense for 2017 and 2016 included $3.8 and $1.0, respectively associated with long-term cash awards. We use the Monte Carlo simulation model valuation technique to determine fair value of our restricted stock awards that contain a market condition (i.e., the PSU’s). 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 PSU. We issued PSU’s to eligible participants on March 1, 2017 and March 2, 2016, while there were no PSU’s issued during 2015. We used the following assumptions in determining the fair value of these awards:
| 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
March 1, 2017 |  |  |  |  |  |  |
SPX Corporation | 41.03 | % |  | — | % |  | 1.52 | % |  | 0.3685
Peer group within S&P 600 Capital Goods Index | 34.49 | % |  | n/a |  |  | 1.52 | % |  |
March 2, 2016 |  |  |  |  |  |  |
SPX Corporation | 36.91 | % |  | — | % |  | 0.97 | % |  | 0.3354
Peer group within S&P 600 Capital Goods Index | 32.94 | % |  | n/a |  |  | 0.97 | % |  |
Annual expected stock price volatility is based on the three-year historical volatility. There is no annual expected dividend yield as we discontinued dividend payments in 2015 and do not expect to pay dividends for the foreseeable future. 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 PSU, RSU, and RS activity from December 31, 2014 through December 31, 2017:
| Unvested PSU’s, RSU’s, and RS’s |  | Weighted-Average Grant-Date Fair Value Per Share
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 |
Granted | 0.423 |  |  | 13.97 |
Vested | (0.528 | ) |  | 10.32 |
Forfeited | (0.062 | ) |  | 20.46 |
December 31, 2016 | 1.702 |  |  | 16.47 |
Granted | 0.252 |  |  | 28.22 |
Vested | (0.483 | ) |  | 18.17 |
Forfeited | (0.241 | ) |  | 20.83 |
December 31, 2017 | 1.230 |  |  | $ | 17.41 |
As of December 31, 2017, there was $8.1 of unrecognized compensation cost related to PSU’s, RSU’s and RS’s. We expect this cost to be recognized over a weighted-average period of 1.4 years. Stock Options On March 1, 2017, March 2, 2016 and October 14, 2015, we granted stock options totaling 0.208, 0.505 and 0.883, respectively, of which 0.188 were exercisable as of December 31, 2017. The exercise price per share of these options is $27.40, $12.85 and $12.36, respectively, and the maximum contractual term of these options is ten years. The fair value of each stock option granted on March 1, 2017, March 2, 2016 and October 14, 2015 was $9.60, $4.11 and $3.76, respectively. The fair value of each option grant was estimated using a Black-Scholes option-pricing model with the following assumptions:
| March 1, 2017 |  | March 2, 2016 |  | October 14 2015
Annual expected stock price volatility | 32.00 | % |  | 30.06 | % |  | 27.86 | %
Annual expected dividend yield | — | % |  | — | % |  | — | %
Risk-free interest rate | 2.14 | % |  | 1.50 | % |  | 1.64 | %
Expected life of stock option (in years) | 6.0 |  |  | 6.0 |  |  | 6.0 |
Annual expected stock price volatility for the March 1, 2017 and March 2, 2016 grant were based on a weighted average of SPX’s stock volatility since the Spin-Off and an average of the most recent six-year historical volatility of a peer company group, while the annual expected stock price volatility for the October 14, 2015 grant was based on the six-year historical volatility of SPX’s common stock. There is no annual expected dividend yield as we discontinued dividend payments in 2015 and do not expect to pay dividends for the foreseeable future. The average risk-free interest rate is based on the five-year and seven-year treasury constant maturity rates. The expected option life is based on a three-year pro-rata vesting schedule and represents the period of time that awards are expected to be outstanding. The following table shows stock option activity from December 31, 2014 through December 31, 2017.
| Shares |  | Weighted- Average Exercise Price
Options outstanding and exercisable at December 31, 2014 | — |  |  | $ | — |
Granted pre-spin | 0.323 |  |  | 85.87 |
Impact of Spin-Off: |  |  |
Terminations | (0.282 | ) |  | 85.87 |
Conversions | 0.123 |  |  | * |
Granted post-spin | 0.883 |  |  | 12.36 |
Options outstanding and exercisable at December 31, 2015 | 1.047 |  |  | 12.91 |
Granted | 0.505 |  |  | 12.85 |
Options outstanding and exercisable at December 31, 2016 | 1.552 |  |  | 12.89 |
Exercised | (0.125 | ) |  | 20.67 |
Forfeited | (0.027 | ) |  | 14.45 |
Granted | 0.208 |  |  | 27.40 |
Options outstanding and exercisable at December 31, 2017 | 1.608 |  |  | $ | 14.67 |
As of December 31, 2017, there was $2.2 of unrecognized compensation cost related to the outstanding stock options. We expect this cost to be recognized over a weighted-average period of 1.2 years. Accumulated Other Comprehensive Income The changes in the components of accumulated other comprehensive income, net of tax, for the year ended December 31, 2017 were as follows:
| Foreign Currency Translation Adjustment |  | Net Unrealized Gains on Qualifying Cash Flow Hedges(3) |  | Pension and Postretirement Liability Adjustment and Other(1)(4) |  | Total
December 31, 2016 | $ | 229.7 |  |  | $ | 1.5 |  |  | $ | 3.9 |  |  | $ | 235.1 |
Other comprehensive income before reclassifications (1) | 0.5 |  |  | 2.3 |  |  | 16.3 |  |  | 19.1 |
Amounts reclassified from accumulated other comprehensive income (2) | — |  |  | (3.0 | ) |  | (1.1 | ) |  | (4.1 | )
Current-period other comprehensive income (loss) | 0.5 |  |  | (0.7 | ) |  | 15.2 |  |  | 15.0 |
December 31, 2017 | $ | 230.2 |  |  | $ | 0.8 |  |  | $ | 19.1 |  |  | $ | 250.1 |
___________________________________________________________________ (1) As indicated in Note 9, we reduced our unfunded liability related to postretirement benefits and increased “Accumulated other comprehensive income” (before tax) by $26.8. (2) As indicated in Note 12, we discontinued hedge accounting for our Swaps resulting in a reclassification from “Accumulated other comprehensive income” (before tax) of $2.7.
(3) | Net of tax provision of $0.5 and $0.9 as of December 31, 2017 and 2016, respectively.
(4) Net of tax provision of $12.5 and $2.7 as of December 31, 2017 and 2016, respectively. The balances as of December 31, 2017 and 2016 include unamortized prior service credits. The changes in the components of accumulated other comprehensive income, net of tax, for the year ended December 31, 2016 were as follows:
| Foreign Currency Translation Adjustment |  | Net Unrealized Losses on Qualifying Cash Flow Hedges(2) |  | Pension and Postretirement Liability Adjustment and Other(3) |  | Total
Balance at December 31, 2015 | $ | 280.6 |  |  | $ | (1.8 | ) |  | $ | 4.5 |  |  | $ | 283.3 |
Other comprehensive income (loss) before reclassifications | (11.9 | ) |  | 1.1 |  |  | — |  |  | (10.8 | )
Amounts reclassified from accumulated other comprehensive income (1) | (39.0 | ) |  | 2.2 |  |  | (0.6 | ) |  | (37.4 | )
Current-period other comprehensive income (loss) | (50.9 | ) |  | 3.3 |  |  | (0.6 | ) |  | (48.2 | )
Balance at December 31, 2016 | $ | 229.7 |  |  | $ | 1.5 |  |  | $ | 3.9 |  |  | $ | 235.1 |
___________________________________________________________________
(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 (provision) benefit of $(0.9) and $0.8 as of December 31, 2016 and 2015, respectively.
(3) | Net of tax provision of $2.7 and $3.1 as of December 31, 2016 and 2015, respectively. The balances as of December 31, 2016 and 2015 include unamortized prior service credits.
The following summarizes amounts reclassified from each component of accumulated comprehensive income for the years ended December 31, 2017 and 2016:
| Amount Reclassified from AOCI |  | Affected Line Items in the Consolidated Statements of Operations
| Year ended December 31, |  |
| 2017 |  | 2016 |  |
(Gains) losses on qualifying cash flow hedges: |  |  |  |  |
FX forward contracts | $ | — |  |  | $ | 1.0 |  |  | Revenues
Commodity contracts | (2.5 | ) |  | 2.0 |  |  | Cost of products sold
Swaps | 0.3 |  |  | — |  |  | Interest Expense
Swaps | (2.7 | ) |  | — |  |  | Other Expense, net
Pre-tax | (4.9 | ) |  | 3.0 |  |  |
Income taxes | 1.9 |  |  | (0.8 | ) |  |
| $ | (3.0 | ) |  | $ | 2.2 |  |  |
Pension and postretirement items: |  |  |  |  |
Amortization of unrecognized prior service credits - Pre-tax | $ | (1.8 | ) |  | $ | (1.0 | ) |  | Selling, general and administrative
Income taxes | 0.7 |  |  | 0.4 |  |  |
| $ | (1.1 | ) |  | $ | (0.6 | ) |  |
Recognition of foreign currency translation adjustments related to business dispositions: |  |  |  |  |
Recognition of foreign currency translation adjustment associated with the sale of our dry cooling business | $ | — |  |  | $ | (40.4 | ) |  | Gain on sale of dry cooling business
Recognition of foreign currency translation adjustment associated with the sale our Balcke Dürr business | — |  |  | 1.4 |  |  | Gain (loss) on disposition of discontinued operations, net of tax
| $ | — |  |  | $ | (39.0 | ) |  |
Common Stock in Treasury As described above, in 2016, we retired 50.0 shares or $$2,948.1 of “Common stock in treasury.” In addition, during the years ended December 31, 2017, 2016 and 2015, “Common stock in treasury” was decreased by the settlement of restricted stock units issued from treasury stock of $16.9, $17.9 and $7.0, respectively, and increased by $0.0, $0.0 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 connection with the Spin-Off, we discontinued dividend payments immediately following the second quarter dividend payment for 2015. Dividends declared totaled $30.9 for the year ended December 31, 2015, while dividends paid were $45.9. Preferred Stock None of our 3.0 shares of authorized no par value preferred stock was outstanding at December 31, 2017, 2016 or 2015.

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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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