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EQUITY AND LONG-TERM INCENTIVE COMPENSATION | 9 Months Ended
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Sep. 29, 2018
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION |
EQUITY AND LONG-TERM INCENTIVE COMPENSATION | 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 29, 2018 |  | September 30, 2017 |  | September 29, 2018 |  | September 30, 2017
Weighted-average number of common shares used in basic income per share | 43.080 |  |  | 42.540 |  |  | 42.948 |  |  | 42.347 |
Dilutive securities — Employee stock options, restricted stock shares and restricted stock units | 1.824 |  |  | 1.524 |  |  | 1.700 |  |  | 1.381 |
Weighted-average number of common shares and dilutive securities used in diluted income per share | 44.904 |  |  | 44.064 |  |  | 44.648 |  |  | 43.728 |
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 0.252 and 0.859, respectively, for the three months ended September 29, 2018 and 0.286 and 0.871, respectively, for the nine months ended September 29, 2018. 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. 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 2018 is included in our 2017 Annual Report on Form 10-K. Awards granted on February 22, 2018 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 a peer group within 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 15, 2018, we granted 0.023 RSU’s to our non-employee directors, which vest in their entirety immediately prior to the annual meeting of stockholders in May 2019. Compensation expense within income from continuing operations related to long-term incentive awards totaled $4.3 and $3.6 for the three months ended September 29, 2018 and September 30, 2017, respectively and $12.4 and $10.4 for the nine months ended September 29, 2018 and September 30, 2017, respectively. The related tax benefit was $1.1 and $1.4 for the three months ended September 29, 2018 and September 30, 2017, respectively and $3.2 and $4.0 for the nine months ended September 29, 2018 and September 30, 2017. Accumulated Other Comprehensive Income The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended September 29, 2018 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 | $ | 229.4 |  |  | $ | (0.2 | ) |  | $ | 22.3 |  |  | $ | 251.5 |
Other comprehensive loss before reclassifications | — |  |  | (0.4 | ) |  | — |  |  | (0.4 | )
Amounts reclassified from accumulated other comprehensive income (loss) | — |  |  | 0.3 |  |  | (0.9 | ) |  | (0.6 | )
Current-period other comprehensive loss | — |  |  | (0.1 | ) |  | (0.9 | ) |  | (1.0 | )
Balance at end of period | $ | 229.4 |  |  | $ | (0.3 | ) |  | $ | 21.4 |  |  | $ | 250.5 |
__________________________
(1) | Net of tax benefit of $0.1 as of September 29, 2018 and June 30, 2018.
(2) | Net of tax provision of $7.2 and $7.3 as of September 29, 2018 and June 30, 2018. The balances as of September 29, 2018 and June 30, 2018 include unamortized prior service credits.
The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended September 29, 2018 were as follows:
| Foreign Currency Translation Adjustment |  | Net Unrealized Gains (Losses) on Qualifying Cash Flow Hedges(1) |  | Pension and Postretirement Liability Adjustment(2) |  | Total
Balance at beginning of period | $ | 230.2 |  |  | $ | 0.8 |  |  | $ | 19.1 |  |  | $ | 250.1 |
Other comprehensive loss before reclassifications | (0.8 | ) |  | (1.2 | ) |  | — |  |  | (2.0 | )
Amounts reclassified from accumulated other comprehensive income: |  |  |  |  |  |  |
Impact of initial adoption of ASC 606 - See Note 2 |  |  |  | (0.3 | ) |  | — |  |  | (0.3 | )
Stranded income tax effects resulting from tax reform - See Note 2 | — |  |  | 0.2 |  |  | 4.6 |  |  | 4.8 |
Commodity contracts and amortization of prior service credits - See below | — |  |  | 0.2 |  |  | (2.3 | ) |  | (2.1 | )
Current-period other comprehensive income (loss) | (0.8 | ) |  | (1.1 | ) |  | 2.3 |  |  | 0.4 |
Balance at end of period | $ | 229.4 |  |  | $ | (0.3 | ) |  | $ | 21.4 |  |  | $ | 250.5 |
__________________________
(1) | Net of tax (provision) benefit of $0.1 and $(0.5) as of September 29, 2018 and December 31, 2017, respectively.
(2) | Net of tax provision of $7.2 and $12.5 as of September 29, 2018 and December 31, 2017. The balances as of September 29, 2018 and December 31, 2017 include unamortized prior service credits.
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 10, 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. The balances as of September 30, 2017 and July 1, 2017 include 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 10, 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 include unamortized prior service credits.
The following summarizes amounts reclassified from each component of accumulated comprehensive income for the three months ended September 29, 2018 and September 30, 2017:
| Amount Reclassified from AOCI |  |
| Three months ended |  |
| September 29, 2018 |  | September 30, 2017 |  | Affected Line Item in the Condensed Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges: |  |  |  |  |  |  |
Commodity contracts | $ | 0.4 |  |  | $ | (0.2 | ) |  | Cost of products sold
Swaps | — |  |  | — |  |  | Interest expense
Pre-tax | 0.4 |  |  | (0.2 | ) |  |
Income taxes | (0.1 | ) |  | 0.1 |  |  |
| $ | 0.3 |  |  | $ | (0.1 | ) |  |
Gains on pension and postretirement items: |  |  |  |  |  |  |
Amortization of unrecognized prior service credits - Pre-tax | $ | (1.0 | ) |  | $ | (0.3 | ) |  | Other income (expense), net
Income taxes | 0.1 |  |  | 0.2 |  |  |
| $ | (0.9 | ) |  | $ | (0.1 | ) |  |
The following summarizes amounts reclassified from each component of accumulated comprehensive income for the nine months ended September 29, 2018 and September 30, 2017:
| Amount Reclassified from AOCI |  |
| Nine months ended |  |
| September 29, 2018 |  | September 30, 2017 |  | Affected Line Item in the Condensed Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges: |  |  |  |  |  |  |
Commodity contracts | $ | 0.2 |  |  | $ | (1.6 | ) |  | Cost of products sold
Swaps | — |  |  | 0.3 |  |  | Interest expense
Pre-tax | 0.2 |  |  | (1.3 | ) |  |
Income taxes | — |  |  | 0.5 |  |  |
| $ | 0.2 |  |  | $ | (0.8 | ) |  |
Gains on pension and postretirement items: |  |  |  |  |  |  |
Amortization of unrecognized prior service credits - Pre-tax | $ | (3.0 | ) |  | $ | (0.7 | ) |  | Other income (expense), net
Income taxes | 0.7 |  |  | 0.3 |  |  |
| $ | (2.3 | ) |  | $ | (0.4 | ) |  |
Common Stock in Treasury During the nine months ended September 29, 2018 and September 30, 2017, “Common stock in treasury” was decreased by the settlement of restricted stock units issued from treasury stock of $13.2 and $16.7, respectively. Changes in Equity A summary of the changes in equity for the three months ended September 29, 2018 and September 30, 2017 is provided below:
| Three months ended
| September 29, 2018 |  | September 30, 2017
Equity, beginning of period | $ | 358.6 |  |  | $ | 208.7 |
Net income | 6.6 |  |  | 22.3 |
Net unrealized gains (losses) on qualifying cash flow hedges, net of tax provision of $0.0 and $0.3 for the three months ended September 29, 2018 and September 30, 2017, respectively | (0.1 | ) |  | 0.5 |
Pension and postretirement liability adjustment, net of tax (provision) benefit of $0.1 and $(10.3) for the three months ended September 29, 2018 and September 30, 2017, respectively | (0.9 | ) |  | 16.2 |
Foreign currency translation adjustments | — |  |  | 2.4 |
Total comprehensive income | 5.6 |  |  | 41.4 |
Incentive plan activity | 2.5 |  |  | 2.0 |
Long-term incentive compensation expense | 3.3 |  |  | 3.0 |
Restricted stock and restricted stock unit vesting, net of tax withholdings | (0.3 | ) |  | (0.1 | )
Equity, end of period | $ | 369.7 |  |  | $ | 255.0 |
A summary of the changes in equity for the nine months ended September 29, 2018 and September 30, 2017 is provided below:
| Nine months ended
| September 29, 2018 |  | September 30, 2017
Equity, beginning of period | $ | 314.7 |  |  | $ | 191.6 |
Net income | 42.0 |  |  | 30.7 |
Net unrealized gains (losses) on qualifying cash flow hedges, net of tax (provision) benefit of $0.6 and ($0.2) for the nine months ended September 29, 2018 and September 30, 2017, respectively | (1.1 | ) |  | 0.3 |
Pension and postretirement liability adjustment, net of tax (provision) benefit of $5.3 and $(10.2) for the nine months ended September 29, 2018 and September 30, 2017, respectively | 2.3 |  |  | 15.9 |
Foreign currency translation adjustments | (0.8 | ) |  | 2.0 |
Total comprehensive income | 42.4 |  |  | 48.9 |
Impact of initial adoption of ASC 606 - See Note 2 | 4.0 |  |  | — |
Stranded income tax effects resulting from tax reform - See Note 2 | (4.8 | ) |  | — |
Impact of adoption of ASU 2016-16 - See Note 2 | (0.2 | ) |  | — |
Incentive plan activity | 7.8 |  |  | 9.4 |
Long-term incentive compensation expense | 9.4 |  |  | 8.8 |
Restricted stock and restricted stock unit vesting, net of tax withholdings | (3.6 | ) |  | (3.7 | )
Equity, end of period | $ | 369.7 |  |  | $ | 255.0 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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