Shareholders' Equity

9 Months Ended

Sep. 30, 2020

Changes in shareholders' equity for the first three quarters of calendar 2020 are as follows:


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Permanent Shareholders' Equity		Redeemable Non-controlling Interest
(in millions, except per share data)	Shares	Amount
Balance, December 31, 2019	20.6	$	0.2	$	292.1	$	632.2	$	(36.4)	$	(1.2)	$	886.9	$	28.0
Adoption of new accounting standard	—	—		—		(0.1)		—		—		(0.1)		—
Net income	—	—		—		218.7		—		—		218.7		0.1
Other comprehensive income (loss)	—	—		—		—		(22.5)		—		(22.5)		0.9
Dividends ($0.26 per share)	—	—		—		(5.3)		—		—		(5.3)		—
Share repurchases	(0.1)	—		(5.3)		—		—		—		(5.3)		—
Incentive plan activity	—	—		1.0		—		—		—		1.0		—
Other	—	—		(1.5)		—		—		—		(1.5)		—
Balance, March 31, 2020	20.5	0.2		286.3		845.5		(58.9)		(1.2)		1,071.9		29.0
Net income (loss)	—	—		—		(6.5)		—		—		(6.5)		0.1
Other comprehensive income	—	—		—		—		22.7		—		22.7		0.6
Dividends ($0.26 per share)	—	—		—		(5.4)		—		—		(5.4)		—

Incentive plan activity	—	—		1.5		—		—		—		1.5		—
Balance, June 30, 2020	20.5	0.2		287.8		833.6		(36.2)		(1.2)		1,084.2		29.7
Net income (loss)	—	—		—		(19.7)		—		—		(19.7)		0.3
Other comprehensive income	—	—		—		—		6.1		—		6.1		0.5
Dividends ($0.26 per share)	—	—		—		(5.4)		—		—		(5.4)		—

Incentive plan activity	—	—		0.7		—		—		—		0.7		—
Balance, September 30, 2020	20.5	$	0.2	$	288.5	$	808.5	$	(30.1)	$	(1.2)	$	1,065.9	$	30.5

Changes in shareholders' equity for the first three quarters of calendar 2019 are as follows:


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity		Redeemable non-controlling interest
(in millions, except per share data)	Shares	Amount
Balance, December 31, 2018	20.7	$	0.2	$	301.0	$	603.3	$	(45.5)	$	(1.3)	$	857.7	$	—
Adoption of new accounting standard	—	—		—		11.5		(11.5)		—		—		—
Net income	—	—		—		13.1		—		—		13.1		—
Other comprehensive income	—	—		—		—		6.8		—		6.8		—
Dividends ($0.25 per share)	—	—		—		(5.3)		—		—		(5.3)		—
Share repurchases	—	—		(2.4)		—		—		—		(2.4)		—
Incentive plan activity	0.1	—		1.2		—		—		—		1.2		—
Balance, March 31, 2019	20.8	0.2		299.8		622.6		(50.2)		(1.3)		871.1		—
Net income	—	—		—		23.9		—		—		23.9		—
Other comprehensive loss	—	—		—		—		(2.6)		—		(2.6)		—
Dividends ($0.25 per share)	—	—		—		(5.2)		—		—		(5.2)		—
Share repurchases	(0.2)	—		(12.6)		—		—		—		(12.6)		—
Incentive plan activity	—	—		1.6		—		—		—		1.6		—
Balance, June 30, 2019	20.6	0.2		288.8		641.3		(52.8)		(1.3)		876.2		—
LeanTeq acquisition	—	—		—		—		—		—		—		28.0
Net loss	—	—		—		(1.5)		—		—		(1.5)		—
Other comprehensive income	—	—		—		—		5.2		—		5.2		—
Dividends ($0.25 per share)	—	—		—		(5.2)		—		—		(5.2)		—

Incentive plan activity	—	—		1.7		—		—		—		1.7		—
Balance, September 30, 2019	20.6	$	0.2	$	290.5	$	634.6	$	(47.6)	$	(1.3)	$	876.4	$	28.0

We intend to declare regular quarterly cash dividends on our common stock, as determined by our board of directors, after taking into account our current and projected cash flows, earnings, financial position, debt covenants and other relevant factors. In accordance with the board of directors declarations, total dividend payments of $16.2 million were made during the nine months ended September 30, 2020.

In October 2020, our board of directors declared a dividend of $0.26 per share, payable on December 16, 2020 to all shareholders of record as of December 2, 2020.

In October 2018, our board of directors authorized the expenditure of up to $50.0 million for the repurchase of our outstanding common shares. During the nine months ended September 30, 2020 we repurchased 0.1 million shares for $5.3 million. Prior to the expiration of the authorization in October 2020, we repurchased 0.3 million shares for $20.3 million. In October 2020, our board of directors authorized the expenditure of up to $50 million for the repurchase of our outstanding common shares through October 2022.

In February 2020, we issued stock options to certain key executives for 0.1 million common shares with an exercise price of $53.78 per share. The options vest pro-rata on the first, second and third anniversaries of the grant date, subject to continued employment. No options have a term greater than 10 years.

We determine the fair value of stock options using the Black-Scholes option pricing formula as of the grant date. Key inputs into this formula include expected term, expected volatility, expected dividend yield, and the risk-free interest rate. This fair value is amortized on a straight line basis over the vesting period.

The expected term represents the period that our stock options are expected to be outstanding, and is determined based on historical experience of similar awards, given the contractual terms of the awards, vesting schedules, and expectations of future employee behavior. The fair value of stock options reflects a volatility factor calculated using historical market data for EnPro's

common stock. The time frame used was approximated as a six-year period from the grant date for the awards. The dividend assumption is based on our expectations as of the grant date. We base the risk-free interest rate on the yield to maturity at the time of the stock option grant on zero-coupon U.S. government bonds having a remaining life equal to the option's expected life. When estimating forfeitures, we consider voluntary termination behaviors as well as analysis of actual option forfeitures.

The option awards issued in 2020 had a fair value of $13.64 per share at their grant date. The following assumptions were used to estimate the fair value of the 2020 option awards:


Average expected term	6 years
Expected volatility	31.53	%
Risk-free interest rate	1.17	%
Expected dividend yield	1.93	%