Shareholders' Equity

9 Months Ended

Oct. 03, 2020

Shareholders’ Equity

A reconciliation of Shareholders’ equity is presented below:


									Accumulated
									Other		Total
	Common		Capital		Treasury		Retained		Comprehensive		Shareholders'
(In millions)	Stock		Surplus		Stock		Earnings		Loss		Equity
Three months ended October 3, 2020
Beginning of period	$	29	$	1,732	$	(74)	$	5,631	$	(1,791)	$	5,527
Net income	—		—		—		115		—		115
Other comprehensive income	—		—		—		—		74		74
Share-based compensation activity	—		30		—		—		—		30
Dividends declared	—		—		—		(5)		—		(5)
End of period	$	29	$	1,762	$	(74)	$	5,741	$	(1,717)	$	5,741
Three months ended September 28, 2019
Beginning of period	$	30	$	1,717	$	(490)	$	5,794	$	(1,715)	$	5,336
Net income	—		—		—		220		—		220
Other comprehensive loss	—		—		—		—		(14)		(14)
Share-based compensation activity	—		24		—		—		—		24
Dividends declared	—		—		—		(5)		—		(5)
Purchases of common stock	—		—		(109)		—		—		(109)
End of period	$	30	$	1,741	$	(599)	$	6,009	$	(1,729)	$	5,452
Nine months ended October 3, 2020
Beginning of period	$	29	$	1,674	$	(20)	$	5,682	$	(1,847)	$	5,518
Net income	—		—		—		73		—		73
Other comprehensive income	—		—		—		—		130		130
Share-based compensation activity	—		88		—		—		—		88
Dividends declared	—		—		—		(14)		—		(14)
Purchases of common stock	—		—		(54)		—		—		(54)
End of period	$	29	$	1,762	$	(74)	$	5,741	$	(1,717)	$	5,741
Nine months ended September 28, 2019
Beginning of period	$	30	$	1,646	$	(129)	$	5,407	$	(1,762)	$	5,192
Net income	—		—		—		616		—		616
Other comprehensive income	—		—		—		—		33		33
Share-based compensation activity	—		95		—		—		—		95
Dividends declared	—		—		—		(14)		—		(14)
Purchases of common stock	—		—		(470)		—		—		(470)
End of period	$	30	$	1,741	$	(599)	$	6,009	$	(1,729)	$	5,452

Dividends per share of common stock were $0.02 for both the third quarter of 2020 and 2019 and $0.06 for both the first nine months of 2020 and 2019.

Earnings Per Share

We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period. Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.

The weighted-average shares outstanding for basic and diluted EPS are as follows:


	Three Months Ended		Nine Months Ended
(In thousands)	October 3, 2020	September 28, 2019	October 3, 2020	September 28, 2019
Basic weighted-average shares outstanding	228,918	229,755	228,492	232,202
Dilutive effect of stock options	361	1,342	345	1,487
Diluted weighted-average shares outstanding	229,279	231,097	228,837	233,689

Stock options to purchase 7.5 million and 7.9 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for the third quarter and first nine months of 2020, respectively, as their effect would have been anti-dilutive. Stock options to purchase 4.3 million and 3.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for the third quarter and first nine months of 2019, respectively, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive loss are presented below:


	Pension and		Foreign		Deferred		Accumulated
	Postretirement		Currency		Gains (Losses)		Other
	Benefits		Translation		on Hedge		Comprehensive
(In millions)	Adjustments		Adjustments		Contracts		Loss
Balance at January 4, 2020	$	(1,811)	$	(36)	$	—	$	(1,847)
Other comprehensive income before reclassifications	—		25		(2)		23
Reclassified from Accumulated other comprehensive loss	110		—		(3)		107
Balance at October 3, 2020	$	(1,701)	$	(11)	$	(5)	$	(1,717)
Balance at December 29, 2018	$	(1,727)	$	(32)	$	(3)	$	(1,762)
Other comprehensive loss before reclassifications	—		(30)		4		(26)
Reclassified from Accumulated other comprehensive loss	61		—		(2)		59
Balance at September 28, 2019	$	(1,666)	$	(62)	$	(1)	$	(1,729)

The before and after-tax components of Other comprehensive income (loss) are presented below:


	October 3, 2020						September 28, 2019
			Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
(In millions)	Amount		Benefit		Amount		Amount		Benefit		Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	46	$	(11)	$	35	$	25	$	(6)	$	19
Amortization of prior service cost*	2		—		2		1		—		1
Pension and postretirement benefits adjustments, net	48		(11)		37		26		(6)		20
Deferred gains (losses) on hedge contracts:
Current deferrals	3		—		3		—		—		—
Reclassification adjustments	(2)		1		(1)		—		—		—
Deferred gains (losses) on hedge contracts, net	1		1		2		—		—		—
Foreign currency translation adjustments	35		—		35		(33)		(1)		(34)
Total	$	84	$	(10)	$	74	$	(7)	$	(7)	$	(14)
Nine Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	138	$	(32)	$	106	$	74	$	(17)	$	57
Amortization of prior service cost*	5		(1)		4		5		(1)		4
Pension and postretirement benefits adjustments, net	143		(33)		110		79		(18)		61
Deferred gains (losses) on hedge contracts:
Current deferrals	(2)		—		(2)		6		(2)		4
Reclassification adjustments	(5)		2		(3)		(2)		—		(2)
Deferred gains (losses) on hedge contracts, net	(7)		2		(5)		4		(2)		2
Foreign currency translation adjustments	28		(3)		25		(29)		(1)		(30)
Total	$	164	$	(34)	$	130	$	54	$	(21)	$	33

*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (credit). See Note 16 of our 2019 Annual Report on Form 10-K for additional information.