Changes in Shareholders' Equity

6 Months Ended

Jun. 29, 2014

Changes in Shareholders' Equity

Note 10 — Changes in shareholders’ equity

In 2007, the Company’s Board of Directors authorized the repurchase of up to $300 million of outstanding Company common stock. Repurchases of Company stock under the Board authorization may be made from time to time in the open market and may include privately-negotiated transactions as market conditions warrant and subject to regulatory considerations. The stock repurchase program has no expiration date and the Company’s ability to execute on the program will depend on, among other factors, cash requirements for acquisitions, cash generated from operations, debt repayment obligations, market conditions and regulatory requirements. In addition, under the Company’s senior credit agreements, the Company is subject to certain restrictions relating to its ability to repurchase shares in the event the Company’s consolidated leverage ratio (generally, the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, as defined in the senior credit agreements) exceeds certain levels, which may limit the Company’s ability to repurchase shares under this Board authorization. Through June 29, 2014, no shares have been purchased under this Board authorization.

The following table provides a reconciliation of basic to diluted weighted average shares outstanding:

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(Shares in thousands)
Basic		41,380		41,115		41,321		41,064
Dilutive effect of share based awards		413		374		442		384
Dilutive effect of 3.875% Convertible Notes and warrants		4,599		1,940		4,308		1,790
Diluted		46,392		43,429		46,071		43,238

Weighted average shares that were antidilutive and therefore not included in the calculation of earnings per share were approximately 6.4 million and 6.5 million for the three and six months ended June 29, 2014 respectively, and approximately 7.9 million for both the three and six month periods ended June 30, 2013, respectively.

The Convertible Notes are included in the diluted net income per share calculation only during periods in which the average market price of our common stock was above the applicable conversion price of the Convertible Notes, or $61.32 per share, and, therefore, the impact of conversion would not be anti-dilutive. In these periods, under the treasury stock method, we calculate the number of shares issuable under the terms of the Convertible Notes based on the average market price of the stock during the period, and include that number in the total diluted shares outstanding for the period.

In connection with the issuance of the Convertible Notes, the Company entered into convertible note hedge and warrant agreements. The convertible note hedge economically reduces the dilutive impact of the Convertible Notes. However, because applicable accounting guidance requires the Company to separately analyze the impact of the convertible note hedge agreements and the impact of the warrant agreements on diluted weighted average shares outstanding, the impact of the convertible note hedge agreements are excluded from the calculation of earnings per share because it would be anti-dilutive. The anti-dilutive shares associated with the convertible note hedges are 2.7 million and 2.6 million for the three and six months ended June 29, 2014, respectively and 1.5 million and 1.4 million for the three and six months ended June 30, 2013, respectively. The treasury stock method is applied when the warrants are in-the-money, assuming the proceeds from the exercise of the warrants are used to repurchase shares based on the average stock price during the period. The strike price of the warrants is approximately $74.65 per share of common stock. Shares issuable upon exercise of the warrants that were included in the total diluted shares outstanding were 1.9 million and 1.7 million for the three and six months ended June 29, 2014, respectively and 0.4 million and 0.3 million for the three and six months ended June 30, 2013, respectively.

For additional information regarding the convertible notes and convertible note hedge and warrant agreements see Note 8 to the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2013.

The following tables provide information relating to the changes in accumulated other comprehensive income (loss), net of tax, for the six months ended June 29, 2014 and June 30, 2013:

	Cash Flow Hedges			Pension and Other Postretirement Benefit Plans			Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income (Loss)
	(Dollars in thousands)
Balance at December 31, 2013	$	—		$	(97,037	)	$	(13,818	)	$	(110,855	)
Other comprehensive income (loss)    before reclassifications		233			(256	)		5,222			5,199
Amounts reclassified from    accumulated other    comprehensive  income (loss)		(90	)		1,498			—			1,408
Net current-period other    comprehensive income		143			1,242			5,222			6,607
Balance at June 29, 2014	$	143		$	(95,795	)	$	(8,596	)	$	(104,248	)

	Cash Flow Hedges			Pension and Other Postretirement Benefit Plans			Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income (Loss)
	(Dollars in thousands)
Balance at December 31, 2012	$	(381	)	$	(127,257	)	$	(4,410	)	$	(132,048	)
Other comprehensive income (loss)    before reclassifications		362			(452	)		(32,654	)		(32,744	)
Amounts reclassified from    accumulated other    comprehensive income (loss)		(374	)		2,408			—			2,034
Net current-period other    comprehensive income (loss)		(12	)		1,956			(32,654	)		(30,710	)
Balance at June 30, 2013	$	(393	)	$	(125,301	)	$	(37,064	)	$	(162,758	)

The following table provides information relating to the reclassifications of losses/(gain) in accumulated other comprehensive income into expense/(income), net of tax, for the three and six months ended June 29, 2014 and June 30, 2013:

	Three Months Ended						Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(Dollars in thousands)
Gains and losses on foreign exchange contracts:
Cost of goods sold	$	(52	)	$	(194	)	$	(129	)	$	(696	)
Total before tax		(52	)		(194	)		(129	)		(696	)
Tax expense		5			95			39			322
Net of tax	$	(47	)	$	(99	)	$	(90	)	$	(374	)
Amortization of pension and other postretirement    benefit items:
Actuarial losses/(gains) (1)	$	1,103		$	1,618		$	2,205		$	3,764
Prior-service costs(1)		(6	)		(6	)		(11	)		(11	)
Transition obligation(1)		—			1			-			2
Total before tax		1,097			1,613			2,194			3,755
Tax expense		(382	)		(660	)		(696	)		(1,347	)
Net of tax	$	715		$	953		$	1,498		$	2,408
Total reclassifications, net of tax	$	668		$	854		$	1,408		$	2,034

(1) These accumulated other comprehensive income components are included in the computation of net benefit cost of pension and other postretirement benefit plans (see Note 12 for additional information).