Shareholders' Equity

12 Months Ended

Jan. 04, 2020

Shareholders' Equity

Shareholders' Equity

Note 12. Shareholders’ Equity

Capital Stock

We have authorization for 15 million shares of preferred stock with a par value of $0.01 and 500 million shares of common stock with a par value of $0.125.  Outstanding common stock activity is presented below:

(In thousands)	2019	2018	2017
Balance at beginning of year	235,621	261,471	270,287
Share repurchases	(10,011)	(29,094)	(11,917)
Share-based compensation activity	2,346	3,244	3,101
Balance at end of year	227,956	235,621	261,471

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:

(In thousands)	2019	2018	2017
Basic weighted-average shares outstanding	231,315	250,196	266,380
Dilutive effect of stock options	1,394	3,041	2,370
Diluted weighted-average shares outstanding	232,709	253,237	268,750

In 2019, 2018 and 2017, stock options to purchase 4.3 million, 1.3 million and 1.6 million shares, respectively, of common stock are excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive.

Accumulated Other Comprehensive 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 December 30, 2017	$	(1,396)	$	11	$	10	$	(1,375)
Other comprehensive loss before reclassifications		(198)		(49)		(8)		(255)
Reclassified from Accumulated other comprehensive loss		124		6		(5)		125
Reclassification of stranded tax effects		(257)		—		—		(257)
Balance at December 29, 2018	$	(1,727)	$	(32)	$	(3)	$	(1,762)
Other comprehensive loss before reclassifications		(166)		(4)		5		(165)
Reclassified from Accumulated other comprehensive loss		82		—		(2)		80
Balance at January 4, 2020	$	(1,811)	$	(36)	$	—	$	(1,847)

In 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows entities to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act  from accumulated other comprehensive loss to retained earnings. The stranded tax effects are comprised of the tax amounts included in accumulated other comprehensive loss at the previous U.S. federal corporate tax rate of 35%, for which the related deferred tax asset or liability was remeasured at the new U.S. federal corporate tax rate of 21% in the fourth quarter of 2017. The adoption of this standard resulted in an increase to accumulated other comprehensive loss of $257 million, with an offsetting increase to retained earnings.

Other Comprehensive Income (Loss)

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

	2019						2018						2017
			Tax		After-				Tax		After-				Tax		After-
	Pre-Tax		(Expense)		Tax		Pre-Tax		(Expense)		Tax		Pre-Tax		(Expense)		Tax
(In millions)	Amount		Benefit		Amount		Amount		Benefit		Amount		Amount		Benefit		Amount
Pension and postretirement benefits adjustments:
Unrealized gains (losses)	$	(218)	$	52	$	(166)	$	(248)	$	58	$	(190)	$	18	$	(1)	$	17
Amortization of net actuarial loss*		99		(23)		76		152		(35)		117		136		(48)		88
Amortization of prior service cost*		8		(2)		6		9		(2)		7		7		(2)		5
Recognition of prior service cost		—		—		—		(20)		5		(15)		(1)		—		(1)
Business disposition		—		—		—		7		—		7		—		—		—
Pension and postretirement benefits adjustments, net		(111)		27		(84)		(100)		26		(74)		160		(51)		109
Foreign currency translation adjustments:
Foreign currency translation adjustments		(6)		2		(4)		(46)		(3)		(49)		100		7		107
Business disposition		—		—		—		6		—		6		—		—		—
Foreign currency translation adjustments, net		(6)		2		(4)		(40)		(3)		(43)		100		7		107
Deferred gains (losses) on hedge contracts:
Current deferrals		8		(3)		5		(8)		—		(8)		10		(2)		8
Reclassification adjustments		(2)		—		(2)		(7)		2		(5)		7		(1)		6
Deferred gains (losses) on hedge contracts, net		6		(3)		3		(15)		2		(13)		17		(3)		14
Total	$	(111)	$	26	$	(85)	$	(155)	$	25	$	(130)	$	277	$	(47)	$	230

* These components of other comprehensive income (loss) are included in the computation of net periodic pension cost. See Note 16 for additional information.