Shareholders' Equity

6 Months Ended

Jun. 29, 2019

Shareholders' Equity

Note 10. 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 June 29, 2019
Beginning of period	$	30	$	1,689	$	(331)	$	5,581	$	(1,736)	$	5,233
Net income		—		—		—		217		—		217
Other comprehensive income		—		—		—		—		21		21
Share-based compensation activity		—		28		—		—		—		28
Dividends declared		—		—		—		(4)		—		(4)
Purchases of common stock		—		—		(159)		—		—		(159)
End of period	$	30	$	1,717	$	(490)	$	5,794	$	(1,715)	$	5,336
Three months ended June 30, 2018
Beginning of period	$	33	$	1,710	$	(392)	$	5,642	$	(1,301)	$	5,692
Net income		—		—		—		224		—		224
Other comprehensive (loss)		—		—		—		—		(42)		(42)
Share-based compensation activity		—		64		—		—		—		64
Dividends declared		—		—		—		(5)		—		(5)
Purchases of common stock		—		—		(571)		—		—		(571)
End of period	$	33	$	1,774	$	(963)	$	5,861	$	(1,343)	$	5,362
Six months ended June 29, 2019
Beginning of period	$	30	$	1,646	$	(129)	$	5,407	$	(1,762)	$	5,192
Net income		—		—		—		396		—		396
Other comprehensive income		—		—		—		—		47		47
Share-based compensation activity		—		71		—		—		—		71
Dividends declared		—		—		—		(9)		—		(9)
Purchases of common stock		—		—		(361)		—		—		(361)
End of period	$	30	$	1,717	$	(490)	$	5,794	$	(1,715)	$	5,336
Six months ended June 30, 2018
Beginning of period	$	33	$	1,669	$	(48)	$	5,368	$	(1,375)	$	5,647
Adoption of ASC 606		—		—		—		90		—		90
Net income		—		—		—		413		—		413
Other comprehensive income		—		—		—		—		32		32
Share-based compensation activity		—		105		—		—		—		105
Dividends declared		—		—		—		(10)		—		(10)
Purchases of common stock		—		—		(915)		—		—		(915)
End of period	$	33	$	1,774	$	(963)	$	5,861	$	(1,343)	$	5,362

Dividends per share of common stock were $0.02 for both the second quarter of 2019 and 2018 and $0.04 for both the first half of 2019 and 2018.

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		Six Months Ended
	June 29,	June 30,	June 29,	June 30,
(In thousands)	2019	2018	2019	2018
Basic weighted-average shares outstanding	232,013	253,904	233,426	257,200
Dilutive effect of stock options	1,532	3,273	1,567	3,262
Diluted weighted-average shares outstanding	233,545	257,177	234,993	260,462

Stock options to purchase 3.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for both the second quarter and first half of 2019, as their effect would have been anti-dilutive. Stock options to purchase 1.3 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for both the second quarter and first half of 2018, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income

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 29, 2018	$	(1,727)	$	(32)	$	(3)	$	(1,762)
Other comprehensive income before reclassifications		—		4		4		8
Reclassified from Accumulated other comprehensive loss		41		—		(2)		39
Balance at June 29, 2019	$	(1,686)	$	(28)	$	(1)	$	(1,715)
Balance at December 30, 2017	$	(1,396)	$	11	$	10	$	(1,375)
Other comprehensive income before reclassifications		—		(27)		(2)		(29)
Reclassified from Accumulated other comprehensive loss		62		—		(1)		61
Balance at June 30, 2018	$	(1,334)	$	(16)	$	7	$	(1,343)

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

	June 29, 2019						June 30, 2018
			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*	$	24	$	(6)	$	18	$	39	$	(9)	$	30
Amortization of prior service cost*		3		(1)		2		2		(1)		1
Pension and postretirement benefits adjustments, net		27		(7)		20		41		(10)		31
Deferred gains (losses) on hedge contracts:
Current deferrals		2		(1)		1		(4)		1		(3)
Reclassification adjustments		(1)		—		(1)		(1)		—		(1)
Deferred gains (losses) on hedge contracts, net		1		(1)		—		(5)		1		(4)
Foreign currency translation adjustments		3		(2)		1		(66)		(3)		(69)
Total	$	31	$	(10)	$	21	$	(30)	$	(12)	$	(42)
Six Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	49	$	(11)	$	38	$	77	$	(18)	$	59
Amortization of prior service cost*		4		(1)		3		4		(1)		3
Pension and postretirement benefits adjustments, net		53		(12)		41		81		(19)		62
Deferred gains (losses) on hedge contracts:
Current deferrals		6		(2)		4		(2)		—		(2)
Reclassification adjustments		(2)		—		(2)		(1)		—		(1)
Deferred gains (losses) on hedge contracts, net		4		(2)		2		(3)		—		(3)
Foreign currency translation adjustments		4		—		4		(26)		(1)		(27)
Total	$	61	$	(14)	$	47	$	52	$	(20)	$	32

*These components of other comprehensive income are included in the computation of net periodic pension cost.  See Note 14 of our 2018 Annual Report on Form 10-K for additional information.