Changes in shareholders' equity

6 Months Ended

Jun. 30, 2013

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 30, 2013, 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 30, 2013		July 1, 2012		June 30, 2013		July 1, 2012
	(Shares in thousands)
Basic		41,115		40,834		41,064		40,801
Dilutive effect of share based awards		374		221		384		—
Dilutive effect of 3.875% Convertible Notes and warrants		1,940		21		1,790		—
Diluted		43,429		41,076		43,238		40,801

The 3.875% Convertible Senior Subordinated Notes due 2017 are included in the dilutive net income per share calculation using the treasury stock method 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 calculated the number of shares issuable under the terms of these notes based on the average market price of the stock during the period, and included 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. The Company separately analyzes the impact of the convertible note hedge and the warrant agreements on diluted weighted average shares outstanding. As a result, the purchases of the convertible note hedges are excluded because their impact would be anti-dilutive. The treasury stock method is applied when the warrants are in-the-money, assuming the proceeds from the exercise of the warrant 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 0.4 million and 0.3 million for the three and six month periods ended June 30, 2013. The warrants had no dilutive impact for the three and six month periods ended July 1, 2012. The total number of shares that could potentially be included if the warrants were exercised is approximately 7.8 million at June 30, 2013.

Weighted average stock options that were antidilutive and therefore not included in the calculation of earnings per share was approximately 7.9 million for both the three and six month periods ended June 30, 2013, respectively, and approximately 8.8 million and 9.0 million for the three and six month periods ended July 1, 2012, respectively.

The following tables provide information relating to the changes in accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2013 and July 1, 2012:

	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	)

	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, 2011	$	(7,257	)	$	(134,548	)	$	(17,548	)	$	(159,353	)
Other comprehensive income (loss) before reclassifications		157			33			(35,544	)		(35,354	)
Amounts reclassified from accumulated other comprehensive income		4,149			2,303			—			6,452
Net current-period other comprehensive income		4,306			2,336			(35,544	)		(28,902	)
Balance at July 1, 2012	$	(2,951	)	$	(132,212	)	$	(53,092	)	$	(188,255	)

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 30, 2013 and July 1, 2012:

	Three Months Ended						Six Months Ended
	June  30, 2013			July 1, 2012			June  30, 2013			July 1, 2012
	(Dollars in thousands)
Gains and losses on cash flow hedges:
Interest Rate Contracts:
Interest expense	$	—		$	3,643		$	—		$	7,394
Foreign Exchange Contracts:
Cost of goods sold		(194	)		130			(696	)		(767	)
Total before tax		(194	)		3,773			(696	)		6,627
Tax expense		95			(1,391	)		322			(2,478	)
Net of tax	$	(99	)	$	2,382		$	(374	)	$	4,149
Amortization of pension and other postretirement benefits items:
Actuarial losses/(gains)(1)	$	1,618		$	1,708		$	3,764		$	3,418
Prior-service costs(1)		(6	)		(6	)		(11	)		(12	)
Transition obligation(1)		1			23			2			49
Settlement charge(1)		—			111			—			111
Total before tax		1,613			1,836			3,755			3,566
Tax expense		(660	)		(651	)		(1,347	)		(1,263	)
Net of tax	$	953		$	1,185		$	2,408		$	2,303
Total reclassifications, net of tax	$	854		$	3,567		$	2,034		$	6,452

(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, “Pension and other postretirement benefits” for additional information).