Stockholders' Equity and Equity Instruments | 9 Months Ended |
Sep. 30, 2014 |
Stockholders' Equity and Equity Instruments [Abstract] | ' |
Stockholders' Equity and Equity Instruments | ' |
12. Stockholders’ Equity and Equity Instruments: |
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In the first nine months of 2014, the Company granted 95,610 stock options, 16,725 restricted stock units (“RSUs”) and 27,574 performance stock units (“PSUs”) to certain employees under its 2005 Incentive Award Plan. The Company’s closing stock price on the grant date was used to set the exercise price for the options and the fair value of the RSUs. The options vest ratably on each anniversary date over a four-year service period. Unexercised options expire after seven years. The RSUs vest on the third anniversary following the grant date. None of the awards granted have voting rights. The RSUs granted entitle the holders to receive non-forfeitable dividends or other distributions equal to those declared on the Company’s common stock for RSUs earned. |
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The PSUs granted in 2014 have a three-year performance period beginning in 2014 and ending in 2016. The PSUs earn between 0% and 150% based upon the Company’s total shareholder return, compared to the total shareholder return for each company comprising the Russell 3000 Index over the three-year period. The performance units will vest three years after the grant date. The PSUs granted entitle the holders to receive non-forfeitable dividends or other distributions equal to those declared on the Company’s common stock from the grant date through the vest date for PSUs earned. |
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To estimate the fair value of options on the grant date, the Company uses the Black-Scholes option valuation model. Award recipients are grouped according to expected exercise behavior. Unless better information is available to estimate the expected term of the options, the estimate is based on historical exercise experience. The risk-free rate, using U.S. Treasury yield curves in effect at the time of grant, is selected based on the expected term of each group. The Company’s historical stock price is used to estimate expected volatility. The range of estimates and calculated fair values for options granted during the first nine months of 2014 is included in the table below. The weighted-average grant date fair value of these options was $15.25. |
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| | Range | | | | | | | | | | | | | | | | | | | | | | |
Fair value of options granted | | $14.08 - $16.23 | | | | | | | | | | | | | | | | | | | | | | |
Exercise price | | $87.18 | | | | | | | | | | | | | | | | | | | | | | |
Expected term (years) | | 5-Apr | | | | | | | | | | | | | | | | | | | | | | |
Expected volatility | | 26.5% - 28.8% | | | | | | | | | | | | | | | | | | | | | | |
Dividend yield | | 3.40% | | | | | | | | | | | | | | | | | | | | | | |
Risk-free rate of return | | 1.4% - 1.6% | | | | | | | | | | | | | | | | | | | | | | |
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To estimate the fair value of the PSUs on the grant date, the Company uses a Monte-Carlo simulation model, which simulates future stock prices of the Company as well as the companies comprising the Russell 3000 Index. This model uses historical stock prices to estimate expected volatility and the Company’s correlation to the Russell 3000 Index. The risk-free rate was determined using the same methodology as the option valuations as discussed above. The estimated fair value of the PSUs granted in 2014 is $105.77 per unit. |
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During the nine months ended September 30, 2014, the Company reissued 91,181 shares of treasury stock related to the exercise of stock options, 15,636 shares related to the release of RSUs which vested, 3,998 shares related to the release of PSUs which vested and 479 shares related to stock payments. The Company recognized a tax deficiency of $0.2 million from its equity compensation awards as a reduction of additional paid-in capital during the first nine months of 2014. During the nine months ended September 30, 2014 and 2013, the Company recorded $3.7 million and $4.1 million, respectively, of compensation expense pursuant to its stock-based compensation plans. No amounts have been capitalized. The following table summarizes stock-based compensation activity during the nine months ended September 30, 2014. |
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| | Stock Options | | | RSUs | | | PSUs(a) | |
| | | | | Weighted-average | | | | | | Weighted-average | | | | | | Weighted-average | |
| | Number | | | exercise price | | | Number | | | fair value | | | Number | | | fair value | |
Outstanding at December 31, 2013 | | | 328,364 | | | $ | 72.88 | | | | 95,718 | | | $ | 76.09 | | | | 55,149 | | | $ | 80.89 | |
Granted | | | 95,610 | | | | 87.18 | | | | 16,725 | | | | 87.18 | | | | 27,574 | | | | 105.77 | |
Exercised (b) | | | (91,181 | ) | | | 66.86 | | | | - | | | | - | | | | - | | | | - | |
Released from restriction (b) | | | - | | | | - | | | | (15,636 | ) | | | 86.48 | | | | (3,998 | ) | | | 93.82 | |
Cancelled/Expired | | | (15,145 | ) | | | 78.64 | | | | (4,316 | ) | | | 77.6 | | | | (12,395 | ) | | | 91.8 | |
Outstanding at September 30, 2014 | | | 317,648 | | | $ | 78.64 | | | | 92,491 | | | $ | 76.27 | | | | 66,330 | | | $ | 88.42 | |
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(a) | Until they vest, PSUs are included in the table at the 100% attainment level at their grant date and at that level represent one share per unit. The final performance period for the 2011 PSU grant was completed in 2013. The Company issued 3,998 shares and cancelled 9,330 PSUs in March 2014 related to the 2011 PSU grant. | | | | | | | | | | | | | | | | | | | | | | | |
(b) | Common stock issued for exercised options and RSUs and PSUs released from restriction were issued from treasury stock. | | | | | | | | | | | | | | | | | | | | | | | |
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Other Comprehensive Income (Loss) |
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The Company’s comprehensive income (loss) is comprised of net earnings, net amortization of the unrealized loss of the pension obligation, the change in the unrealized gain (loss) on natural gas cash flow hedges and foreign currency translation adjustments. The components of and changes in accumulated other comprehensive income (“AOCI”) as of and for the three and nine months ended September 30, 2014 and 2013 are as follows (in millions): |
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| | Gains and | | | | | | | | | | | | | | | | | | |
| | (Losses) on | | | Defined | | | | | | | | | | | | | | | |
| | Cash Flow | | | Benefit | | | Foreign | | | | | | | | | | | | |
Three Months Ended September 30, 2014 (a) | | Hedges | | | Pension | | | Currency | | | Total | | | | | | | | | |
Beginning balance | | $ | 0.4 | | | $ | (8.7 | ) | | $ | 46.9 | | | $ | 38.6 | | | | | | | | | |
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Other comprehensive income (loss) before reclassifications (b) | | | (0.5 | ) | | | - | | | | (28.4 | ) | | | (28.9 | ) | | | | | | | | |
Amounts reclassified from accumulated other comprehensive income | | | - | | | | 0.3 | | | | - | | | | 0.3 | | | | | | | | | |
Net current period other comprehensive income (loss) | | | (0.5 | ) | | | 0.3 | | | | (28.4 | ) | | | (28.6 | ) | | | | | | | | |
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Ending balance | | $ | (0.1 | ) | | $ | (8.4 | ) | | $ | 18.5 | | | $ | 10 | | | | | | | | | |
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| | Gains and | | | | | | | | | | | | | | | | | | |
| | (Losses) on | | | Defined | | | | | | | | | | | | | | | |
| | Cash Flow | | | Benefit | | | Foreign | | | | | | | | | | | | |
Three Months Ended September 30, 2013 (a) | | Hedges | | | Pension | | | Currency | | | Total | | | | | | | | | |
Beginning balance | | $ | (0.5 | ) | | $ | (9.0 | ) | | $ | 39.3 | | | $ | 29.8 | | | | | | | | | |
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Other comprehensive income (loss) before reclassifications (b) | | | - | | | | - | | | | 16 | | | | 16 | | | | | | | | | |
Amounts reclassified from accumulated other comprehensive income | | | - | | | | 0.7 | | | | - | | | | 0.7 | | | | | | | | | |
Net current period other comprehensive income | | | - | | | | 0.7 | | | | 16 | | | | 16.7 | | | | | | | | | |
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Ending balance | | $ | (0.5 | ) | | $ | (8.3 | ) | | $ | 55.3 | | | $ | 46.5 | | | | | | | | | |
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| | Gains and | | | | | | | | | | | | | | | | | | |
| | (Losses) on | | | Defined | | | | | | | | | | | | | | | |
| | Cash Flow | | | Benefit | | | Foreign | | | | | | | | | | | | |
Nine Months Ended September 30, 2014 (a) | | Hedges | | | Pension | | | Currency | | | Total | | | | | | | | | |
Beginning balance | | $ | 0.3 | | | $ | (9.3 | ) | | $ | 43.5 | | | $ | 34.5 | | | | | | | | | |
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Other comprehensive income (loss) before reclassifications (b) | | | 0.2 | | | | - | | | | (25.0 | ) | | | (24.8 | ) | | | | | | | | |
Amounts reclassified from accumulated other comprehensive income | | | (0.6 | ) | | | 0.9 | | | | - | | | | 0.3 | | | | | | | | | |
Net current period other comprehensive income (loss) | | | (0.4 | ) | | | 0.9 | | | | (25.0 | ) | | | (24.5 | ) | | | | | | | | |
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Ending balance | | $ | (0.1 | ) | | $ | (8.4 | ) | | $ | 18.5 | | | $ | 10 | | | | | | | | | |
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| | Gains and | | | | | | | | | | | | | | | | | | |
| | (Losses) on | | | Defined | | | | | | | | | | | | | | | |
| | Cash Flow | | | Benefit | | | Foreign | | | | | | | | | | | | |
Nine Months Ended September 30, 2013 (a) | | Hedges | | | Pension | | | Currency | | | Total | | | | | | | | | |
Beginning balance | | $ | (0.7 | ) | | $ | (9.6 | ) | | $ | 67.9 | | | $ | 57.6 | | | | | | | | | |
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Other comprehensive income (loss) before reclassifications (b) | | | (0.2 | ) | | | - | | | | (12.6 | ) | | | (12.8 | ) | | | | | | | | |
Amounts reclassified from accumulated other comprehensive income | | | 0.4 | | | | 1.3 | | | | - | | | | 1.7 | | | | | | | | | |
Net current period other comprehensive income (loss) | | | 0.2 | | | | 1.3 | | | | (12.6 | ) | | | (11.1 | ) | | | | | | | | |
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Ending balance | | $ | (0.5 | ) | | $ | (8.3 | ) | | $ | 55.3 | | | $ | 46.5 | | | | | | | | | |
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(a) | With the exception of the cumulative foreign currency translation adjustment, for which no tax effect is recorded, the changes in the components of accumulated other comprehensive gain (loss) presented in the table above are reflected net of applicable income taxes. | | | | | | | | | | | | | | | | | | | | | | | |
(b) | The Company recorded foreign exchange losses of approximately $10.4 million and $10.8 million in the three months and nine months ended September 30, 2014, respectively, and foreign exchange losses (gains) of $5.9 million and $(7.5) million in the three months and nine months ended September 30, 2013, respectively, in accumulated other comprehensive income related to intercompany notes which were deemed to be of long-term investment nature. | | | | | | | | | | | | | | | | | | | | | | | |
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The amounts reclassified from AOCI to income for the three and nine months ended September 30, 2014 and 2013 are shown below (in millions): |
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| | Amount Reclassified from AOCI | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | Nine Months Ended | | | Line Item Impacted in the | | | | | | | | | | | | | | |
| | 30-Sep-14 | | | 30-Sep-14 | | | Consolidated Statement of Operations | | | | | | | | | | | | | | |
Gains and (losses) on cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | |
Natural gas instruments | | $ | (0.1 | ) | | $ | (1.0 | ) | | Product cost | | | | | | | | | | | | | | |
| | | 0.1 | | | | 0.4 | | | Income tax expense (benefit) | | | | | | | | | | | | | | |
Reclassifications, net of income taxes | | | - | | | | (0.6 | ) | | | | | | | | | | | | | | | | |
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Amortization of defined benefit pension: | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization of loss | | $ | 0.4 | | | $ | 1.2 | | | Product cost | | | | | | | | | | | | | | |
| | | (0.1 | ) | | | (0.3 | ) | | Income tax expense (benefit) | | | | | | | | | | | | | | |
Reclassifications, net of income taxes | | | 0.3 | | | | 0.9 | | | | | | | | | | | | | | | | | |
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Total reclassifications, net of income taxes | | $ | 0.3 | | | $ | 0.3 | | | | | | | | | | | | | | | | | |
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| | Amount Reclassified from AOCI | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | Nine Months Ended | | | Line Item Impacted in the | | | | | | | | | | | | | | |
| | 30-Sep-13 | | | 30-Sep-13 | | | Consolidated Statement of Operations | | | | | | | | | | | | | | |
Gains and (losses) on cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | |
Natural gas instruments | | $ | 0.1 | | | $ | 0.7 | | | Product cost | | | | | | | | | | | | | | |
| | | (0.1 | ) | | | (0.3 | ) | | Income tax expense (benefit) | | | | | | | | | | | | | | |
Reclassifications, net of income taxes | | | - | | | | 0.4 | | | | | | | | | | | | | | | | | |
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Amortization of defined benefit pension: | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization of loss | | $ | 0.4 | | | $ | 1.2 | | | Product cost | | | | | | | | | | | | | | |
| | | (0.1 | ) | | | (0.3 | ) | | Income tax expense (benefit) | | | | | | | | | | | | | | |
| | | 0.4 | | | | 0.4 | | | Deferred tax asset | | | | | | | | | | | | | | |
Reclassifications, net of income taxes | | | 0.7 | | | | 1.3 | | | | | | | | | | | | | | | | | |
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Total reclassifications, net of income taxes | | $ | 0.7 | | | $ | 1.7 | | | | | | | | | | | | | | | | | |