Stockholders' Equity
 9 Months Ended
Oct. 02, 2016
Stockholders' Equity Note [Abstract]  
Stockholders' Equity
Stockholders’ Equity
The changes in shares of our common stock outstanding were as follows:
 
 
Nine Months Ended
(In millions)
 
Oct 2, 2016
 
Sep 27, 2015
Beginning balance
 
299.0

 
307.3

Stock plans activity
 
1.6

 
1.6

Share repurchases
 
(7.0
)
 
(7.9
)
Ending balance
 
293.6

 
301.0



From time to time, our Board of Directors authorizes the repurchase of shares of our common stock. In November 2015, our Board authorized the repurchase of up to $2.0 billion of our outstanding common stock. At October 2, 2016, we had approximately $1.7 billion available under the 2015 repurchase program. Share repurchases will take place from time to time at management’s discretion depending on market conditions.

Share repurchases also include shares surrendered by employees to satisfy tax withholding obligations in connection with RSAs, RSUs, stock options and LTPP awards issued to employees.

Repurchased shares are retired immediately upon repurchase. We account for treasury stock under the cost method. Upon retirement the excess over par value is charged against additional paid-in capital until reduced to zero, with the remainder recorded as a reduction to retained earnings. Due to the volume of repurchases made under our share repurchase program, additional paid-in capital was reduced to zero, with the remainder of the excess purchase price over par value of $365 million recorded as a reduction to retained earnings in the nine months ended October 2, 2016.

Our share repurchases were as follows:
 
 
Nine Months Ended
(In millions)
 
Oct 2, 2016
 
Sep 27, 2015
 
 
$
Shares

 
$
Shares

Shares repurchased under our share repurchase programs
 
$
801

6.2

 
$
750

7.0

Shares repurchased to satisfy tax withholding obligations
 
95

0.8

 
98

0.9

Total share repurchases
 
$
896

7.0

 
$
848

7.9



In March 2016, our Board of Directors authorized a 9.3% increase to our annual dividend payout rate from $2.68 to $2.93 per share. Our Board of Directors also declared dividends of $2.20 per share during the first nine months of 2016, compared to dividends of $2.01 per share during the first nine months of 2015. Dividends are subject to quarterly approval by our Board of Directors.

As further discussed in "Note 7: Thales-Raytheon Systems Co. Ltd. (TRS) Joint Venture", in the second quarter of 2016, we recorded our acquisition of Thales S.A.'s noncontrolling interest in RCCS LLC at fair value, which resulted in a reduction to retained earnings of $167 million before tax, $205 million after tax. The $38 million of deferred tax is due to the change in outside basis difference in RCCS LLC.

Stock-based Compensation Plans
RSAs and RSUs—During the first nine months of 2016, we granted 1.1 million RSAs and RSUs with a weighted-average grant-date fair value of $124.02, calculated under the intrinsic value method. These awards generally vest in equal installments on each of the second, third and fourth anniversary dates of the award's grant date.

LTPP—During the first nine months of 2016, we granted RSUs subject to the 2016–2018 LTPP plan with an aggregate target award of 0.2 million units and a weighted-average grant-date fair value of $123.31. The performance goals for the 2016–2018 LTPP award are independent of each other and based on three metrics, as defined in the award agreements: return on invested capital (ROIC), weighted at 50%; total shareholder return (TSR) relative to a peer group, weighted at 25%; and cumulative free cash flow from continuing operations (CFCF), weighted at 25%. The ultimate award, which is determined at the end of the three-year cycle, can range from zero to 200% of the target award and includes dividend equivalents, which are not included in the aggregate target award numbers. The grant-date fair value is based upon the value determined under the intrinsic value method for the CFCF and ROIC portions of the award and the Monte Carlo simulation method for the TSR portion of the award.

Forcepoint Plans—In 2015, Forcepoint established long-term incentive plans that provide for awards of unit appreciation rights and profits interests in the joint venture to Forcepoint management and key employees. Awards are approved by the Board of Forcepoint. These awards vest over a specified period of time and settlement is subject to a liquidity event defined as either a change in control or an initial public offering of the joint venture. In certain limited circumstances other vesting conditions may apply and the expense attributable to these vesting conditions was $2 million and $4 million for the third quarter and first nine months of 2016, respectively. At October 2, 2016, there were 131 thousand combined units and/or profits interests authorized for award under these plans.

Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) includes gains and losses associated with pension and other postretirement benefits (PRB), foreign exchange translation adjustments, the effective portion of gains and losses on derivative instruments qualified as cash flow hedges, and unrealized gains (losses) on available-for-sale investments. The computation of other comprehensive income (loss) and its components are presented in the consolidated statements of comprehensive income.
Accumulated other comprehensive income (loss) consisted of the following activity during the first nine months of 2016 and 2015:
 
Pension and PRB plans, net(1)

 
Foreign exchange translation

 
Cash flow hedges(2)

 
Unrealized gains (losses) on investments and other, net(3)

 
Total

 
 
 
 
 
(In millions)
 
 
 
 
Balance at December 31, 2015
$
(7,088
)
 
$
(60
)
 
$
(16
)
 
$
(12
)
 
$
(7,176
)
Before tax amount
590

 
(78
)
 
16

 
15

 
543

Tax (expense) or benefit
(211
)
 
—

 
(7
)
 
(5
)
 
(223
)
Net of tax amount
379

 
(78
)
 
9

 
10

 
320

Balance at October 2, 2016
$
(6,709
)
 
$
(138
)
 
$
(7
)
 
$
(2
)
 
$
(6,856
)
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
(7,432
)
 
$
(3
)
 
$
(14
)
 
$
(9
)
 
$
(7,458
)
Before tax amount
724

 
(30
)
 
(4
)
 
(6
)
 
684

Tax (expense) or benefit
(253
)
 
—

 
1

 
2

 
(250
)
Net of tax amount
471

 
(30
)
 
(3
)
 
(4
)
 
434

Balance at September 27, 2015
$
(6,961
)
 
$
(33
)
 
$
(17
)
 
$
(13
)
 
$
(7,024
)

(1)
The pension and PRB plans, net, is shown net of tax benefits of $3,613 million and $3,824 million at October 2, 2016 and December 31, 2015, respectively.
(2)
The cash flow hedges are shown net of tax benefits of $3 million and $10 million at October 2, 2016 and December 31, 2015, respectively.
(3)
The unrealized gains (losses) on investments and other, net are shown net of tax (expense) or benefit of $(1) million and $4 million at October 2, 2016 and December 31, 2015, respectively.

Material amounts reclassified out of AOCL were related to amortization of net actuarial loss associated with our pension and PRB plans and were $758 million and $847 million before tax in the first nine months of 2016 and 2015, respectively. This component of AOCL is included in the calculation of net periodic pension expense (income) (see "Note 12: Pension and Other Employee Benefits" for additional details).

We expect approximately $5 million of after-tax net unrealized losses on our cash flow hedges at October 2, 2016 to be reclassified into earnings at then-current values over the next twelve months as the underlying hedged transactions occur.