UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~April 2, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-6948

SPX CORPORATION

(Exact Name of registrant as specified in its charter)


Delaware						38-1016240
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

6325 Ardrey Kell Road, Suite 400, Charlotte, North Carolina 28277

(Address of principal executive offices) (Zip Code)

(980) 474-3700

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols(s)	Name of each exchange on which registered
Common Stock, par value $0.01	SPXC	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No.

Common shares outstanding ~~October~~ April 29, ~~2021,~~ ~~45,413,380~~2022, 45,718,063

SPX CORPORATION AND SUBSIDIARIES

FORM 10-Q INDEX

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited; in millions, except per share amounts)


		Three months ended				Nine months ended					Three months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Revenues	Revenues	$	285.8	$	268.3	$	870.4	$	783.1	Revenues	$	307.1	$	287.2
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of products sold	Cost of products sold	191.8		176.6		570.4		513.4		Cost of products sold	203.1		182.8
Selling, general and administrative	Selling, general and administrative	76.2		67.7		234.7		206.2		Selling, general and administrative	84.2		75.2
Intangible amortization	Intangible amortization	5.5		3.3		16.0		8.3		Intangible amortization	9.3		4.0
Special charges, net	Special charges, net	0.5		0.3		1.9		1.6		Special charges, net	—		0.2

Other operating (income) expense		—		—		2.7		(0.4)
Other operating income										Other operating income	(0.9)		—
Operating income	Operating income	11.8		20.4		44.7		54.0		Operating income	11.4		25.0

Other income, net	Other income, net	2.9		2.7		17.2		8.5		Other income, net	6.5		7.4
Interest expense	Interest expense	(3.5)		(4.5)		(11.1)		(14.0)		Interest expense	(2.4)		(4.2)
Interest income	Interest income	0.2		0.1		0.4		0.2		Interest income	0.1		0.1

Income from continuing operations before income taxes	Income from continuing operations before income taxes	11.4		18.7		51.2		48.7		Income from continuing operations before income taxes	15.6		28.3
Income tax provision	Income tax provision	(3.7)		(3.1)		(9.8)		(8.4)		Income tax provision	(2.6)		(5.3)
Income from continuing operations	Income from continuing operations	7.7		15.6		41.4		40.3		Income from continuing operations	13.0		23.0

Income from discontinued operations, net of tax										Income from discontinued operations, net of tax	—		4.6
Loss on disposition of discontinued operations, net of tax										Loss on disposition of discontinued operations, net of tax	(1.6)		(0.8)
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	(31.0)		7.1		20.3		33.5		Income (loss) from discontinued operations, net of tax	(1.6)		3.8
Gain (loss) on disposition of discontinued operations, net of tax		354.4		0.1		357.7		(1.2)
Income from discontinued operations, net of tax		323.4		7.2		378.0		32.3

Net income	Net income	$	331.1	$	22.8	$	419.4	$	72.6	Net income	$	11.4	$	26.8

Basic income per share of common stock:	Basic income per share of common stock:									Basic income per share of common stock:
Income from continuing operations	Income from continuing operations	$	0.17	$	0.35	$	0.92	$	0.90	Income from continuing operations	$	0.29	$	0.51
Income from discontinued operations		7.13		0.16		8.35		0.73
Income (loss) from discontinued operations										Income (loss) from discontinued operations	(0.04)		0.08
Net income per share	Net income per share	$	7.30	$	0.51	$	9.27	$	1.63	Net income per share	$	0.25	$	0.59

Weighted-average number of common shares outstanding — basic	Weighted-average number of common shares outstanding — basic	45.331		44.708		45.244		44.538		Weighted-average number of common shares outstanding — basic	45.554		45.132

Diluted income per share of common stock:	Diluted income per share of common stock:									Diluted income per share of common stock:
Income from continuing operations	Income from continuing operations	$	0.17	$	0.34	$	0.89	$	0.88	Income from continuing operations	$	0.28	$	0.50
Income from discontinued operations		6.93		0.16		8.14		0.71
Income (loss) from discontinued operations										Income (loss) from discontinued operations	(0.03)		0.08
Net income per share	Net income per share	$	7.10	$	0.50	$	9.03	$	1.59	Net income per share	$	0.25	$	0.58

Weighted-average number of common shares outstanding — diluted	Weighted-average number of common shares outstanding — diluted	46.650		45.894		46.455		45.694		Weighted-average number of common shares outstanding — diluted	46.445		46.319

Comprehensive income	Comprehensive income	$	325.0	$	24.7	$	415.4	$	65.5	Comprehensive income	$	14.4	$	29.5

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share data)


		October 2, 2021		December 31, 2020			April 2, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and equivalents	Cash and equivalents	$	560.1	$	68.3	Cash and equivalents	$	262.8	$	388.2
Accounts receivable, net	Accounts receivable, net	212.1		221.0		Accounts receivable, net	223.1		223.4
Contract assets	Contract assets	23.7		32.5		Contract assets	30.3		28.9
Inventories, net	Inventories, net	170.3		143.1		Inventories, net	220.7		189.8
Other current assets (includes income taxes receivable of $2.6 and $27.3 at October 2, 2021 and December 31, 2020, respectively)		80.3		96.1
Other current assets						Other current assets	78.6		73.1

Assets of discontinued operations		—		121.6

Total current assets	Total current assets	1,046.5		682.6		Total current assets	815.5		903.4
Property, plant and equipment:	Property, plant and equipment:					Property, plant and equipment:
Land	Land	14.0		12.9		Land	13.9		13.9
Buildings and leasehold improvements	Buildings and leasehold improvements	61.7		64.9		Buildings and leasehold improvements	62.8		62.9
Machinery and equipment	Machinery and equipment	230.2		215.6		Machinery and equipment	233.1		231.4
		305.9		293.4			309.8		308.2
Accumulated depreciation	Accumulated depreciation	(197.9)		(183.4)		Accumulated depreciation	(199.1)		(194.9)
Property, plant and equipment, net	Property, plant and equipment, net	108.0		110.0		Property, plant and equipment, net	110.7		113.3
Goodwill	Goodwill	404.0		368.6		Goodwill	490.6		457.3
Intangibles, net	Intangibles, net	337.2		305.0		Intangibles, net	405.9		415.5
Other assets	Other assets	590.9		609.8		Other assets	676.6		675.9
Deferred income taxes	Deferred income taxes	3.2		23.9		Deferred income taxes	12.5		11.0
Assets of discontinued operations		—		219.1

Assets of DBT and Heat Transfer (includes cash and cash equivalents of $6.7 and $7.8 at April 2, 2022 and December 31, 2021, respectively)						Assets of DBT and Heat Transfer (includes cash and cash equivalents of $6.7 and $7.8 at April 2, 2022 and December 31, 2021, respectively)	55.4		52.2
TOTAL ASSETS	TOTAL ASSETS	$	2,489.8	$	2,319.0	TOTAL ASSETS	$	2,567.2	$	2,628.6
LIABILITIES AND EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY						LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	112.3	$	104.6	Accounts payable	$	111.0	$	119.6
Contract liabilities	Contract liabilities	50.7		46.3		Contract liabilities	43.7		44.7
Accrued expenses	Accrued expenses	240.6		209.4		Accrued expenses	177.4		217.9
Income taxes payable	Income taxes payable	60.2		0.4		Income taxes payable	46.8		42.1
Short-term debt	Short-term debt	2.3		101.2		Short-term debt	2.0		2.2
Current maturities of long-term debt	Current maturities of long-term debt	11.4		7.2		Current maturities of long-term debt	13.0		13.0

Liabilities of discontinued operations		—		115.8

Total current liabilities	Total current liabilities	477.5		584.9		Total current liabilities	393.9		439.5
Long-term debt	Long-term debt	233.9		304.0		Long-term debt	227.7		230.8
Deferred and other income taxes	Deferred and other income taxes	21.3		23.5		Deferred and other income taxes	30.6		31.3
Other long-term liabilities	Other long-term liabilities	696.8		746.7		Other long-term liabilities	761.2		788.5
Liabilities of discontinued operations		—		30.7

Liabilities of DBT and Heat Transfer						Liabilities of DBT and Heat Transfer	38.0		35.6
Total long-term liabilities	Total long-term liabilities	952.0		1,104.9		Total long-term liabilities	1,057.5		1,086.2
Commitments and contingent liabilities (Note 15)	Commitments and contingent liabilities (Note 15)	0		0		Commitments and contingent liabilities (Note 15)	0		0
Equity:
Stockholders' Equity:						Stockholders' Equity:

Common stock (52,921,832 and 45,372,991 issued and outstanding at October 2, 2021, respectively, and 52,704,973 and 45,032,325 issued and outstanding at December 31, 2020, respectively)		0.5		0.5
Common stock (53,065,643 and 45,716,583 issued and outstanding at April 2, 2022, respectively, and 53,011,255 and 45,467,768 issued and outstanding at December 31, 2021, respectively)						Common stock (53,065,643 and 45,716,583 issued and outstanding at April 2, 2022, respectively, and 53,011,255 and 45,467,768 issued and outstanding at December 31, 2021, respectively)	0.5		0.5
Paid-in capital	Paid-in capital	1,328.2		1,319.9		Paid-in capital	1,321.2		1,334.2
Retained deficit	Retained deficit	(68.7)		(488.1)		Retained deficit	(40.4)		(51.8)
Accumulated other comprehensive income	Accumulated other comprehensive income	244.5		248.5		Accumulated other comprehensive income	266.9		263.9
Common stock in treasury (7,548,841 and 7,672,648 shares at October 2, 2021 and December 31, 2020, respectively)		(444.2)		(451.6)
Common stock in treasury (7,349,060 and 7,543,487 shares at April 2, 2022 and December 31, 2021, respectively)						Common stock in treasury (7,349,060 and 7,543,487 shares at April 2, 2022 and December 31, 2021, respectively)	(432.4)		(443.9)

Total equity		1,060.3		629.2
TOTAL LIABILITIES AND EQUITY		$	2,489.8	$	2,319.0
Total stockholders' equity						Total stockholders' equity	1,115.8		1,102.9
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY						TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,567.2	$	2,628.6

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited; in millions)


		Three months ended October 2, 2021													Three months ended April 2, 2022
		Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity			Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Stockholders’ Equity
Balance at July 3, 2021		$	0.5	$	1,321.2	$	(399.8)	$	250.6	$	(444.3)	$	728.2
Balance at December 31, 2021														Balance at December 31, 2021	$	0.5	$	1,334.2	$	(51.8)	$	263.9	$	(443.9)	$	1,102.9
Net income	Net income	—		—		331.1		—		—		331.1		Net income	—		—		11.4		—		—		11.4
Other comprehensive loss, net		—		—		—		(6.1)		—		(6.1)
Other comprehensive income, net														Other comprehensive income, net	—		—		—		3.0		—		3.0
Incentive plan activity	Incentive plan activity	—		3.0		—		—		—		3.0		Incentive plan activity	—		2.5		—		—		—		2.5
Long-term incentive compensation expense	Long-term incentive compensation expense	—		4.2		—		—		—		4.2		Long-term incentive compensation expense	—		3.1		—		—		—		3.1
Restricted stock unit vesting	Restricted stock unit vesting	—		(0.2)		—		—		0.1		(0.1)		Restricted stock unit vesting	—		(18.6)		—		—		11.5		(7.1)
Balance at October 2, 2021		$	0.5	$	1,328.2	$	(68.7)	$	244.5	$	(444.2)	$	1,060.3
Balance at April 2, 2022														Balance at April 2, 2022	$	0.5	$	1,321.2	$	(40.4)	$	266.9	$	(432.4)	$	1,115.8

Nine months ended October 2, 2021
Common Stock Paid-In Capital Retained Deficit Accum. Other Comprehensive Income Common Stock In Treasury SPX Corporation Shareholders’ Equity
Balance at December 31, 2020 $ 0.5 $ 1,319.9 $ (488.1) $ 248.5 $ (451.6) $ 629.2
Net income — — 419.4 — — 419.4
Other comprehensive loss, net — — — (4.0) — (4.0)
Incentive plan activity — 9.8 — — — 9.8
Long-term incentive compensation expense — 10.8 — — — 10.8
Restricted stock unit vesting — (12.3) — — 7.4 (4.9)
Balance at October 2, 2021 $ 0.5 $ 1,328.2 $ (68.7) $ 244.5 $ (444.2) $ 1,060.3


		Three months ended September 26, 2020													Three months ended April 3, 2021
		Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity			Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Stockholders’ Equity
Balance at June 27, 2020		$	0.5	$	1,303.4	$	(535.5)	$	235.3	$	(451.6)	$	552.1
Balance at December 31, 2020														Balance at December 31, 2020	$	0.5	$	1,319.9	$	(477.2)	$	248.5	$	(451.6)	$	640.1

Net income	Net income	—		—		22.8		—		—		22.8		Net income	—		—		26.8		—		—		26.8
Other comprehensive income, net	Other comprehensive income, net	—		—		—		1.9		—		1.9		Other comprehensive income, net	—		—		—		2.7		—		2.7
Incentive plan activity	Incentive plan activity	—		3.1		—		—		—		3.1		Incentive plan activity	—		3.8		—		—		—		3.8
Long-term incentive compensation expense	Long-term incentive compensation expense	—		3.2		—		—		—		3.2		Long-term incentive compensation expense	—		3.0		—		—		—		3.0
Restricted stock unit vesting	Restricted stock unit vesting	—		—		—		—		—		—		Restricted stock unit vesting	—		(10.9)		—		—		6.2		(4.7)
Balance at September 26, 2020		$	0.5	$	1,309.7	$	(512.7)	$	237.2	$	(451.6)	$	583.1
Balance at April 3, 2021														Balance at April 3, 2021	$	0.5	$	1,315.8	$	(450.4)	$	251.2	$	(445.4)	$	671.7

Nine months ended September 26, 2020
Common Stock Paid-In Capital Retained Deficit Accum. Other Comprehensive Income Common Stock In Treasury SPX Corporation Shareholders’ Equity
Balance at December 31, 2019 $ 0.5 $ 1,302.4 $ (584.8) $ 244.3 $ (460.0) $ 502.4
Impact of adoption of ASU 2016-13 - See Note 2 — — (0.5) — — (0.5)
Net income — — 72.6 — — 72.6
Other comprehensive loss, net — — — (7.1) — (7.1)
Incentive plan activity — 10.7 — — — 10.7
Long-term incentive compensation expense — 9.3 — — — 9.3
Restricted stock unit vesting — (12.7) — — 8.4 (4.3)
Balance at September 26, 2020 $ 0.5 $ 1,309.7 $ (512.7) $ 237.2 $ (451.6) $ 583.1

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


		Nine months ended					Three months ended
		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Cash flows from (used in) operating activities:	Cash flows from (used in) operating activities:					Cash flows from (used in) operating activities:
Net income	Net income	$	419.4	$	72.6	Net income	$	11.4	$	26.8
Less: Income from discontinued operations, net of tax		378.0		32.3
Less: Income (loss) from discontinued operations, net of tax						Less: Income (loss) from discontinued operations, net of tax	(1.6)		3.8
Income from continuing operations	Income from continuing operations	41.4		40.3		Income from continuing operations	13.0		23.0
Adjustments to reconcile income from continuing operations to net cash from operating activities:
Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:						Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:
Special charges, net	Special charges, net	1.9		1.6		Special charges, net	—		0.2
Gain on change in fair value of equity security	Gain on change in fair value of equity security	(9.0)		(7.4)		Gain on change in fair value of equity security	(4.4)		(5.2)

Deferred and other income taxes	Deferred and other income taxes	1.9		13.0		Deferred and other income taxes	4.3		8.3
Depreciation and amortization	Depreciation and amortization	32.1		21.6		Depreciation and amortization	14.0		8.7
Pension and other employee benefits	Pension and other employee benefits	4.1		5.3		Pension and other employee benefits	1.6		0.7
Long-term incentive compensation	Long-term incentive compensation	9.5		9.6		Long-term incentive compensation	3.1		2.7
Other, net	Other, net	3.6		3.3		Other, net	0.6		1.8
Changes in operating assets and liabilities, net of effects from acquisitions:	Changes in operating assets and liabilities, net of effects from acquisitions:					Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable and other assets	Accounts receivable and other assets	62.5		51.1		Accounts receivable and other assets	10.4		27.5
Inventories	Inventories	(20.1)		(24.1)		Inventories	(25.6)		(6.9)
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	(31.5)		(101.0)		Accounts payable, accrued expenses and other	(65.5)		(37.3)
Cash spending on restructuring actions	Cash spending on restructuring actions	(2.4)		(2.3)		Cash spending on restructuring actions	(0.1)		(0.4)
Net cash from continuing operations		94.0		11.0
Net cash from discontinued operations		59.8		45.4
Net cash from operating activities		153.8		56.4
Net cash from (used in) continuing operations						Net cash from (used in) continuing operations	(48.6)		23.1
Net cash from (used in) discontinued operations						Net cash from (used in) discontinued operations	(8.6)		37.1
Net cash from (used in) operating activities						Net cash from (used in) operating activities	(57.2)		60.2
Cash flows from (used in) investing activities:	Cash flows from (used in) investing activities:					Cash flows from (used in) investing activities:
Proceeds from company-owned life insurance policies, net		8.2		1.1
Business acquisitions, net of cash acquired		(120.0)		(87.9)
Proceeds related to company-owned life insurance policies, net						Proceeds related to company-owned life insurance policies, net	—		3.5
Business acquisition, net of cash acquired						Business acquisition, net of cash acquired	(41.8)		—

Capital expenditures	Capital expenditures	(7.5)		(12.5)		Capital expenditures	(2.1)		(2.2)
Net cash used in continuing operations		(119.3)		(99.3)
Net cash from (used in) discontinued operations		617.9		(2.5)

Net cash from (used in) continuing operations						Net cash from (used in) continuing operations	(43.9)		1.3
Net cash used in discontinued operations						Net cash used in discontinued operations	(13.9)		(0.4)
Net cash from (used in) investing activities	Net cash from (used in) investing activities	498.6		(101.8)		Net cash from (used in) investing activities	(57.8)		0.9
Cash flows from (used in) financing activities:	Cash flows from (used in) financing activities:					Cash flows from (used in) financing activities:

Borrowings under senior credit facilities	Borrowings under senior credit facilities	209.1		183.9		Borrowings under senior credit facilities	—		54.0
Repayments under senior credit facilities	Repayments under senior credit facilities	(343.6)		(118.9)		Repayments under senior credit facilities	(3.1)		(81.6)
Borrowings under trade receivables financing arrangement		179.0		65.0
Repayments under trade receivables financing arrangement		(207.0)		(60.4)
Net repayments under other financing arrangements		(0.3)		(1.8)
Borrowings under trade receivables arrangement						Borrowings under trade receivables arrangement	—		54.0
Repayments under trade receivables arrangement						Repayments under trade receivables arrangement	—		(48.0)
Net borrowings (repayments) under other financing arrangements						Net borrowings (repayments) under other financing arrangements	(0.2)		0.2
Payment of contingent consideration	Payment of contingent consideration	—		(1.5)		Payment of contingent consideration	(1.3)		—
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	(4.0)		(1.8)		Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	(6.4)		(3.8)

Net cash from (used in) continuing operations		(166.8)		64.5
Net cash used in continuing operations						Net cash used in continuing operations	(11.0)		(25.2)
Net cash used in discontinued operations	Net cash used in discontinued operations	—		—		Net cash used in discontinued operations	(0.4)		(0.4)
Net cash from (used in) financing activities		(166.8)		64.5
Net cash used in financing activities						Net cash used in financing activities	(11.4)		(25.6)
Change in cash and equivalents due to changes in foreign currency exchange rates	Change in cash and equivalents due to changes in foreign currency exchange rates	6.2		(3.1)		Change in cash and equivalents due to changes in foreign currency exchange rates	(0.1)		3.1
Net change in cash and equivalents	Net change in cash and equivalents	491.8		16.0		Net change in cash and equivalents	(126.5)		38.6
Consolidated cash and equivalents, beginning of period	Consolidated cash and equivalents, beginning of period	68.3		54.7		Consolidated cash and equivalents, beginning of period	396.0		68.3
Consolidated cash and equivalents, end of period	Consolidated cash and equivalents, end of period	$	560.1	$	70.7	Consolidated cash and equivalents, end of period	$	269.5	$	106.9


	Three months ended
	April 2, 2022		April 3, 2021
Components of cash and equivalents:
Cash and cash equivalents	$	262.8	$	90.7
Cash and cash equivalents included in assets of DBT and Heat Transfer	6.7		16.2
Total cash and equivalents	$	269.5	$	106.9

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; in millions, except per share data and asbestos-related claims)

(1) BASIS OF PRESENTATION

Unless otherwise indicated, “we,” “us” and “our” mean SPX Corporation and its consolidated subsidiaries (“SPX”).

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information normally required by accounting principles generally accepted in the United States (“GAAP”) can be condensed or omitted. The financial statements represent our accounts after the elimination of intercompany transactions and, in our opinion, include the adjustments (consisting only of normal and recurring items) necessary for their ~~fair~~ presentation. Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only (see Note 3 for information on discontinued operations).

We account for investments in unconsolidated companies where we exercise significant influence but do not have control using the equity method. In determining whether we are the primary beneficiary of a variable interest entity (“VIE”), we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties to determine which party has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and which party has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. All of our VIEs are ~~considered~~ immaterial, individually and in aggregate, to our condensed consolidated financial statements.

Sale of ~~Transformers~~Transformer Solutions Business

On October 1, 2021, we completed the ~~previously announced~~ sale of SPX Transformer Solutions, Inc. (“Transformer Solutions”) pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021 with GE-Prolec Transformers, Inc. (the “Purchaser”) and Prolec GE Internacional, S. de R.L. de C.V. ~~We transferred all~~During the quarter ended April 2, 2022, we agreed to the final adjustment of the ~~outstanding common stock of Transformer Solutions~~purchase price which resulted in a payment to the Purchaser ~~for an aggregate cash purchase price~~ of ~~$645.0 (the “Transaction”). The purchase price is subject~~$13.9 with no resulting adjustment to ~~potential adjustment based~~the gain on Transformer Solutions’ cash, debt and working capital on the date the Transaction was consummated, as well as for specified transaction expenses and other specified items, with the net cash proceeds received totaling ~~$620.6~~. After the sale of Transformer Solutions, we have only a limited presence in the power generation markets and are now focusing our efforts and investments on the HVAC and detection and measurement markets.sale. Historically, Transformer Solutions’ operations have had a significant impact on our consolidated financial results, with revenues totaling approximately 25% of our total consolidated revenues. As we no longer have a consequential presence in the power ~~generation~~transmission and distribution markets, and given Transformer Solutions' significance to our historical consolidated financial results, we ~~have~~ concluded that the sale of Transformer Solutions ~~represents~~represented a strategic shift. Accordingly, we have classified the business as a discontinued operation in the accompanying condensed consolidated financial ~~statements for all periods presented.~~statements. See Note 3 for additional details.

~~Change in Segment Reporting Structure~~

As noted above, Transformer Solutions is now being reported as a discontinued operation within the accompanying condensed consolidated financial statements. In addition, the remaining operations of our former Engineered Solutions reportable segment, with annual income representing less than 5% of the total annual income of our reportable segments, are being reported within our HVAC reportable segment, as these operations are now being managed, and evaluated by our Chief Operating Decision Maker, as part of our HVAC cooling business.

Wind-Down of ~~the SPX Heat Transfer~~DBT Technologies Business

~~As a continuation of our strategic shift away from power-generation markets, during~~During the fourth quarter of ~~2020,~~2021, we ~~completed the wind-down~~substantially ceased all operations of ~~the SPX Heat Transfer business~~DBT Technologies (PTY) LTD (“~~Heat Transfer”~~DBT”)~~, which included providing all products and services on the business’s remaining contracts with customers.~~. As a result, we are reporting ~~Heat Transfer~~DBT as a discontinued operation in the accompanying condensed consolidated financial ~~statements for all periods presented.~~statements. DBT continues to be involved in various dispute resolution matters related to 2 large power projects. See Note 3 for additional ~~details.~~

~~Acquisition of ULC~~

~~On September 2, 2020, we completed~~details regarding DBT's presentation as a discontinued operation and Note 15 regarding the acquisition of ULC Robotics (“ULC”), a leading developer of robotic systems, machine learning applications, and inspection technology for the energy, utility, and industrial markets, for cash proceeds of $89.2, net of cash acquired of $4.0. Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $45.0, with payments scheduled to be made upon successful achievement of certain operational and financial performance milestones. At the time of the acquisition, we recorded a liability of ~~$24.3,~~ ~~which~~

represented the estimated fair value of the contingent consideration. During the third quarter of 2021, we concluded that the operational and financial milestones noted above would not be achieved. As a result, we reversed the liability of $~~24.3~~ during the quarter, with the offset recorded to “Other operating (income) expense” (See Note 9 for further discussion of this matter). The post-acquisition operating results of ULC are reflected within our Detection and Measurement reportable segment.dispute resolution matters.

Acquisition of ~~Sensors & Software~~

On November 11, 2020, we completed the acquisition of Sensors & Software Inc. (“Sensors & Software”), a leading manufacturer and distributor of ground penetrating radar products used for locating underground utilities, detecting unexploded ordinances, and geotechnical and geological investigations, for cash proceeds of $15.5, net of cash acquired of $0.3. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $3.9, with payment scheduled to be made upon successful achievement of a financial performance milestone during the twelve months following the date of acquisition. The estimated fair value of such contingent consider~~ation is $0.7, whic~~h is reflected as a liability in our condensed consolidated balance sheets as of October 2, 2021 and December 31, 2020. The post-acquisition operating results of Sensors & Software are reflected within our Detection and Measurement reportable segment.

~~Acquisition of~~ Sealite

On April 19, 2021, we completed the acquisition of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, “Sealite”). Sealite is a leader in the design and manufacture of marine and aviation Aids to Navigation products. We purchased Sealite for cash ~~proceeds~~consideration of $80.3, net of cash acquired of $2.3. The ~~post-acquisition~~post acquisition operating results of Sealite are reflected within our Detection and Measurement ~~Reportable~~reportable segment.

Acquisition of ECS

On August 2, 2021, we completed the acquisition of Enterprise Control Systems Ltd (“ECS”), a leader in the design and manufacture of highly-engineered tactical datalinks and radio frequency (“RF”) countermeasures, including counter-drone and counter-IED RF jammers. We purchased ECS for cash ~~proceeds~~consideration of $39.4, net of cash acquired of $5.1. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to ~~$16.8,~~$16.4, with payment to be made in the fourth quarter of 2022 upon successful achievement of certain financial performance milestones. During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of certain large orders, resulting in a reduction of the estimated liability of $6.7. During the first quarter of 2022, we further reduced the estimated liability by $0.9, with such amount recorded within “Other operating income.” The estimated fair value of such contingent consideration, ~~is $8.2, which is~~which we have reflected as a liability in our condensed consolidated balance ~~sheet as of October~~sheets, was $0.6 and $1.5 at April 2, ~~2021.~~ 2022 and December 31, 2021, respectively. The ~~post-acquisition~~post acquisition operating results of ECS are reflected within our Detection and Measurement reportable segment.

Acquisition of Cincinnati Fan

On December 15, 2021, we completed the acquisition of Cincinnati Fan & Ventilator Co., Inc. (“Cincinnati Fan”), a leader in engineered air movement solutions, including blowers and critical exhaust systems. We purchased Cincinnati Fan for cash consideration of $145.2, net of cash acquired of $2.5. The purchase price is subject to adjustment based on the final calculation of working capital, cash, and debt as of the date of the acquisition. The post acquisition operating results of Cincinnati Fan are reflected within our HVAC reportable segment.

Acquisition of ITL

On March 31, 2022, we completed the acquisition of International Tower Lighting, LLC (“ITL”), a leader in the design and manufacture of highly-engineered Aids-to-Navigation systems, including obstruction lighting for telecommunications towers, wind turbines and numerous other terrestrial obstructions. We purchased ITL for cash consideration of $41.8, net of cash acquired of $1.1. The purchase price is subject to adjustment based on the final calculation of working capital, cash, and debt as of the date of the acquisition. The post acquisition operating results of ITL are reflected within our Detection and Measurement reportable segment.

The assets acquired and liabilities assumed in the ~~Sensors & Software,~~ Sealite, ECS, Cincinnati Fan, and ~~ECS~~ITL transactions have been recorded at estimates of fair value as determined by management, based on information available and assumptions as to future operations and are subject to change, primarily for the final assessment and valuation of certain income tax ~~amounts.~~amounts, and the valuation of ITL's acquired intangible assets.

Change in Segment Reporting Structure

As Transformer Solutions is now being reported as a discontinued operation, the remaining operations of our former Engineered Solutions reportable segment are being reported within our HVAC reportable segment, as these operations are now being managed, and evaluated by our Chief Operating Decision Maker, as part of our HVAC cooling business.

Change in Accounting Method

During the fourth quarter of 2021, as a means of harmonizing our accounting method for inventory across all of our businesses, we converted the inventory accounting for certain businesses within our HVAC reportable segment from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. This change in accounting has been retrospectively applied, with the change having no impact on our results herein for the three months ended April 3, 2021.

Other

Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from these estimates. The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Interim results are not necessarily indicative of full year results.

We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length. Our fourth quarter ends on December 31. The interim closing dates for the first, second and third quarters of ~~2021~~2022 are April 2, July 2, and October 1, compared to the respective April 3, July 3 and October 2, ~~compared to the respective March 28, June 27 and September 26, 2020~~2021 dates. We had ~~five more days~~one less day in the first quarter of ~~2021~~2022 and will have ~~six fewer days~~one more day in the fourth quarter of ~~2021~~2022 than in the respective ~~2020~~2021 periods. It is not practicable to

estimate the impact of the ~~five additional days~~one less day on our consolidated operating results for the ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, when compared to the consolidated operating results for the ~~2020~~2021 respective period.

Reclassification of Prior Year Amounts

Certain prior year amounts have been reclassified to conform to the current year presentation, including amounts related to the inclusion of DBT and Transformer Solutions within discontinued operations and the resulting change in our segment reporting structure noted above.

(2) NEW ACCOUNTING PRONOUNCEMENTS

The following is a summary of new accounting pronouncements that apply or may apply to our business.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13. ASU 2016-13 changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, based on historical experience, current conditions and reasonable and supportable forecasts. ~~The requirements of ASU 2016-13 are to be applied on a modified retrospective basis, which entails~~

~~recognizing the initial effect of adoption in retained earnings.We adopted ASU 2016-13 on January 1, 2020, which resulted in an increase of our retained deficit of~~ ~~$0.5.~~

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for the step-up in the tax basis of goodwill. The transition requirements are primarily prospective and the effective date is for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. We adopted this guidance on January 1, 2021, with no material impact on our condensed consolidated financial statements.

The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on June 30, ~~2023, with some tenors ceasing on December 31, 2021.~~2023. In an effort to address the various challenges created by such discontinuance, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued two amendments to existing guidance, ~~ASU~~Accounting Standards Update (“ASU”) No. 2020-04 and No. 2021-01, Reference Rate Reform. The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, etc.) necessitated by the reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by the reference rate reform. Application of the guidance in the amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. ~~We are currently evaluating~~In preparation of our adoption of these amendments, we entered into a LIBOR transition amendment related to our global revolving credit facility, as described in our 2021 Annual Report on Form 10-K. Upon adoption, we do not believe these amendments will have a material impact to our condensed consolidated financial statements.

In October 2021, the ~~impacts~~FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. This guidance is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The impact of ~~reference rate reform and the new~~adopting this guidance on our condensed consolidated financial statements will depend on business combinations occurring on or after the effective date.

In March 2022, the FASB issued ASU No. 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. This ASU allows multiple hedged layers to be designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments. This guidance applies to all entities that elect to apply the portfolio layer method of hedge accounting in accordance with Topic 815 and is effective for public entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326) - Troubled Debt Restructurings and Vintage Disclosures, which requires enhanced disclosure of certain loan refinancing and restructuring by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This guidance also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and allows for early adoption in any interim period after issuance. We are currently assessing the impact of this amendment on our condensed consolidated financial statements.

(3) ACQUISITIONS AND DISCONTINUED OPERATIONS

As indicated in Note 1, on ~~September 2, 2020, November 11, 2020,~~ April 19, 2021, ~~and~~ August 2, 2021, December 15, 2021, and March 31, 2022, we completed the acquisitions of ~~ULC, Sensors & Software,~~ Sealite, ECS, Cincinnati Fan, and ~~ECS,~~ITL, respectively. The pro forma effects of these acquisitions ~~to the applicable periods,~~ are not material to ~~the accompanying~~our condensed consolidated results of operations.

Sale of Transformer Solutions Business

As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer ~~Solutions for net cash proceeds~~Solutions. During the first quarter of ~~$620.6. In connection~~2022, we reached agreement with the ~~sale, we recorded a gain~~Purchaser on the amount of ~~$357.7 to~~ “~~Gain (loss) on disposition of discontinued operations, net of tax~~” ~~within our condensed consolidated statements of operations for the three and nine months ended October 2, 2021.~~

~~The final sales price for Transformer Solutions is subject to adjustment based on~~ cash, debt and working capital ~~existing at~~on the ~~closing~~ date ~~as well as~~the Transaction was consummated, for ~~specified transaction expenses and other specified items, and is subject~~a payment made to ~~agreement with~~ the Purchaser of $13.9 with ~~final agreement~~no resulting adjustment to the gain on sale.

The results of ~~these~~Transformer Solutions are presented as a discontinued operation for all periods presented. Major line items ~~yet to~~constituting pre-tax income and after-tax income of Transformer Solutions for the three months ended April 3, 2021 are shown below:


	Three months ended
	April 3, 2021
Revenues	$	110.6
Costs and expenses:
Cost of product sold	89.4
Selling, general and administrative	9.5


Other expense, net	0.2

Income before income tax	11.5
Income tax provision	(2.9)
Income from discontinued operations, net of tax	$	8.6

Wind-Down of DBT Business

As discussed in Note 1, we completed the wind-down of our DBT business in the fourth quarter of 2021. As a result of completing the wind-down plan, we are reporting DBT as a discontinued operation for all periods presented.

Major line items constituting pre-tax loss and after-tax loss of DBT for the three months ended April 3, 2021 are shown below:


	Three months ended
	April 3, 2021
Revenues	$	0.7
Costs and expenses:
Cost of product sold	1.0
Selling, general and administrative	4.2
Special charges	0.5
Other expense, net	0.2

Loss before tax	(5.2)
Income tax benefit	1.2
Loss after tax	$	(4.0)

The assets and liabilities of DBT have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of April 2, 2022 and December 31, 2021. The major line items constituting DBT's assets and liabilities as of April 2, 2022 and December 31, 2021 are shown below:


	April 2, 2022		December 31, 2021
ASSETS
Cash and equivalents	$	6.7	$	7.8
Accounts receivable, net	10.0		9.1
Other current assets	7.7		7.0
Property, plant and equipment:
Buildings and leasehold improvements	0.3		0.2
Machinery and equipment	1.5		1.5
	1.8		1.7
Accumulated depreciation	(1.6)		(1.5)
Property, plant and equipment, net	0.2		0.2
Other assets	30.4		27.6
Total assets of DBT	$	55.0	$	51.7
LIABILITIES
Accounts payable	$	1.6	$	2.3
Contract liabilities	5.8		5.6
Accrued expenses	25.1		22.4
Other long-term liabilities	5.3		4.9
Total liabilities of DBT	$	37.8	$	35.2

Wind-Down of the Heat Transfer Business

We completed the wind-down of our SPX Heat Transfer (“Heat Transfer”) business in the fourth quarter of 2020. As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all periods presented.

The assets and liabilities of Heat Transfer have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of April 2, 2022 and December 31, 2021. The major line items constituting Heat Transfer's assets and liabilities as of April 2, 2022 and December 31, 2021 are shown below:


	April 2, 2022		December 31, 2021
ASSETS
Accounts receivable, net	$	0.1	$	0.1
Other current assets	0.2		0.2
Other assets	0.1		0.2

Total assets of Heat Transfer	$	0.4	$	0.5
LIABILITIES
Accounts payable	$	0.1	$	0.3
Accrued expenses	0.1		0.1
Total liabilities of Heat Transfer	$	0.2	$	0.4

Changes in estimates associated with liabilities retained in connection with a business divestiture (e.g. income taxes) may occur. ~~Accordingly,~~As a result, it is possible that the ~~sales price~~resulting gains/losses on these and ~~resulting gain for this divestiture~~other previous divestitures may be materially adjusted in subsequent periods.

For the three months ended April 2, 2022 and April 3, 2021, results of operations from our businesses reported as discontinued operations were as follows:


	Three months ended
	April 2, 2022		April 3, 2021
Transformer Solutions (1)
Income (loss) from discontinued operations	$	(0.3)	$	11.5
Income tax (provision) benefit	0.1		(2.9)
Income (loss) from discontinued operations, net	(0.2)		8.6

DBT (2)
Loss from discontinued operations	(1.6)		(5.2)
Income tax benefit	0.4		1.2
Loss from discontinued operations, net	(1.2)		(4.0)

Heat Transfer (3)
Loss from discontinued operations	—		(0.1)
Income tax (provision) benefit	—		—
Loss from discontinued operations, net	—		(0.1)

All other (3)
Loss from discontinued operations	(0.2)		(0.9)
Income tax benefit	—		0.2
Loss from discontinued operations, net	(0.2)		(0.7)

Total
Income (loss) from discontinued operations	(2.1)		5.3
Income tax (provision) benefit	0.5		(1.5)
Income (loss) from discontinued operations, net	$	(1.6)	$	3.8

___________________________

(1) Loss for the three months ended April 2, 2022 resulted primarily from revisions to liabilities retained in connection with the disposition.

(2) Loss for the three months ended April 2, 2022 resulted primarily from legal costs incurred in connection with various dispute resolution matters related to two large power projects.

(3) Loss for the three months ended April 2, 2022 and April 3, 2021 resulted primarily from revisions to liabilities retained in connection with prior dispositions.

912

The results of Transformer Solutions are presented as a discontinued operation for all periods presented. Major line items constituting pre-tax income and after-tax income (loss) of Transformer Solutions for the three and nine months ended October 2, 2021 and September 26, 2020 are shown below:

Three months ended Nine months ended
October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Revenues $ 94.4 $ 95.1 $ 313.5 $ 319.6
Costs and expenses:
Cost of product sold 81.3 78.4 258.0 253.5
Selling, general and administrative 10.3 7.0 28.4 23.0
Other income, net — 0.2 — 0.9
Income before income tax 2.8 9.9 27.1 44.0
Income tax provision (33.8) (2.7) (6.8) (10.5)
Income (loss) from discontinued operations, net of tax $ (31.0) $ 7.2 $ 20.3 $ 33.5

The assets and liabilities of Transformer Solutions have been classified as assets and liabilities of discontinued operations as of December 31, 2020. The major line items constituting Transformer Solutions assets and liabilities as of December 31, 2020 are shown below:


~~ASSETS~~

~~Accounts receivable, net~~	$	~~50.9~~
~~Contract assets~~	~~48.6~~
~~Inventories, net~~	~~18.9~~
~~Other current assets~~	~~3.2~~
~~Property, plant and equipment:~~
~~Land~~	~~6.5~~
~~Buildings and leasehold improvements~~	~~63.1~~
~~Machinery and equipment~~	~~141.1~~
	~~210.7~~
~~Accumulated depreciation~~	~~(131.0)~~
~~Property, plant and equipment, net~~	~~79.7~~
~~Goodwill~~	~~131.3~~
~~Other assets~~	~~8.1~~
~~Total assets - discontinued operations~~	$	~~340.7~~
~~LIABILITIES~~
~~Accounts payable~~	$	~~34.1~~
~~Contract liabilities~~	~~57.2~~
~~Accrued expenses~~	~~24.5~~
~~Deferred and other income taxes~~	~~21.6~~
~~Other long-term liabilities~~	~~9.1~~
~~Total liabilities - discontinued operations~~	$	~~146.5~~

~~Wind-Down of the Heat Transfer Business~~

As discussed in Note 1, we completed the wind-down of Heat Transfer in the fourth quarter of 2020. As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all prior periods presented.

~~Major line items constituting pre-tax income (loss) and after-tax income (loss) of Heat Transfer for the three and nine months ended September 26, 2020 are shown below:~~

Three months ended Nine months ended
September 26, 2020 September 26, 2020
Revenues $ — $ 3.2
Cost of product sold 0.1 2.6
Selling, general and administrative (0.1) 0.1
Special charges, net 0.1 0.5
Income (loss) before income tax (0.1) —
Income tax provision — —
Income (loss) from discontinued operations, net of tax $ (0.1) $ —

We recognized net gain (loss) of $(3.3) and $0.0 during the three and nine months ended October 2, 2021 and net gain (loss) of $0.1 and $(1.2) during the three and nine months ended September 26, 2020 within “Gain (loss) on ~~disposition of discontinued operations, net of tax” resulting primarily from revisions to~~ ~~liabilities, including income tax liabilities,~~ ~~retained in connection with prior businesses classified as discontinued operations.~~

(4) REVENUES FROM CONTRACTS

Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments, ~~and our other operating segment,~~ as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are affected by economic factors, with such disaggregation presented below for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020:~~April 3, 2021:

Three months ended October 2, 2021
Reportable Segments and Other HVAC Detection and Measurement Other Total
Major product lines
Package and process cooling equipment and services $ 104.1 $ — $ — $ 104.1
Boilers, comfort heating, and ventilation 75.2 — — 75.2
Underground locators, inspection and rehabilitation
equipment, and robotic systems — 60.1 — 60.1
Communication technologies, obstruction lighting, and bus fare collection systems — 46.3 — 46.3
South African projects — — 0.1 0.1
$ 179.3 $ 106.4 $ 0.1 $ 285.8
Timing of Revenue Recognition
Revenues recognized at a point in time $ 154.1 $ 94.5 $ — $ 248.6
Revenues recognized over time 25.2 11.9 0.1 37.2
$ 179.3 $ 106.4 $ 0.1 $ 285.8

Nine months ended October 2, 2021
Reportable Segments and Other HVAC Detection and Measurement Other Total
Major product lines
Package and process cooling equipment and services $ 317.3 $ — $ 0.2 $ 317.5
Boilers, comfort heating, and ventilation 223.0 — — 223.0
Underground locators, inspection and rehabilitation
equipment, and robotic systems — 193.4 — 193.4
Communication technologies, obstruction lighting, and bus fare collection systems — 135.8 — 135.8
South African projects — — 0.7 0.7
$ 540.3 $ 329.2 $ 0.9 $ 870.4
Timing of Revenue Recognition
Revenues recognized at a point in time $ 474.8 $ 292.5 $ — $ 767.3
Revenues recognized over time 65.5 36.7 0.9 103.1
$ 540.3 $ 329.2 $ 0.9 $ 870.4

Three months ended September 26, 2020
Reportable Segments and Other HVAC Detection and Measurement Other Total
Major product lines
Package and process cooling equipment and services $ 107.7 $ — $ 0.2 $ 107.9
Boilers, comfort heating, and ventilation 74.9 — — 74.9
Underground locators, inspection and rehabilitation
equipment, and robotic systems — 52.0 — 52.0
Communication technologies, obstruction lighting, and bus fare collection systems — 33.2 — 33.2
South African Projects — — 0.3 0.3
$ 182.6 $ 85.2 $ 0.5 $ 268.3
Timing of Revenue Recognition
Revenues recognized at a point in time $ 160.6 $ 76.2 $ — $ 236.8
Revenues recognized over time 22.0 9.0 0.5 31.5
$ 182.6 $ 85.2 $ 0.5 $ 268.3


											Three months ended April 2, 2022
		Nine months ended September 26, 2020
Reportable Segments and Other		HVAC		Detection and Measurement		Other		Total
Reportable Segments										Reportable Segments	HVAC		Detection and Measurement		Total

Major product lines	Major product lines									Major product lines
Package and process cooling equipment and services		$	319.4	$	—	$	0.6	$	320.0
Package and process cooling equipment and services, and engineered air quality solutions										Package and process cooling equipment and services, and engineered air quality solutions	$	116.8	$	—	$	116.8
Boilers, comfort heating, and ventilation	Boilers, comfort heating, and ventilation	191.2		—		—		191.2		Boilers, comfort heating, and ventilation	76.3		—		76.3
Underground locators, inspection and rehabilitation equipment, and robotic systems	Underground locators, inspection and rehabilitation equipment, and robotic systems	—		148.0		—		148.0		Underground locators, inspection and rehabilitation equipment, and robotic systems	—		67.2		67.2
Communication technologies, obstruction lighting, and bus fare collection systems	Communication technologies, obstruction lighting, and bus fare collection systems	—		121.2		—		121.2		Communication technologies, obstruction lighting, and bus fare collection systems	—		46.8		46.8
South African projects		—		—		2.7		2.7

		$	510.6	$	269.2	$	3.3	$	783.1		$	193.1	$	114.0	$	307.1

Timing of Revenue Recognition	Timing of Revenue Recognition									Timing of Revenue Recognition
Revenues recognized at a point in time	Revenues recognized at a point in time	$	429.6	$	245.4	$	0.2	$	675.2	Revenues recognized at a point in time	$	173.1	$	103.2	$	276.3
Revenues recognized over time	Revenues recognized over time	81.0		23.8		3.1		107.9		Revenues recognized over time	20.0		10.8		30.8
		$	510.6	$	269.2	$	3.3	$	783.1		$	193.1	$	114.0	$	307.1


	Three months ended April 3, 2021
Reportable Segments	HVAC		Detection and Measurement		Total

Major product lines
Package and process cooling equipment and services	$	101.7	$	—	$	101.7
Boilers, comfort heating, and ventilation	73.9		—		73.9
Underground locators, inspection and rehabilitation equipment, and robotic systems	—		67.4		67.4
Communication technologies, obstruction lighting, and bus fare collection systems	—		44.2		44.2
	$	175.6	$	111.6	$	287.2

Timing of Revenue Recognition
Revenues recognized at a point in time	$	154.4	$	96.5	$	250.9
Revenues recognized over time	21.2		15.1		36.3
	$	175.6	$	111.6	$	287.2

Contract Balances

Our customers are invoiced for products and services at the time of delivery or based on contractual milestones, resulting in outstanding receivables with payment terms from these customers (“Contract Accounts Receivable”). In some cases, the timing of revenue recognition, particularly for revenue recognized over time, differs from when such amounts are invoiced to customers, resulting in a contract asset (revenue recognition precedes the invoicing of the related revenue amount) or a contract liability (payment from the customer precedes recognition of the related revenue amount). Contract assets and liabilities are generally classified as current. On a contract-by-contract basis, the contract assets and contract liabilities are reported net within our condensed consolidated balance sheets. Our contract balances consisted of the following as of ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020:~~2021:

Contract Balances October 2, 2021 December 31, 2020 Change
Contract Accounts Receivable(1)
$ 202.8 $ 210.6 $ (7.8)
Contract Assets 23.7 32.5 (8.8)
Contract Liabilities - current (50.7) (46.3) (4.4)
Contract Liabilities - non-current(2)
(5.9) (3.4) (2.5)
Net contract balance $ 169.9 $ 193.4 $ (23.5)


Contract Balances	April 2, 2022		December 31, 2021		Change
Contract Accounts Receivable(1)	$	213.9	$	215.3	$	(1.4)
Contract Assets	30.3		28.9		1.4
Contract Liabilities - current	(43.7)		(44.7)		1.0
Contract Liabilities - non-current(2)	(5.8)		(5.8)		—
Net contract balance	$	194.7	$	193.7	$	1.0

___________________________

(1) Included in “Accounts receivable, net” within the accompanying condensed consolidated balance sheets.

(2) Included in “Other long-term liabilities” within the accompanying condensed consolidated balance sheets.

The ~~$23.5~~ ~~decrease~~$1.0 increase in our net contract asset balance from December 31, ~~2020~~2021 to ~~October~~April 2, ~~2021~~2022 was due primarily to revenue recognized during the period, partially offset by cash payments received from customers during the ~~period, partially offset by revenue recognized during the~~ period.

During the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, we recognized revenues of ~~$8.6 and $31.8, r~~$~~espectively,~~23.6 related to our contract liabilities at December 31, ~~2020.~~2021.

Performance Obligations

As of ~~October~~April 2, ~~2021,~~2022, the aggregate amount ~~allocated~~allocated to remaining performance obligations was ~~$102.5.~~$96.3. We expect to recognize revenue on approximately ~~63%~~75% and ~~86%~~87% of ~~remaining~~remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

(5) LEASES

There have been no material changes to our operating and finance leases during the ~~nine~~three months ended ~~October~~April 2, ~~2021.~~2022.

(6) INFORMATION ON REPORTABLE SEGMENTS ~~AND~~ “~~OTHER~~” ~~OPERATING SEGMENT~~

We are a global supplier of highly specialized, engineered solutions with operations in ~~over~~ 15 countries and sales in over 100 countries around the world.

~~Our DBT Technologies (PTY) LTD (“DBT”) operating segment is reported within an “Other” category outside of our reportable segments.~~ We have aggregated our ~~other~~ operating segments into the following 2 reportable segments: HVAC and Detection and Measurement. The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment. In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the ~~Codification.~~Accounting Standards Codification (“Codification”). Operating income or loss for each of our ~~operating~~reportable segments is determined before considering, if applicable, impairment and special charges, long-term incentive compensation, certain other operating income/expense, and other indirect corporate expenses. This is consistent with the way our Chief Operating Decision Maker evaluates the results of each segment.

HVAC Reportable Segment

Our HVAC reportable segment engineers, designs, manufactures, installs and services package and process cooling ~~equipment~~ products and engineered air movement solutions for the HVAC industrial and power generation markets, as well as boilers and comfort heating and ventilation products for the residential and commercial markets. The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers. The segment serves a customer base in North America, Europe, and Asia.

Detection and Measurement Reportable Segment

Our Detection and Measurement reportable segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, bus fare collection systems, communication technologies, and obstruction lighting. The primary distribution channels for the segment’s products are direct

to customers and third-party distributors. The segment serves a global customer base, with a strong presence in North America, Europe, Africa and Asia.

~~Other~~

As noted above, “Other” consists of our South African operating segment, DBT. Our DBT operating segment engineers, designs, manufactures, installs, and services equipment for the industrial and power generation markets, with its efforts focused primarily on 2 large power projects in South Africa that are in the final stages of completion (see Note 15 for additional details).

Corporate Expense

Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters.

Financial data for our reportable segments ~~and our other operating segment~~ for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021 are presented below:

Three months ended Nine months ended
October 2,
2021 September 26,
2020 October 2,
2021 September 26,
2020
Revenues:
HVAC reportable segment $ 179.3 $ 182.6 $ 540.3 $ 510.6
Detection and Measurement reportable segment 106.4 85.2 329.2 269.2
Other 0.1 0.5 0.9 3.3
Consolidated revenues $ 285.8 $ 268.3 $ 870.4 $ 783.1
Income (loss):
HVAC reportable segment $ 21.4 $ 26.8 $ 69.1 $ 64.1
Detection and Measurement reportable segment 9.9 14.2 41.3 48.4
Other (4.1) (5.3) (12.6) (13.9)
Total income for segments 27.2 35.7 97.8 98.6
Corporate expense (11.5) (11.8) (39.0) (33.8)
Long-term incentive compensation expense (3.4) (3.2) (9.5) (9.6)
Special charges, net (0.5) (0.3) (1.9) (1.6)
Other operating income (expense)(1)
— — (2.7) 0.4
Consolidated operating income $ 11.8 $ 20.4 $ 44.7 $ 54.0

~~___________________________~~


	Three months ended
	April 2, 2022		April 3, 2021
Revenues:
HVAC reportable segment	$	193.1	$	175.6
Detection and Measurement reportable segment	114.0		111.6
Consolidated revenues	$	307.1	$	287.2

Income:
HVAC reportable segment	$	15.2	$	22.3
Detection and Measurement reportable segment	15.0		20.0
Total income for reportable segments	30.2		42.3

Corporate expense	16.6		14.4
Long-term incentive compensation expense	3.1		2.7

Special charges, net	—		0.2
Other operating income	(0.9)		—
Consolidated operating income	$	11.4	$	25.0

~~(1)~~ For the nine months ended October 2, 2021, includes a charge of $2.7 related to revisions of recorded assets for asbestos-related claims. For the nine months ended September 26, 2020, includes a gain of $0.4 related to revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

(7) SPECIAL CHARGES, NET

Special charges, net, for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021 are described in more detail below:
Three months ended Nine months ended
October 2,
2021 September 26,
2020 October 2,
2021 September 26,
2020
HVAC reportable segment $ — $ — $ 0.2 $ 0.5
Detection and Measurement reportable segment — — 0.6 0.1
Other 0.5 — 1.1 0.2
Corporate — 0.3 — 0.8
Total $ 0.5 $ 0.3 $ 1.9 $ 1.6


	Three months ended
	April 2, 2022		April 3, 2021
HVAC reportable segment	$	—	$	—
Detection and Measurement reportable segment	—		0.2
Corporate	—		—
Total	$	—	$	0.2

~~HVAC~~ ~~— Charges for the nine~~ months ended October 2, 2021 related to severance costs associated with a restructuring action at one of the segment's heating businesses. Charges for the nine months ended September 26, 2020 related primarily to severance costs associated with restructuring actions at one of ~~the segment's heating businesses and its Cooling Americas business.~~

Detection and Measurement — Charges for the ~~nine~~ three months ended ~~October 2,~~April 3, 2021 related primarily to severance costs ~~for restructuring actions at the segment's location and inspection businesses. Charges for the nine months ended September 26, 2020 related to severance costs for~~associated with a restructuring action at the segment's ~~bus fare collection systems~~pipeline inspection and rehabilitation business.

~~Other~~ — Charges for the three and nine months ended October 2, 2021 included an asset impairment charge and severance costs incurred in connection with the wind-down activities at DBT. Charges for the nine months ended September 26, 2020 included severance costs at DBT.

~~Corporate~~ ~~— Charges for the three and nine months ended September 26, 2020 related to asset impairment and other charges associated with the move to a new corporate headquarters.~~

No significant future charges are expected to be incurred under actions approved as of ~~October~~April 2, ~~2021.~~2022.

The following is an analysis of our restructuring liabilities for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020:~~April 3, 2021:

Nine months ended
October 2,
2021 September 26,
2020
Balance at beginning of year $ 1.5 $ 1.7
Special charges (1)
1.4 1.2
Utilization — cash (2.4) (2.3)
Currency translation adjustment and other — (0.2)
Balance at end of period $ 0.5 $ 0.4

~~___________________________~~


	Three months ended
	April 2, 2022		April 3, 2021
Balance at beginning of year	$	0.3	$	0.8
Special charges	—		0.2
Utilization — cash	(0.1)		(0.4)
Currency translation adjustment and other	—		—
Balance at end of period	$	0.2	$	0.6

~~(1)~~ ~~For the nine months ended October 2, 2021 and~~ ~~September 26, 2020, excludes $0.5 and $0.4, respectively, of non-cash charges that impacted “Special charges” but not the restructuring liabilities.~~

(8) INVENTORIES, NET

Inventories at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020~~2021 comprised the following:


		October 2, 2021		December 31, 2020			April 2, 2022		December 31, 2021
Finished goods	Finished goods	$	58.1	$	49.4	Finished goods	$	58.9	$	55.1
Work in process	Work in process	23.7		21.3		Work in process	25.1		21.1
Raw materials and purchased parts	Raw materials and purchased parts	102.4		84.3		Raw materials and purchased parts	136.7		113.6
Total FIFO cost		184.2		155.0
Excess of FIFO cost over LIFO inventory value		(13.9)		(11.9)
Total inventories, net		$	170.3	$	143.1
Total inventories						Total inventories	$	220.7	$	189.8

Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated net realizable values. Certain inventories are valued using the last-in, first-out (“LIFO”) method. These inventories were approximately 31% and 35% of total inventory at October 2, 2021 and December 31, 2020, respectively. Other inventories are valued using the first-in, first-out (“FIFO”) method.

(9) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 were as follows:


		December 31, 2020		Goodwill Resulting from Business Combinations (1)		Impairments (2)		Foreign Currency Translation		October 2, 2021			December 31, 2021		Goodwill Resulting from Business Combinations (1)		Impairments		Foreign Currency Translation		April 2, 2022
HVAC reportable segment	HVAC reportable segment											HVAC reportable segment
Gross goodwill	Gross goodwill	$	492.2	$	—	$	—	$	(6.5)	$	485.7	Gross goodwill	$	528.9	$	(0.7)	$	—	$	(2.1)	$	526.1
Accumulated impairments	Accumulated impairments	(340.6)		—		—		4.5		(336.1)		Accumulated impairments	(334.1)		—		—		1.4		(332.7)
Goodwill	Goodwill	151.6		—		—		(2.0)		149.6		Goodwill	194.8		(0.7)		—		(0.7)		193.4

Detection and Measurement reportable segment	Detection and Measurement reportable segment											Detection and Measurement reportable segment
Gross goodwill	Gross goodwill	351.5		64.2		—		(3.6)		412.1		Gross goodwill	424.9		35.2		—		(1.2)		458.9
Accumulated impairments	Accumulated impairments	(134.5)		—		(23.3)		0.1		(157.7)		Accumulated impairments	(162.4)		—		—		0.7		(161.7)
Goodwill	Goodwill	217.0		64.2		(23.3)		(3.5)		254.4		Goodwill	262.5		35.2		—		(0.5)		297.2

Other
Gross goodwill		—		—		—		—		—
Accumulated impairments		—		—		—		—		—
Goodwill		—		—		—		—		—

Total	Total											Total
Gross goodwill	Gross goodwill	843.7		64.2		—		(10.1)		897.8		Gross goodwill	953.8		34.5		—		(3.3)		985.0
Accumulated impairments	Accumulated impairments	(475.1)		—		(23.3)		4.6		(493.8)		Accumulated impairments	(496.5)		—		—		2.1		(494.4)
Goodwill	Goodwill	$	368.6	$	64.2	$	(23.3)	$	(5.5)	$	404.0	Goodwill	$	457.3	$	34.5	$	—	$	(1.2)	$	490.6

___________________________

(1)Reflects (i) goodwill acquired with the ~~Sealite and ECS~~ ~~acquisitions~~ITL acquisition of ~~$38.5 and $20.6, respectively,~~$35.6, (ii) ~~an increase~~a decrease in ~~ULC's~~Cincinnati Fan's goodwill ~~during 202~~1 of ~~$3.1~~$0.7 resulting from revisions to the valuation of certain assets and liabilities, and ~~income tax accounts, and~~ (iii) ~~an increase~~a decrease in ~~Sensors & Software's~~Sealite's goodwill of ~~$2.0~~$0.4 resulting from revisions to the valuation of certain assets and ~~liabilities and income tax accounts.~~liabilities. As indicated in Note 1, the acquired assets, in~~cluding~~including goodwill, and liabilities assumed in the Sealite, Cincinnati Fan, ECS, and ~~Sensors & Software~~ITL acquisitions have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

~~(2)~~As indicated in Note 1, we concluded during the third quarter of 2021 that the operating and financial milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $~~24.3, with the offset to~~ ~~“Other operating (income) expense~~.” We also concluded that the lack of achievement of these milestones, along with lower than anticipated future cash flows, are indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill. As such, we tested ULC’s indefinite-lived intangible assets and goodwill for impairment during the quarter. Based on such testing, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business. As a result, we recorded an impairment charge to “Other operating (income) expense” of $24.3 during the quarter, with $23.3 related to goodwill and the remainder to trademarks.

Other Intangibles, Net

Identifiable intangible assets at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020~~2021 comprised the following:

October 2, 2021 December 31, 2020
Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Value Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Value
Intangible assets with determinable lives (1):

Customer relationships $ 126.6 $ (23.7) $ 102.9 $ 103.4 $ (16.2) $ 87.2
Technology 65.9 (10.5) 55.4 54.4 (6.8) 47.6
Patents 4.5 (4.5) — 4.5 (4.5) —
Other 22.4 (16.7) 5.7 18.8 (12.5) 6.3
219.4 (55.4) 164.0 181.1 (40.0) 141.1
Trademarks with indefinite lives (2)
173.2 — 173.2 163.9 — 163.9
Total $ 392.6 $ (55.4) $ 337.2 $ 345.0 $ (40.0) $ 305.0

~~___________________________~~

~~(1)The identifiable intangible assets as~~sociated with the Sealite and ECS acquisitions consist of customer backlog of $1.9 and $0.8, respectively, customer relationships of $12.1 and $12.6, respectively, technology of $6.6 and $5.8, respectively, and definite-lived trademarks of $0.0 and $1.2, respectively.


	April 2, 2022						December 31, 2021
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with determinable lives:
Customer relationships	$	188.0	$	(30.4)	$	157.6	$	188.2	$	(26.7)	$	161.5
Technology	80.1		(13.6)		66.5		80.1		(11.9)		68.2
Patents	4.5		(4.5)		—		4.5		(4.5)		—
Other	31.6		(21.9)		9.7		31.6		(18.0)		13.6
	304.2		(70.4)		233.8		304.4		(61.1)		243.3
Trademarks with indefinite lives	172.1		—		172.1		172.2		—		172.2
Total	$	476.3	$	(70.4)	$	405.9	$	476.6	$	(61.1)	$	415.5

~~(2)Changes during the nine months ended October~~At April 2, ~~2021 related primarily to the acquisition of Sealite trademarks of $11.6 and, as previously discussed, the impairment charge of~~ ~~$1.0 related to ULC's trademarks.~~

In connection with the acquisitions of Sealite and ECS, which have definite-lived intangible assets as noted above, we increased our estimated annual amortization expense related to intangible assets to approximately $21.0 for the full year 2021, and $19.0 for 2022, ~~and each of the four years thereafter.~~

~~At October 2, 2021,~~ the net carrying value of intangible assets with determinable lives consisted of ~~$22.4~~$100.8 in the HVAC reportable segment and ~~$141.6~~$133.0 in the Detection and Measurement reportable segment. At ~~October~~April 2, ~~2021,~~2022, trademarks with indefinite lives consisted of ~~$105.5~~$105.3 in the HVAC reportable segment and ~~$67.7~~$66.8 in the Detection and Measurement reportable segment.

We ~~perform our annual~~review goodwill and indefinite-lived intangible assets for impairment ~~testing~~annually during the fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of the end of the third quarter. In addition, we test goodwill for impairment on a more frequent basis if there are indications of potential impairment. In reviewing goodwill and indefinite-lived intangible assets for impairment, we initially perform a qualitative analysis. If there is an indication of impairment, we then perform a quantitative analysis. A significant amount of judgment is involved in determining if an indication of impairment has occurred between annual testing dates. Such indication may include: a significant decline in expected future cash flows; a significant adverse change in legal factors or the business climate; unanticipated competition; and a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit.

~~Based on our annual goodwill impairment testing during~~During the fourth quarter of ~~2020,~~2021, based on a quantitative analyses of the goodwill and indefinite-lived intangible assets of our ULC reporting unit, we ~~concluded~~determined that the ~~estimated~~ fair value of ~~each of our~~the reporting ~~units, exclusive of Cues, Inc.~~ ~~(“Cues”),~~ ~~Patterson-Kelley, LLC (“Patterson-Kelley”) and ULC,~~ exceeded the carrying value of their respective net assets by over 75%. The estimated fair values of Cues and Patterson-Kelley exceeded the carrying value of their respective net assets by approximately 12% and 3%, while ULC's fair value approximatesunit approximated the carrying value of its net assets. The total goodwill ~~for Cues, Patterson-Kelley and~~of ULC ~~was $~~wa~~47.9,~~s $12.0 $~~14.2 and $17.1,~~ ~~respectively,~~ as of ~~October~~April 2, ~~2021.~~2022. A change in assumptions used in ~~valuing Cues, Patterson-Kelley, or ULC~~ULC's quantitative analysis (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in ~~these~~the reporting ~~units~~unit's estimated fair value being less than the ~~respective~~ carrying value of ~~their~~its net assets. In addition to ULC, the fair value of Sealite, ECS, Cincinnati Fan and ITL, acquisitions over the past 12 months, approximate their carrying value. If ~~any of these reporting units is~~ULC, Sealite, ECS, Cincinnati Fan or ITL are unable to achieve ~~its~~their respective current financial forecast, we may be required to record an impairment charge in a future period related to ~~its~~their respective goodwill.

We perform our annual trademarks impairment testing during the fourth quarter, or on a more frequent basis, if there are indications of potential impairment. The fair ~~values~~value of our trademarks ~~are determined by~~is based on applying estimated royalty rates to projected revenues, with ~~the~~ resulting cash flows discounted at a rate of return that reflects current market conditions (fair value based on unobservable inputs - Level 3, as defined in Note 17). The primary basis for these projected revenues is the annual operating plan for each of the related businesses, which is prepared in the fourth quarter of each year.

(10) WARRANTY

The following is an analysis of our product warranty accrual for the periods presented:


		Nine months ended					Three months ended
		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Balance at beginning of year	Balance at beginning of year	$	35.3	$	31.8	Balance at beginning of year	$	34.8	$	35.3
Acquisitions		—		1.6

Provisions	Provisions	8.0		8.2		Provisions	2.6		2.8
Usage	Usage	(7.2)		(7.8)		Usage	(3.0)		(3.1)
Currency translation adjustment		—		0.1

Balance at end of period	Balance at end of period	36.1		33.9		Balance at end of period	34.4		35.0
Less: Current portion of warranty	Less: Current portion of warranty	12.1		11.9		Less: Current portion of warranty	11.2		11.1
Non-current portion of warranty	Non-current portion of warranty	$	24.0	$	22.0	Non-current portion of warranty	$	23.2	$	23.9

(11) EMPLOYEE BENEFIT PLANS

On February 17, 2022, we transferred our existing liability under the SPX Postretirement Benefit Plans (the “Plans”) for a group of participants with retiree life insurance benefits to an insurance carrier for consideration payable to the insurance carrier of approximately $10.0. Of this consideration, $9.0 was paid during the quarter ended April 2, 2022, with the remainder expected to be paid in the second quarter of 2022. This transaction resulted in a settlement charge of $0.7 recorded in net periodic pension benefit expense during the first quarter of 2022. In addition, and in connection with this transfer, we remeasured the assets and liabilities of the Plans as of the transfer date, which resulted in a benefit of $0.4 recorded in net periodic pension benefit expense for the three months ended April 2, 2022. Lastly, as a result of the transfer, we have eliminated the third-party cost and internal resource requirements associated with administering these benefits.

Net periodic benefit (income) expense for our pension and postretirement plans include the following components:

Domestic Pension Plans


		Three months ended				Nine months ended					Three months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Service cost	Service cost	$	—	$	—	$	—	$	—	Service cost	$	—	$	—
Interest cost	Interest cost	2.1		2.7		6.3		8.1		Interest cost	2.3		2.1
Expected return on plan assets	Expected return on plan assets	(2.2)		(2.4)		(6.6)		(7.2)		Expected return on plan assets	(2.1)		(2.2)

Net periodic pension benefit (income) expense	Net periodic pension benefit (income) expense	$	(0.1)	$	0.3	$	(0.3)	$	0.9	Net periodic pension benefit (income) expense	$	0.2	$	(0.1)

Foreign Pension Plans


		Three months ended				Nine months ended					Three months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Service cost	Service cost	$	—	$	—	$	—	$	—	Service cost	$	—	$	—
Interest cost	Interest cost	0.8		1.0		2.4		3.0		Interest cost	1.0		0.8
Expected return on plan assets	Expected return on plan assets	(1.4)		(1.4)		(4.2)		(4.4)		Expected return on plan assets	(1.5)		(1.4)

Net periodic pension benefit income	Net periodic pension benefit income	$	(0.6)	$	(0.4)	$	(1.8)	$	(1.4)	Net periodic pension benefit income	$	(0.5)	$	(0.6)

Postretirement Plans


		Three months ended				Nine months ended					Three months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Service cost	Service cost	$	—	$	—	$	—	$	—	Service cost	$	—	$	—
Interest cost	Interest cost	0.3		0.4		0.9		1.2		Interest cost	0.3		0.3

Amortization of unrecognized prior service credits	Amortization of unrecognized prior service credits	(1.2)		(1.2)		(3.6)		(3.6)		Amortization of unrecognized prior service credits	(1.1)		(1.2)
Recognized net actuarial losses (1)										Recognized net actuarial losses (1)	0.3		—
Net periodic postretirement benefit income	Net periodic postretirement benefit income	$	(0.9)	$	(0.8)	$	(2.7)	$	(2.4)	Net periodic postretirement benefit income	$	(0.5)	$	(0.9)

_________________

(1)The three months ended April 2, 2022 includes the impact of the transfer of the retiree life insurance benefits obligation.

(12) INDEBTEDNESS

The following summarizes our debt activity (both current and non-current) for the ~~nine~~three months ended ~~October~~April 2, ~~2021:~~2022:


		December 31, 2020		Borrowings		Repayments		Other(5)		October 2, 2021			December 31, 2021		Borrowings		Repayments		Other		April 2, 2022
Revolving loans ~~(1)~~	Revolving loans ~~(1)~~	$	129.8	$	209.1	$	(338.9)	$	—	$	—	Revolving loans ~~(1)~~	$	—	$	—	$	—	$	—	$	—
Term loan~~(2)~~(1)	Term loan~~(2)~~(1)	248.6		—		(4.7)		0.3		244.2		Term loan~~(2)~~(1)	242.7		—		(3.1)		—		239.6

Trade receivables financing arrangement~~(3)~~(2)	Trade receivables financing arrangement~~(3)~~(2)	28.0		179.0		(207.0)		—		—		Trade receivables financing arrangement~~(3)~~(2)	—		—		—		—		—
Other indebtedness~~(4)~~(3)	Other indebtedness~~(4)~~(3)	6.0		0.6		(0.9)		(2.3)		3.4		Other indebtedness~~(4)~~(3)	3.3		—		(0.2)		—		3.1
Total debt	Total debt	412.4		$	388.7	$	(551.5)	$	(2.0)	247.6		Total debt	246.0		$	—	$	(3.3)	$	—	242.7

Less: short-term debt	Less: short-term debt	101.2								2.3		Less: short-term debt	2.2								2.0
Less: current maturities of long-term debt	Less: current maturities of long-term debt	7.2								11.4		Less: current maturities of long-term debt	13.0								13.0
Total long-term debt	Total long-term debt	$	304.0							$	233.9	Total long-term debt	$	230.8							$	227.7

___________________________

~~(1)~~While not due for repayment until December 2024 under the terms of our senior credit agreement, we classify within current liabilities the portion of the outstanding balance that we believe will be repaid over the next year, with such amount based on an estimate of cash that is expected to be generated over such period.

~~(2)~~(1)The term loan is repayable in quarterly installments ~~beginning in the first quarter of 2021, with the quarterly installments~~ equal to ~~0.625%~~1.25% of the initial term loan balance of $250.0, ~~during 2021, 1.25%~~ in each of the four quarters of 2022 and 2023, and 1.25% during the first three quarters of 2024. The remaining balance is payable in full on December 17, 2024. Balances are net of unamortized debt issuance costs of ~~$1.1 and $1.4~~$1.0 at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021.

~~(3)~~(2)Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses.

~~(4)~~(3)Primarily includes balances under a purchase card program of ~~$2.3~~$2.0 and ~~$1.7~~$2.2 and finance lease obligations of $1.1 and ~~$2.6~~$1.1 at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

~~(5)~~“Other” primarily includes debt assumed, foreign currency translation on any debt instruments denominated in currencies other than the U.S. dollar, and the impact of amortization of debt issuance costs associated with the term loan.

Senior Credit Facilities

A detailed description of our senior credit facilities is included in our ~~2020~~2021 Annual Report on Form 10-K.

On May 24, 2021 we elected to reduce our participating foreign credit instrument facility and bilateral foreign credit instrument facility, available for performance letters of credit and guarantees, by an aggregate amount of $20.0 and $25.0, respectively. The facility reduction resulted in a write-off of deferred finance costs of $0.2, recorded to “Interest expense” in the condensed consolidated statement of operations for nine months ended OctoberAt April 2, ~~2021.~~

~~At October 2, 2021,~~2022, we had ~~$437.8~~$438.2 of available borrowing capacity under our revolving credit facilities, after giving effect to ~~$12.2~~$11.8 reserved for ~~domestic~~outstanding letters of credit. In addition, at ~~October~~April 2, ~~2021,~~2022, we had ~~$31.2~~$28.9 of available issuance capacity under our foreign credit instrument facilities after giving effect to ~~$23.8~~$26.1 reserved for outstanding letters of credit.

The weighted-average interest rate of outstanding borrowings under our senior credit agreement was approximately ~~1.6%~~1.8% at ~~October~~April 2, ~~2021.~~2022.

At ~~October~~April 2, ~~2021,~~2022, we were in compliance with all covenants of our senior credit agreement.

~~Off Balance Sheet Arrangements~~

~~As of October 2, 2021, in connection with the sale of Transformer Solutions and pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021,~~ ~~surety bonds totaling approximately $27.4 remained in place at the time of sale~~. Transformer Solutions and the Purchaser provided us an indemnity in the event that any of the bonds are called. Under the Stock Purchase Agreement, the Purchaser has 90 days to arrange for substitute surety bonds.

(13) DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swaps

We previously maintained interest rate swap agreements that matured in March 2021 and effectively converted borrowings under our senior credit facilities to a fixed rate of 2.535%, plus the applicable margin.

In February 2020, and as a result of a December 2019 amendment that extended the maturity date of our senior credit facilities to December 17, 2024, we entered into additional interest swap agreements (“Swaps”). The Swaps have a notional amount of ~~$245.3,~~$240.6, cover the period from March 2021 to November 2024, and effectively convert borrowings under our senior credit facilities to a fixed rate of 1.061%, plus the applicable margin.

We have designated and are accounting for our interest rate swap agreements as cash flow hedges. As of ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, the unrealized ~~loss,~~gain, net of tax, recorded in accumulated other comprehensive income (“AOCI”) was ~~$2.2~~$7.0 and ~~$5.9,~~$0.5, respectively. In addition, as of ~~October~~April 2, ~~2021,~~2022, the fair value of our interest rate swap agreements totaled ~~$2.9, with $2.4~~$9.3 (with $0.3 recorded as a current ~~liability~~asset, $9.4 as a non-current asset, and ~~the remainder in long-term liabilities,~~$0.4 as a current liability), and ~~$7.8~~$0.6 at December 31, ~~2020~~2021 (with ~~$1.4~~$2.5 recorded as a non-current asset and $1.9 as a current ~~liability and the remainder in long-term liabilities)~~liability). Changes in fair value of our interest rate swap agreements are reclassified into earnings as a component of interest expense, when the forecasted transaction impacts earnings.

Currency Forward Contracts

We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency exchange rates. Our objective is to preserve the economic value of non-functional currency-denominated cash flows

and to minimize the impact of changes as a result of currency fluctuations. Our principal currency exposures relate to the South African Rand, British Pound Sterling (“GBP”), and Euro.

From time to time, we enter into forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries (“FX forward contracts”). None of our FX forward contracts are designated as cash flow hedges.

We had FX forward contracts with an aggregate notional amount of ~~$8.6~~$4.6 and ~~$6.3~~$8.7 outstanding as of ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, with all of the ~~$8.6~~$4.6 scheduled to mature within one year. The fair value of our FX forward contracts was less than $0.1 at April 2, 2022 and December 31, 2021.

Commodity Contracts

~~From time to time,~~In connection with our Transformer Solutions business, we ~~ent~~erhistorically entered into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials. ~~The commodity contracts relate solely to Transformer Solutions.~~ As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer ~~Solutions.~~Solutions, which has been presented within discontinued operations. Immediately prior to the sale, we extinguished the existing commodity contracts and reclassified from AOCI a net loss of $0.6 to “~~Gain~~“Gain (loss) on disposition of discontinued operations, net of ~~tax~~”tax” within our condensed consolidated statements of operations for the three ~~and nine~~ months ended October 2, 2021. ~~At December 31, 2020, the outstanding notional amount of commodity contracts was 3.2 pounds of copper.~~ Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and, to the extent the commodity contracts were effective in offsetting the variability of the forecasted purchases, the change in fair value was included in AOCI. We reclassified amounts associated with our commodity contracts out of AOCI when the forecasted transaction impacted earnings. As of December 31, 2020, the fair value of these contracts was a current asset of $2.4. Since these commodity contracts related to our Transformer Solutions business, the amount has been recorded within assets of discontinued operations in the accompanying condensed consolidated balance sheet. The unrealized gain, net of taxes, recorded in AOCI was $1.5 as of December 31, 2020.

(14) STOCKHOLDERS' EQUITY AND LONG-TERM INCENTIVE COMPENSATION

Income Per Share

The following table sets forth the number of weighted-average shares outstanding used in the computation of basic and diluted income per share:


		Three months ended		Nine months ended			Three months ended
		October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020		April 2, 2022	April 3, 2021
Weighted-average number of common shares used in basic income per share	Weighted-average number of common shares used in basic income per share	45.331	44.708	45.244	44.538	Weighted-average number of common shares used in basic income per share	45.554	45.132
Dilutive securities — Employee stock options and restricted stock units	Dilutive securities — Employee stock options and restricted stock units	1.319	1.186	1.211	1.156	Dilutive securities — Employee stock options and restricted stock units	0.891	1.187
Weighted-average number of common shares and dilutive securities used in diluted income per share	Weighted-average number of common shares and dilutive securities used in diluted income per share	46.650	45.894	46.455	45.694	Weighted-average number of common shares and dilutive securities used in diluted income per share	46.445	46.319

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period w~~ere 0.222~~were 0.243 and ~~0.631~~,0.737, respectively, for the three months ended ~~October~~April 2, ~~2021,~~2022, and ~~0.261~~0.234 and ~~0.631, respectively, for the nine months ended October 2, 2021.~~

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period were 0.352 and 0.858,0.627, respectively, for the three months ended ~~September 26, 2020, and 0.346 and 0.817, respectively, for the nine months ended September 26, 2020.~~April 3, 2021.

Long-Term Incentive Compensation

Long-term incentive compensation awards may be granted to certain eligible employees or non-employee directors. A detailed description of the awards granted prior to ~~2021~~2022 is included in our ~~2020~~2021 Annual Report on Form 10-K.

Awards granted on March 1, ~~2021~~2022 to executive officers and other members of senior management were comprised of performance stock units (“PSU’s”), stock options, and time-based restricted stock units (“RSU’s”), while other eligible employees were granted PSU’s and RSU’s. The PSU’s are eligible to vest at the end of a three-year performance period, with performance based on the total return of our stock over the three-year performance period against a peer group within the S&P 600 Capital Goods Index. Stock options and RSU’s vest ratably over the three-year period subsequent to the date of grant.

~~Effective May 11, 2021, we granted 0.017 RSU's to~~Non-employee directors receive annual long-term incentive awards at the time of our ~~non-employee directors, which vest in their entirety immediately prior to the~~ annual meeting of stockholders, inwith the 2022 meeting scheduled for May 10, 2022.

Compensation expense within income from continuing operations related to long-term incentive awards totaled ~~$3.4~~$3.1 and ~~$3.2~~$2.7 for the three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020 and $9.5 and $9.6 for the nine months ended October 2,~~April 3, 2021, ~~and September 26, 2020,~~ respectively. The related tax benefit was ~~$0.6 and $0.8~~$0.5 for the three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020 and $1.6 and $2.4 for the nine months ended October 2, 2021 and September 26, 2020, respectively.~~April 3, 2021.

PSU’s and RSU’s

We use the Monte Carlo simulation model valuation technique to determine the fair value of our restricted stock units that contain a market condition (i.e., the PSU’s). The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculates the fair value of each PSU.

The following table summarizes the PSU and RSU activity from December 31, 2021 through April 2, 2022:


	Unvested PSU's and RSU's	Weighted-Average Grant-Date Fair Value Per Share
Outstanding at December 31, 2021	0.636	$	49.14
Granted	0.265	48.39
Vested	(0.320)	43.97
Forfeited	(0.007)	50.57
Outstanding at April 2, 2022	0.574	$	51.67

As of April 2, 2022, there was $18.0 of unrecognized compensation cost related to PSU’s and RSU’s. We expect this cost to be recognized over a weighted-average period of 2.4 years.

Stock Options

On March 1, 2022, we granted 0.105 stock options, all of which were outstanding (but not exercisable) as of April 2, 2022. The exercise price per share of these options is $48.97 and the maximum contractual term of these options is 10 years.

The fair value per share of the stock options granted on March 1, 2022 was $19.33. The fair value of each option grant was estimated using the Black-Scholes option-pricing model with the following assumptions:


Annual expected stock price volatility	38.62	%
Annual expected dividend yield	—	%
Risk-free interest rate	1.61	%
Expected life of stock option (in years)	6.0

Annual expected stock price volatility is based on a weighted average of SPX’s stock volatility of the most recent six-year historical volatility of a peer company group. There is no annual expected dividend yield as we discontinued dividend payments in 2015 and do not expect to pay dividends for the foreseeable future. The average risk-free interest rate is based on the five-year and seven-year treasury constant maturity rates. The expected option life is based on a three-year pro-rata vesting schedule and represents the period of time that awards are expected to be outstanding.

As of April 2, 2022, there was $3.1 of unrecognized compensation cost related to stock options. We expect this cost to be recognized over a weighted-average period of 2.5 years.

Accumulated Other Comprehensive Income

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended ~~October~~April 2, ~~2021~~2022 were as follows:


		Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total			Foreign Currency Translation Adjustment		Net Unrealized Gains on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total
Balance at beginning of period	Balance at beginning of period	$	240.1	$	(2.0)	$	12.5	$	250.6	Balance at beginning of period	$	252.7	$	0.5	$	10.7	$	263.9
Other comprehensive loss before reclassifications		(5.0)		(0.4)		—		(5.4)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	(2.6)		6.1		—		3.5
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		0.2		(0.9)		(0.7)		Amounts reclassified from accumulated other comprehensive income (loss)	—		0.4		(0.9)		(0.5)
Current-period other comprehensive loss		(5.0)		(0.2)		(0.9)		(6.1)
Current-period other comprehensive income (loss)										Current-period other comprehensive income (loss)	(2.6)		6.5		(0.9)		3.0
Balance at end of period	Balance at end of period	$	235.1	$	(2.2)	$	11.6	$	244.5	Balance at end of period	$	250.1	$	7.0	$	9.8	$	266.9

__________________________

(1)Net of tax ~~benefit of~~ provision o~~$0.7~~f $2.3 and $0.1 as of ~~October~~April 2, ~~2021 and July 3, 2021.~~

~~(2)Net of tax provision of~~ ~~$4.0~~ ~~and~~ ~~$4.3~~ ~~as of October 2, 2021 and July 3, 2021, respectively. The balances as of October 2, 2021 and July 3, 2021 include unamortized prior service credits.~~

~~The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended October 2, 2021 were as follows:~~
Foreign
Currency
Translation
Adjustment
Net Unrealized
Losses
on Qualifying Cash
Flow Hedges(1)
Pension and
Postretirement
Liability
Adjustment(2)
Total
Balance at beginning of period $ 238.6 $ (4.4) $ 14.3 $ 248.5
Other comprehensive income (loss) before reclassifications (3.5) 3.1 — (0.4)
Amounts reclassified from accumulated other comprehensive income (loss) — (0.9) (2.7) (3.6)
Current-period other comprehensive income (loss) (3.5) 2.2 (2.7) (4.0)
Balance at end of period $ 235.1 $ (2.2) $ 11.6 $ 244.5

~~__________________________~~

~~(1)Net of tax benefit of $0.7~~ ~~and $1.4 as of October 2, 2021~~2022 and December 31, ~~2020,~~2021, respectively.

(2)Net of tax provision of $$3.5 and ~~4.0~~$3.7 ~~and $4.9~~ as of ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The balances as of ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020~~2021 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended ~~September 26, 2020~~April 3, 2021 were as follows:


		Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total			Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total
Balance at beginning of period	Balance at beginning of period	$	227.2	$	(8.0)	$	16.1	$	235.3	Balance at beginning of period	$	238.6	$	(4.4)	$	14.3	$	248.5
Other comprehensive income before reclassifications	Other comprehensive income before reclassifications	1.7		0.4		—		2.1		Other comprehensive income before reclassifications	0.6		3.3		—		3.9
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		0.7		(0.9)		(0.2)		Amounts reclassified from accumulated other comprehensive income (loss)	—		(0.3)		(0.9)		(1.2)
Current-period other comprehensive income (loss)	Current-period other comprehensive income (loss)	1.7		1.1		(0.9)		1.9		Current-period other comprehensive income (loss)	0.6		3.0		(0.9)		2.7
Balance at end of period	Balance at end of period	$	228.9	$	(6.9)	$	15.2	$	237.2	Balance at end of period	$	239.2	$	(1.4)	$	13.4	$	251.2

__________________________

(1)Net of tax benefit of ~~$2.2~~$0.4 and ~~$2.6~~$1.4 as of ~~September 26, 2020~~April 3, 2021 and ~~June 27,~~December 31, 2020, respectively.

(2)Net of tax provision of ~~$5.2~~$4.6 and ~~$5.5~~$4.9 as of ~~September 26, 2020~~April 3, 2021 and ~~June 27,~~December 31, 2020, respectively. The balances as of ~~September 26, 2020 and June 27, 2020 include unamortized prior service credits.~~

~~The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended September 26, 2020 were as follows:~~
Foreign
Currency
Translation
Adjustment
Net Unrealized
Losses
on Qualifying Cash
Flow Hedges(1)
Pension and
Postretirement
Liability
Adjustment(2)
Total
Balance at beginning of period $ 228.0 $ (1.6) $ 17.9 $ 244.3
Other comprehensive income (loss) before reclassifications 0.9 (7.8) — (6.9)
Amounts reclassified from accumulated other comprehensive income (loss) — 2.5 (2.7) (0.2)
Current-period other comprehensive income (loss) 0.9 (5.3) (2.7) (7.1)
Balance at end of period $ 228.9 $ (6.9) $ 15.2 $ 237.2

~~__________________________~~

~~(1)Net of tax benefit of $2.2 and $0.5 as of September 26, 2020~~April 3, 2021 and December 31, ~~2019, respectively.~~

~~(2)Net of tax provision of $5.2 and $6.1 as of September 26,~~ 2020 ~~and December 31, 2019, respectively. The balances as of September 26, 2020 and December 31, 2019~~ include unamortized prior service credits.

The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020:~~April 3, 2021:


		Amount Reclassified from AOCI						Amount Reclassified from AOCI
		Three months ended						Three months ended
		October 2, 2021		September 26, 2020		Affected Line Item in the Condensed Consolidated Statements of Operations		April 2, 2022		April 3, 2021		Affected Line Item in the Condensed Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:	(Gains) losses on qualifying cash flow hedges:						(Gains) losses on qualifying cash flow hedges:

Commodity contracts	Commodity contracts	$	(0.3)	$	(0.5)	Income from discontinued operations, net of tax	Commodity contracts	$	—	$	(1.8)	Income from discontinued operations, net of tax
Swaps	Swaps	0.6		1.4		Interest expense	Swaps	0.5		1.4		Interest expense
Pre-tax	Pre-tax	0.3		0.9			Pre-tax	0.5		(0.4)
Income taxes	Income taxes	(0.1)		(0.2)			Income taxes	(0.1)		0.1
		$	0.2	$	0.7			$	0.4	$	(0.3)

Gains on pension and postretirement items:	Gains on pension and postretirement items:						Gains on pension and postretirement items:
Amortization of unrecognized prior service credits - Pre-tax	Amortization of unrecognized prior service credits - Pre-tax	$	(1.2)	$	(1.2)	Other income, net	Amortization of unrecognized prior service credits - Pre-tax	$	(1.1)	$	(1.2)	Other income, net
Income taxes	Income taxes	0.3		0.3			Income taxes	0.2		0.3
		$	(0.9)	$	(0.9)			$	(0.9)	$	(0.9)

~~The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the nine months ended October 2, 2021 and September 26, 2020:~~

Amount Reclassified from AOCI
Nine months ended
October 2, 2021 September 26, 2020 Affected Line Item in the Condensed
Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:
Commodity contracts $ (3.8) $ 0.1 Income from discontinued operations, net of tax
Swaps 2.6 3.2 Interest expense
Pre-tax (1.2) 3.3
Income taxes 0.3 (0.8)
$ (0.9) $ 2.5
Gains on pension and postretirement items:
Amortization of unrecognized prior service credits - Pre-tax $ (3.6) $ (3.6) Other income, net
Income taxes 0.9 0.9
$ (2.7) $ (2.7)

2322

(15) CONTINGENT LIABILITIES AND OTHER MATTERS

General

Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims), environmental matters, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate. While we (and our subsidiaries) maintain property, cargo, auto, product, general liability, environmental, and directors’ and officers’ liability insurance and have acquired rights under similar policies in connection with acquisitions that we believe cover a significant portion of these claims, this insurance may be insufficient or unavailable (e.g., in the case of insurer insolvency) to protect us against potential loss exposures. Also, while we believe we are entitled to indemnification from third parties for some of these claims, these rights may be insufficient or unavailable to protect us against potential loss exposures.

Our recorded ~~liabilities~~liabilities related to these matters totaled ~~$540.4~~$645.6 and ~~$575.7~~$658.8 at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Of these amounts, ~~$469.5~~$570.6 and ~~$499.8~~$584.3 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these matters are based on a number of assumptions, including historical claims and payment experience. While we base our assumptions on facts currently known to us, they entail inherently subjective judgments and uncertainties. As a result, our current assumptions for estimating these liabilities may not prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations.

Our asbestos-related claims are typical in certain of the industries in which we operate or pertain to legacy businesses we no longer operate. It is not unusual in these cases for 50 or more corporate entities to be named as defendants. We vigorously defend these claims, many of which are dismissed without payment, and the significant majority of costs related to these claims have historically been paid pursuant to our insurance arrangements. Our recorded assets and liabilities related to asbestos-related claims were as follows at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020:~~2021:


		October 2, 2021		December 31, 2020			April 2, 2022		December 31, 2021
Insurance recovery assets (1)	Insurance recovery assets (1)	$	453.9	$	496.4	Insurance recovery assets (1)	$	521.2	$	526.2
Liabilities for claims (2)	Liabilities for claims (2)	499.4		535.2		Liabilities for claims (2)	604.5		616.5

__________________________

(1)Of these amounts,~~, $403.9~~ $466.2 and ~~$446.4~~$473.6 are included in “Other assets” at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, while the remainder is included in “Other current assets.”

(2)Of these amounts, ~~$444.8 and $479.9~~$548.6 and $561.4 are included in “Other long-term liabilities” at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, while the remainder is included in “Accrued expenses.”

The liabilities we record for asbestos-related claims are based on a number of assumptions. In estimating our liabilities for asbestos-related claims, we consider, among other things, the following:

• The number of pending claims by disease type and jurisdiction.

• Historical information by disease type and jurisdiction with regard to:

◦ Average number of claims settled with payment (versus dismissed without payment); and

◦ Average claim settlement amounts.

• The period over which we can reasonably project asbestos-related claims (currently projecting through 2057).

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The following table presents information regarding activity for the asbestos-related claims for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020:~~April 3, 2021:


		Nine months ended	Nine months ended		Three months ended
		October 2, 2021	September 26, 2020		April 2, 2022	April 3, 2021
Pending claims, beginning of period	Pending claims, beginning of period	9,782	11,079	Pending claims, beginning of period	10,065	9,782
Claims filed	Claims filed	2,044	1,730	Claims filed	712	514
Claims resolved	Claims resolved	(1,797)	(2,651)	Claims resolved	(597)	(167)
Pending claims, end of period	Pending claims, end of period	10,029	10,158	Pending claims, end of period	10,180	10,129

The assets we record for asbestos-related claims represent amounts that we believe we are or will be entitled to recover under agreements we have with insurance companies. The amount of these assets are based on a number of assumptions, including the continued solvency of the insurers and our legal interpretation of our rights for recovery under the agreements we have with the insurers. Our current assumptions for estimating these assets may not prove accurate, and we may be required to adjust these assets in the future. These variances relative to current expectations could have a material impact on our financial position and results of operations.

During the ~~nine~~three months ended ~~October~~April 2, 2022 and April 3, 2021, ~~and September 26, 2020,~~ our ~~(receipts)~~ payments for asbestos-related claims, net of respective insurance ~~recoveries~~recoveries of ~~$39.8~~$7.4 and ~~$23.3,~~$8.0, were ~~$(2.2)~~$7.2 and ~~$15.8, respectively. The nine months ended October 2, 2021 includes insurance proceeds of $15.0, associated with the settlement of an asbestos insurance coverage matter.~~$3.8, respectively. A significant increase in claims, costs and/or issues with existing insurance coverage (e.g., dispute with or insolvency of insurer(s)) could have a material adverse impact on our share of future payments related to these matters, and, as a result, have a material impact on our financial position, results of operations and cash flows.

During the ~~nine~~three months ended ~~October~~April 2, 2022 and April 3, 2021, ~~we recorded a charge of $2.7 related to revisions of recorded assets for asbestos-related claims. There~~there were no other changes in estimates associated with our assets and liabilities related to our asbestos product liability ~~matters during the three and nine months ended October 2, 2021 and three and nine months ended September 26, 2020.~~matters.

Large Power Projects in South Africa

Overview - Since 2008, DBT ~~has~~had been executing ~~contracts~~ on ~~two~~2 large power projects in South Africa (Kusile and Medupi)., on which it has now substantially completed its scope of work. Over such time, the business environment surrounding these projects ~~has been~~was difficult, as DBT, along with many other contractors on the projects, ~~have~~ experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including DBT and its subcontractors), and various suppliers. ~~DBT has substantially completed its scope of work, with its~~DBT's remaining responsibilities ~~related~~relate largely to resolution of various claims, primarily between itself and one of its prime contractors, Mitsubishi Heavy Industries Power—ZAF (f.k.a. Mitsubishi-Hitachi Power Systems Africa (PTY) LTD), or “MHI.”

The challenges related to the projects have resulted in (i) significant adjustments to our revenue and cost estimates for the projects, (ii) DBT’s submission of numerous change orders to the prime contractors, (iii) various claims and disputes between DBT and other parties involved with the projects (e.g., prime contractors, subcontractors, suppliers, etc.), and (iv) the possibility that DBT may become subject to additional claims, which could be significant. It is possible that some outstanding claims may not be resolved until after the prime contractors complete their scopes of work. Our future financial position, operating results, and cash flows could be materially impacted by the resolution of current and any future claims.

Claims by DBT - DBT has asserted claims against MHI of approximately South African Rand ~~1,100.0~~1,000.0 (or $~~72.5~~)$69.0). As DBT prepares these claims for dispute resolution processes, the amounts, along with the characterization, of the claims could change. Of these claims, South African Rand 566.5 (or $~~37.4~~)$39.1), which is inclusive of the amounts awarded in the adjudications referred to below, are currently proceeding through contractual ~~dispute~~dispute resolution processes and DBT is likely to initiate additional dispute resolution processes. DBT is also pursuing several claims to force MHI to abide by its contractual obligations and provide DBT with certain benefits that MHI may have received from its customer on the projects. In addition to existing asserted claims, DBT believes it has additional claims and rights to recovery based on its performance under the contracts with, and actions taken by, MHI. DBT is continuing to evaluate the claims and the amounts owed to it under the contracts based on MHI's failure to comply with its contractual obligations. The amounts DBT may recover for current and potential future claims against MHI are not currently known given (i) the extent of current and potential future claims by MHI against DBT (see below for further discussion) and (ii) the unpredictable nature of any dispute resolution processes that may occur in connection with these current and potential future claims. No revenue has been recorded in the accompanying condensed consolidated financial statements with respect to current or potential future claims against MHI.

On July 23, 2020, a dispute adjudication panel issued a ruling in favor of DBT on certain matters related to the Kusile and Medupi projects. The panel (i) ruled that DBT had achieved takeover on 9 of the units; (ii) ordered MHI to return $2.3 of bonds (which have been subsequently returned by MHI); (iii) ruled that DBT is entitled to the return of an additional ~~$4.5~~$4.3 of

bonds upon the completion of certain administrative milestones; (iv) ordered MHI to pay South African Rand 18.4 (or $1.1 at the time of the ruling) in incentive payments for work performed by DBT (which MHI has subsequently paid); and (v) ruled that MHI waived its rights to assert delay damages against DBT on ~~one~~1 of the units of the Kusile project. The ruling is subject to MHI’s rights to seek further arbitration in the matter, as provided in the contracts. As such, the incentive payments noted above have not been recorded in our condensed consolidated statements of operations.

On February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on 2 units of the Kusile project. In connection with the ruling, MHI paid DBT South African Rand 126.6 (or $8.6 at the time of payment). This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our condensed consolidated statement of ~~operations for the nine months ended October 2, 2021.~~operations. On July 5, 2021, DBT received notice from MHI of its intent to seek final and binding arbitration in this matter.

On April 28, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on ~~two~~2 units of the Medupi project. In connection with the ruling, MHI paid DBT South African Rand 82.0 (or $6.0 at the time of payment). This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our condensed consolidated statement of ~~operations for the nine months ended October 2, 2021.~~operations.

Claims by MHI - On February 26, 2019, DBT received notification of an interim claim consisting of both direct and consequential damages from MHI alleging, among other things, that DBT (i) provided defective product and (ii) failed to meet certain project milestones. In September 2020, MHI made a demand on certain bonds issued in its favor by DBT, based solely on these alleged defects, but without further substantiation or other justification (see further discussion below). On December 30, 2020, MHI notified DBT of its intent to take these claims to binding ~~arbitration.~~arbitration even though the vast majority of these claims had not been brought appropriately before a dispute adjudication board as required under the relevant subcontracts. On June 4, 2021, in connection with the arbitration, DBT received a revised version of the claim. Similar to the interim claim, we believe the vast majority of the damages summarized in the revised claim are unsubstantiated and, thus, any loss for the majority of these claims is considered remote. For the remainder of the claims in both the interim notification and the revised version, which largely appear to be direct in nature (approximately South African Rand ~~950.0~~790.0 or $~~62.6~~)$54.5), DBT has numerous defenses and, thus, we do not believe that DBT has a probable loss associated with these claims. In addition, we do not believe MHI has followed the appropriate dispute resolution processes under our agreement and therefore most, if not all, of its claims against DBT are not valid. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims. DBT intends to vigorously defend itself against these claims. Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims; (ii) complexity of contractual relationships between the end customer, MHI, and DBT; (iii) legal interpretation of the contract provisions and application of South African law to the contracts; and (iv) unpredictable nature of any dispute resolution processes that may occur in connection with these claims.

In April and ~~July~~July 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 407.2 (or $~~26.9~~)$28.1) from MHI alleging that DBT failed to meet certain project milestones related to the construction of the filters for both the Kusile and Medupi projects. DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a probable loss associated with these claims. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims. Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss.

MHI has made other claims against DBT totaling South African Rand 176.2 (or $~~11.6~~12.2). DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a probable loss associated with these claims. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims.

Bonds Issued in Favor of MHI - DBT is obligated with respect to bonds issued by banks in favor of MHI. In September of 2020, MHI made a demand, and received payment of South African Rand 239.6 (or $14.3 at the time of payment), on certain of these bonds. In May 2021, MHI made an additional demand, and received payment of South African Rand 178.7 (or $12.5 at the time of payment), on certain of the remaining bonds at such time. In both cases, we funded the payment as required under the terms of the bonds and our senior credit agreement. In its demands, MHI purported that DBT failed to carry out its obligations to rectify certain alleged product defects and that DBT failed to meet certain project milestones. DBT denies liability for such allegations and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand 418.3 (or $~~27.6~~)$28.9) that has been paid. However, given the extent and complexities of the claims between DBT and MHI, reimbursement of the South African Rand 418.3 (or ~~$27.6~~)$28.9) is unlikely to occur over the next twelve months. As such, we have reflected the South African Rand 418.3 (or ~~$27.6~~)$28.9) as a ~~non-current~~non-current asset within our condensed consolidated balance ~~sheet~~sheets as of ~~October~~April 2, 2022 and December 31, 2021.

The remaining bond of $~~1.9~~2.0 issued to MHI as a performance guarantee could be exercised by MHI for an alleged breach of DBT's obligation. In the event that MHI were to receive payment on a portion, or all, of the remaining bond, we would be required to reimburse the issuing bank.

In addition to this bond, SPX Corporation has guaranteed DBT’s performance on these projects to the prime contractors, including MHI.

Claim against Surety - On February 5, 2021, DBT received payment of $6.7 on bonds issued in support of performance by one of DBT's sub-contractors. The sub-contractor maintains a right to seek recovery of such amount and, thus, the amount received by DBT has not been reflected in our condensed consolidated statement of ~~operations for the nine months ended October 2, 2021.~~operations.

Litigation Matters

We are subject to other legal matters that arise in the normal course of business. We believe these matters are either without merit or of a kind that should not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows; however, we cannot assure you that these proceedings or claims will not have a material effect on our financial position, results of operations or cash flows.

Environmental Matters

Our operations and properties are subject to federal, state, local and foreign regulatory requirements relating to environmental protection. It is our policy to comply fully with all applicable requirements. As part of our effort to comply, we have a comprehensive environmental compliance program that includes environmental audits conducted by internal and external independent professionals, as well as regular communications with our operating units regarding environmental compliance requirements and anticipated regulations. Based on current information, we believe that our operations are in substantial compliance with applicable environmental laws and regulations, and we are not aware of any violations that could have a material effect, individually or in the aggregate, on our business, financial condition, and results of operations or cash flows. ~~As of October 2, 2021, we~~We had liabilities for site investigation and/or remediation at 2518 sites ~~(25 sites at December 31, 2020)~~ that we own or control, or formerly owned and ~~controlled.~~controlled, as of April 2, 2022 and December 31, 2021. In addition, while we believe that we maintain adequate accruals to cover the costs of site investigation and/or remediation, we cannot provide assurance that new matters, developments, laws and regulations, or stricter interpretations of existing laws and regulations will not materially affect our business or operations in the future.

Our environmental accruals cover anticipated costs, including investigation, remediation, and maintenance of clean-up sites. Our estimates are based primarily on investigations and remediation plans established by independent consultants, regulatory agencies and potentially responsible third parties. Accordingly, our estimates may change based on future developments, including new or changes in existing environmental laws or policies, differences in costs required to complete anticipated actions from estimates provided, future findings of investigation or remediation actions, or alteration to the expected remediation plans. It is our policy to revise an estimate once the revision becomes probable and the amount of change can be reasonably estimated. We generally do not discount our environmental accruals and do not reduce them by anticipated insurance recoveries. We take into account third-party indemnification from financially viable parties in determining our accruals where there is no dispute regarding the right to indemnification.

In the case of contamination at offsite, third-party disposal sites, as of ~~October~~April 2, 2022 and December 31, 2021, we have been notified thatthat we are potentially responsible and have received other notices of potential liability pursuant to various ~~environmental la~~wsenvironmental laws at 119 sites, at which the liability has not been settled and all of which ~~9 sites~~ have been active in the past few years. These laws may impose liability on certain persons that are considered jointly and severally liable for the costs of investigation and remediation of hazardous substances present at these sites, regardless of fault or legality of the original disposal. These persons include the present or former owners or operators of the site and companies that generated, disposed of or arranged for the disposal of hazardous substances at the site. We are considered a “de minimis” potentially responsible party at most of the sites, and we estimate that our aggregate liability, if any, related to these sites is not material to our condensed consolidated financial statements. We conduct extensive environmental due diligence with respect to potential acquisitions, including environmental site assessments and such further testing as we may deem warranted. If an environmental matter is identified, we estimate the cost and either establish a liability, purchase insurance or obtain an indemnity from a financially sound seller; however, in connection with our acquisitions or dispositions, we may assume or retain significant environmental liabilities, some of which we may be unaware. The potential costs related to these environmental matters and the possible impact on future operations are uncertain due in part to the complexity of government laws and regulations and their interpretations, the varying costs and effectiveness of various clean-up technologies, the uncertain level of insurance or other types of recovery, and the questionable level of our responsibility. We record a liability when it is both probable and the amount can be reasonably estimated.

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In our opinion, after considering accruals established for such purposes, the cost of remedial actions for compliance with the present laws and regulations governing the protection of the environment are not expected to have a material impact, individually or in the aggregate, on our financial position, results of operations or cash flows.

Self-insured Risk Management Matters

We are self-insured for certain of our workers’ compensation, automobile, product and general liability, disability and health costs, and we believe that we maintain adequate accruals to cover our retained liability. Our accruals for risk management matters are determined by us, are based on claims filed and estimates of claims incurred but not yet reported, and generally are not discounted. We consider a number of factors, including third-party actuarial valuations, when making these determinations. We maintain third-party stop-loss insurance policies to cover certain liability costs in excess of predetermined retained amounts. The insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against loss exposure.

(16) INCOME AND OTHER TAXES

Uncertain Tax Benefits

As of ~~October~~April 2, ~~2021~~2022, we had gross unrecognized tax ~~benefits~~benefits of ~~$7.3~~$7.1 (net unrecognized tax benefits of ~~$6.4~~)$6.4). All of these net unrecognized tax benefits would impact our effective tax rate from continuing operations if recognized.

We classify interest and penalties related to unrecognized tax benefits as a component of our income tax provision. As of ~~October~~April 2, ~~2021,~~2022, gross accrued interest totaled ~~$3.1~~$2.7 (net accrued interest of ~~$2.5~~)$2.3). As of ~~October~~April 2, ~~2021,~~2022, we had no accrual for penalties included in our unrecognized tax benefits.

Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to ~~$5.0. Th~~e$5.0. The previously unrecognized tax benefits relate to a variety of tax matters including transfer pricing and various state matters.

Other Tax Matters

For the three months ended ~~October~~April 2, ~~2021,~~2022, we recorded an income tax ~~provision~~provision of ~~$3.7~~$2.6 on ~~$11.4~~$15.6 of pre-tax income from continuing operations, resulting in an effective rate of ~~32.5%~~16.7%. This compares toto an income tax provision for the three months ended ~~September 26, 2020~~April 3, 2021 of ~~$3.1~~ $5.3 on ~~$18.7~~$28.3 of pre-tax income from continuing operations, resulting in an effective rate of ~~16.6%~~18.7%. The most significant item impacting the income tax provision for the ~~third~~first quarter of 2022 and 2021 was $0.7 ~~of expense related to the revaluation of certain deferred tax liabilities due to an enacted tax rate increase. The most significant item impacting the income tax provision for the third quarter of 2020 was $1.2~~ ~~of tax benefits related to our U.S. tax credits~~ and ~~incentives.~~

~~For the nine months ended October 2, 2021, we recorded an income tax provision o~~f ~~$9.8~~ on ~~$51.2~~ ~~of pre-tax income from continuing operations, resulting in an effective rate of~~ ~~19.1%. This compares to an income tax provision for the nine months ended September 26, 2020 of~~ ~~$8.4~~ on ~~$48.7~~ ~~of pre-tax income from continuing operations, resulting in an effective rate of~~ ~~17.2%~~. The most significant items impacting the income tax provision for the first nine months of 2021 were (i) a benefit of $2.2 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims and (ii) $1.0 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, partially offset by (iii) $1.3 of expense related to the revaluation of deferred tax liabilities due to an enacted tax rate increase. The most significant items impacting the income tax provision for the first nine months of 2020 were (i) $1.5$0.9, respectively, of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the period, (ii) the $1.2 of tax benefits associated with U.S. tax credits and incentives noted above, and (iii) $0.5 of tax benefits associated with statute expirations in certain jurisdictions during the second quarter of 2020.periods.

We perform reviews of our income tax positions on a continuous basis and accrue for potential uncertain positions when we determine that an uncertain position meets the criteria of the Income Taxes Topic of the Codification. Accruals for these uncertain tax positions are recorded in “Income taxes payable” and “Deferred and other income taxes” in the accompanying condensed consolidated balance sheets based on the expectation as to the timing of when the matters will be resolved. As events change and resolutions occur, these accruals are adjusted, such as in the case of audit settlements with taxing authorities.

~~The~~During the second quarter of 2021, the Internal Revenue Service (“IRS”) concluded its audit of our 2013, 2014, 2015, 2016 and 2017 federal income tax returns. ~~In connection with such, we recorded a tax benefit of $2.2 during the three months ended July 3, 2021~~We believe contingencies related to the ~~resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims.~~

subsequent returns are adequately provided for.

State income tax returns generally are subject to examination for a period of three to five years after filing the respective tax returns. The impact on such tax returns of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. We have various state income tax returns in the process of examination. We believe any uncertain tax positions related to these examinations have been adequately provided for.

We have various foreign income tax returns under examination. The most significant of these is in Germany for the 2010 through 2014 tax years. We believe that any uncertain tax positions related to these examinations have been adequately provided for.

An unfavorable resolution of one or more of the above matters could have a material impact on our results of operations or cash flows in the quarter and year in which an adjustment is recorded or the tax is due or paid. As audits and

examinations are still in process, the timing of the ultimate resolution and any payments that may be required for the above matters cannot be determined at this time.

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)

On March 27, 2020, the CARES Act was enacted into law and provides changes to various tax laws that impact businesses. We do not believe these changes impact our current and deferred income tax balances; therefore, no resulting adjustments have been recorded to such balances as of April 2, 2022 and December 31, 2021.

As provided within the CARES Act, we are deferring payments of our social security payroll taxes, for the period March 27, 2020 to December 31, 2020, with such deferral totaling $3.5 as of April 2, 2022. This amount is required to be paid by the end of 2022.

(17) FAIR VALUE

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy:

•Level 1 — Quoted prices for identical instruments in active markets.

•Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3 — Significant inputs to the valuation model are unobservable.

There were no changes during the periods presented to the valuation techniques we use to measure asset and liability fair values on a recurring or nonrecurring basis. There were no transfers between the three levels of the fair value hierarchy for the periods presented.

Valuation ~~Methodologies~~Methods Used to Measure Fair Value on a Non-Recurring Basis

Parent Guarantees and Bonds Associated with Balcke Dürr — In connection with the 2016 sale of Balcke Dürr, existing parent company guarantees and bank surety bonds, which totaled approximately Euro 79.0 and Euro 79.0, respectively, remained in place at the time of sale. These guarantees and bonds provided protections for Balcke Dürr customers in regard to advance payments, performance, and warranties on projects in existence at the time of sale. In addition, certain bonds related to lease obligations and foreign tax matters in existence at the time of sale. Balcke Dürr and the acquirer of Balcke Dürr provided us an indemnity in the event that any of the bonds were called or payments were made under the guarantees. Also, at the time of sale, Balcke Dürr provided cash collateral of Euro 4.0 and the parent company of the buyer provided a guarantee of Euro 5.0 as a security for the above indemnifications (Euro 0.0 and Euro ~~1.0, respectively,~~0.0, respectively, at ~~October~~April 2, ~~2021)~~2022). In connection with the sale, we recorded a liability for the estimated fair value of the guarantees and bonds and an asset for the estimated fair value of the cash collateral and indemnities provided. Since the sale of Balcke Dürr, the guarantees have expired and bonds have been ~~periodically~~ returned. ~~As of~~ ~~October 2, 2021, all remaining bonds have been returned.~~Summarized below are ~~changes~~the liability (related to parent company guarantees and bank and surety bonds) and asset (related to cash collateral and guarantee provided by the parent company of the buyer) recorded at the time of sale, along with the change in the liability and asset during the ~~nine~~three months ended ~~October 2, 2021 and September 26, 2020.~~April 3, 2021.

Nine months ended
October 2, 2021 September 26, 2020
Guarantees and Bonds Liability (1)
Indemnification Assets (1)
Guarantees and Bonds Liability (1)
Indemnification Assets (1)
Balance at beginning of year
$ 1.8 $ — $ 2.0 $ 0.3
Reduction/Amortization for the period (2)
(1.7) — (0.3) (0.2)
Impact of changes in foreign currency rates (0.1) — 0.1 —
Balance at end of period $ — $ — $ 1.8 $ 0.1


		Three months ended
	April 3, 2021
		Guarantees and Bonds Liability (1)		Indemnification Assets (1)
Balance at beginning of year		$	1.8	$	—
Reduction/Amortization for the period (2)		(1.7)		—
Impact of changes in foreign currency rates		(0.1)		—
Balance at end of period		$	—	$	—

___________________________

(1)In connection with the sale, we estimated the fair value of the existing parent company guarantees and bank and surety bonds considering the probability of default by Balcke Dürr and an estimate of the amount we would be obligated to pay in the event of a default. Additionally, we estimated the fair value of the cash collateral provided by Balcke Dürr and guarantee provided by mutares AG based on the terms and conditions and relative risk associated with each of these securities (unobservable inputs - Level 3).

(2)We reduced the liability generally at the earlier of the completion of the related underlying project milestones or the expiration of the guarantees or bonds. We amortized the asset based on the expiration terms of each of the securities. We recorded the reduction of the liability and the amortization of the asset to “Other income, net.”

Contingent Consideration for Sensors & Software and ~~ECS~~ECS Acquisitions — - In connection with the ~~acquisitions~~acquisition of Sensors & Software, ~~and ECS,~~ the ~~respective~~ sellers ~~are~~were eligible for additional cash consideration of up to ~~$3.9 and~~ $~~16.8, respectively,~~4.0, with payment of such contingent consideration dependent upon the achievement of certain milestones. The estimated fair value of such contingent consideration totaled $1.3, and was paid during the quarter ended April 2, 2022.

In connection with the acquisition of ECS, the respective seller is ~~$0.7~~eligible for additional cash consideration of up to $16.4, with payment of such contingent consideration dependent upon the achievement of certain milestones. The estimated fair value of such contingent consideration was $0.6 and ~~$8.2, respectively,~~$1.5 at April 2, 2022 and December 31, 2021, respectively, with such amounts reflected as ~~liabilities~~a liability within ~~our~~the respective condensed consolidated balance sheets. We estimated the fair value of the contingent consideration for ~~these acquisitions~~this acquisition based on the probability of ~~Sensors & Software and~~ ECS achieving the applicable milestones.

Goodwill, Indefinite-Lived Intangible and Other Long-Lived Assets — Certain of our non-financial assets are subject to impairment analysis, including long-lived assets, indefinite-lived intangible assets and goodwill. We review the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually for indefinite-lived intangible assets and goodwill. Any resulting asset impairment would require that the instrument be recorded at its fair value.

Valuation ~~Methodologies~~Methods Used to Measure Fair Value on a Recurring Basis

Derivative Financial Instruments — Our financial derivative assets and liabilities include commodity contracts (until the sale of Transformer Solutions), interest rate swaps, and FX forward contracts, valued using valuation models based on observable market inputs such as forward rates, interest rates, our own credit risk and the credit risk of our counterparties, which comprise investment-grade financial institutions. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. We have not made any adjustments to the inputs obtained from the independent sources. Based on our continued ability to enter into forward contracts, we consider the markets for our fair value instruments active. We primarily use the income approach, which uses valuation techniques to convert future amounts to a single present amount.

As of ~~October~~April 2, ~~2021,~~2022, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities. Similarly, there has been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risks.

Equity Security — We estimate the fair value of an equity security that we hold utilizing a practical expedient under existing guidance, with such estimated fair value based on our ownership percentage applied to the net asset value of the investee as presented in the investee’s most recent audited financial statements. During the three ~~and nine~~ months ended

~~October~~ April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, we recorded ~~a gain~~gains of ~~$1.6~~$4.4 and ~~$9.0, respectively and $2.1 and $7.4,~~$5.2, respectively, to “Other income, net” to reflect an increase in the estimated fair value of the equity security. As of ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, the equity security had an estimated fair value of ~~$36.0~~$43.2 and ~~$27.0,~~$38.8, respectively.

Indebtedness and Other — The estimated fair value of our debt instruments as of ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020~~2021 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments. See Note 12 for further details.

3129

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (in millions)

FORWARD-LOOKING STATEMENTS

Some of the statements in this document and any documents incorporated by reference, including any statements as to operational and financial projections, constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our businesses’ or our industries’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Such statements may address our plans, our strategies, our prospects, changes and trends in our business and the markets in which we operate under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) or in other sections of this document. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential” or “continue” or the negative of those terms or other comparable terminology. Particular risks and uncertainties facing us include ~~economic, business~~the impact of the COVID-19 pandemic and governmental and other actions taken in response; the uncertainty of claims resolution with respect to the large power projects in South Africa, as well as claims with respect to asbestos, environmental and other contingent liabilities; cyclical changes and specific industry events in our markets; economic impacts from continued or escalating geopolitical tensions; changes in anticipated capital investment and maintenance expenditures by customers; availability, limitations or cost increases of raw materials and/or commodities that cannot be recovered in product pricing; the impact of competition on profit margins and our ability to maintain or increase market share; inadequate performance by third-party suppliers and subcontractors for outsourced products, components and services and other supply-chain risks; cyber-security risks; risks ~~stemming from~~with respect to the protection of intellectual property, including with respect to our ~~internal operations,~~digitalization initiatives; the impact of overruns, inflation and the incurrence of delays with respect to long-term fixed-price contracts; defects or errors in current or planned products; domestic economic, political, legal, accounting and business developments adversely affecting our business, including regulatory ~~risks, and~~changes; changes in worldwide economic conditions; uncertainties with respect to ~~costs~~our ability to identify acceptable acquisition targets; uncertainties surrounding timing and successful completion of ~~raw materials, pricing pressures, pension funding requirements, integration of~~any announced acquisition or disposition transactions, including with respect to integrating acquisitions and ~~changes in~~achieving cost savings or other benefits from acquisitions; the ~~economy, as well as the impacts~~impact of ~~the coronavirus disease (the “COVID-19 pandemic”)~~retained liabilities of disposed businesses; potential labor disputes; and ~~governmental responses to stem further outbreaks of the COVID-19 pandemic, which is further discussed below~~extreme weather conditions and innatural and other ~~sections of this document.~~disasters. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors, and forward-looking statements should not be relied upon as a prediction of actual results. In addition, management’s estimates of future operating results are based on our current complement of businesses, which is subject to change as management selects strategic markets.

All the forward-looking statements are qualified in their entirety by reference to the factors discussed under the heading “Risk Factors” in our ~~2020~~2021 Annual Report on Form 10-K, in any subsequent filing with the U.S. Securities and Exchange Commission, as well as in any documents incorporated by reference that describe risks, uncertainties and other factors that could cause results to differ materially from those projected in these forward-looking statements. We caution you that these risk factors may not be exhaustive. We operate in a continually changing business environment and frequently enter into new businesses and product lines. We cannot predict these new risk factors, and we cannot assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, you should not rely on forward-looking statements as a prediction of actual results. We disclaim any responsibility to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.

COVID-19 PANDEMIC, SUPPLY CHAIN DISRUPTIONS, LABOR SHORTAGES, AND ~~OTHER ECONOMIC FACTORS~~COST INCREASES

The impact of the COVID-19 pandemic ~~had an adverse impact~~ on our ~~consolidated~~operating results was relatively minimal throughout 2021. However, during January 2022, there was an increase in COVID-19 cases at certain of ~~operations~~our manufacturing facilities, which resulted in a high-level of absenteeism at such facilities during the ~~first half of 2020, with diminishing impacts during~~month. In addition, since the second half ~~of 2020 and during the first nine months of 2021. During the third quarter~~ of 2021, certain of our businesses ~~began to experience disruptions in the~~have experienced supply chain ~~which has~~disruptions, as well as labor shortages, while all of our businesses have experienced increases in raw material, component, and transportation costs. The combination of these matters negatively impacted ~~their production~~our operating results during the first quarter of ~~goods and, thus, resulted in~~2022, as we experienced lower absorption of manufacturing costs and, ~~delays in shipments to customers during the quarter. Our businesses are also experiencing increased costs for certain components, commodities, and services and,~~ in some cases, ~~labor shortages.~~the negative impact of cost increases on fixed-price customer contracts. We are ~~taking actions to manage any additional costs~~actively managing these matters and ~~other~~we expect the potential impacts ~~of these matters. We~~ will ~~continue to assess the actual and expected impacts and the need for further actions.~~diminish as we progress through 2022.

POTENTIAL IMPACTS OF RUSSIA/UKRAINE CONFLICT

The Russia/Ukraine conflict did not have a significant impact on our operating results during the three months ended April 2, 2022. We are monitoring the availability of certain raw materials that are supplied by these countries. However, at this time, we do not expect the potential impact to be material to our operating results.

OTHER SIGNIFICANT MATTERS

•Acquisitions

◦~~ULC Robotics (“ULC”)~~

▪~~Acquired on September 2, 2020 for cash proceeds of $89.2, net of cash acquired of $4.0.~~

▪~~Revenues for the twelve months prior to the date of acquisition totaled approximately $40.0.~~

▪~~Post-acquisition operating results are included within the Detection and Measurement reportable segment.~~

▪~~The seller was eligible for additional cash consideration of up to $45.0, upon achievement of certain operating and financial performance milestones.~~

▪~~Contingent Consideration~~

•~~During the third quarter of 2021, we concluded that the operating and financial milestones associated with the contingent consideration would not be achieved.~~

•~~As a result, we reversed the related liability of $24.3, with the offset~~ ~~to “Other operating (income) expense.”~~

•~~See Note 1 to our condensed consolidated financial statements for additional details.~~

▪~~Indefinite-Lived Intangible Assets and Goodwill~~

•We also concluded that the lack of achievement of the above milestones, along with lower than anticipated future cash flows, are indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill.

•~~As such, we tested ULC’s indefinite-lived intangible assets and goodwill for impairment during the quarter.~~

•~~Based on such testing, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business.~~

•~~As a result, we recorded an impairment charge of $24.3 to “Other operating (income) expense,” with $23.3 related to goodwill and the remainder to trademarks.~~

•~~See Note 9 to our condensed consolidated financial statements for additional details.~~

◦~~Sensors & Software, Inc. (“Sensors & Software”)~~

▪~~Acquired on November 11, 2020 for cash proceeds of $15.5, net of cash acquired of $0.3.~~

▪~~Revenues for the twelve months prior to the date of acquisition totaled approximately $7.0.~~

▪~~Post-acquisition operating results are included within the Detection and Measurement reportable segment.~~

▪~~The seller is eligible for additional cash consideration of up to $3.9, upon achievement of certain financial performance milestones.~~

◦Sealite Pty Ltd and Affiliated Entities (“Sealite”)

▪Acquired on April 19, 2021 for cash ~~proceeds~~consideration of $80.3, net of cash acquired of $2.3.

▪~~Revenues for the twelve months prior to the date of acquisition totaled approximately $33.0~~.

▪Post-acquisition operating results of Sealite are included within ~~the~~our Detection and Measurement reportable segment.

◦Enterprise Control Systems Ltd (“ECS”)

▪Acquired on August 2, 2021 for cash ~~proceeds~~consideration of $39.4, net of cash acquired of $5.1.

▪~~Revenues for the twelve months prior to the date of acquisition totaled approximately $10.9~~.

▪~~Post-acquisition operating results are included within the Detection and Measurement reportable segment.~~

▪The seller is eligible for additional cash consideration of up to ~~$16.8~~,$16.4, upon achievement of certain financial performance milestones.

•The estimated fair value of such contingent consideration was $8.2 as of the date of the acquisition.

•During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of certain large orders, resulting in a reduction of the estimated fair value/liability of $6.7.

•During the first quarter of 2022, we further reduced the estimated fair value/liability by $0.9, with such amount recorded to “Other operating income” during the quarter.

•As of April 2, 2022, the estimated fair value/liability related to the contingent consideration was $0.6.

▪Post-acquisition operating results of ECS are included within our Detection and Measurement reportable segment.

◦Cincinnati Fan & Ventilator Co., Inc. (“Cincinnati Fan”)

▪Acquired on December 15, 2021 for cash consideration of $145.2, net of cash acquired of $2.5.

▪Post-acquisition operating results of Cincinnati Fan are included within our HVAC reportable segment.

◦International Tower Lighting, LLC (“ITL”)

▪Acquired on March 31, 2022 for cash consideration of $41.8, net of cash acquired of $1.1.

▪Post-acquisition operating results of ITL are included within our Detection and Measurement reportable segment.

•Disposition of SPX Transformer Solutions, Inc. (“Transformer Solutions”)

◦~~On June 8, 2021, we signed a definitive agreement to sell Transformer Solutions for cash proceeds of $645.0.~~

◦~~Transformer Solutions has been included in discontinued operations for all periods presented.~~

◦On October 1, 2021, we completed the sale for net cash proceeds of $620.6 and recorded a gain of ~~$357.7~~$382.2 to “Gain (loss) on disposition of discontinued operations, net of tax.”

◦During the first quarter of 2022, we paid $13.9 to the buyer of Transformer Solutions related primarily to the settlement of the final working capital balances of the business.

•~~Change~~Transfer of Postretirement Life Insurance Benefit Obligation

◦On February 17, 2022, we transferred our obligation for life insurance benefits under our postretirement benefit plans to an insurance carrier for total cash consideration of $10.0.

◦We paid $9.0 at the time of transfer and expect to pay the remainder in ~~Segment Reporting Structure~~the second quarter of 2022.

◦In connection with the ~~disposition of Transformer Solutions and its classification as a discontinued operation, we have eliminated the Engineered Solutions reportable segment.~~

◦~~The remaining operations of the former Engineered Solutions reportable segment have been reflected within our HVAC reportable segment for all periods presented.~~

•~~Large Power Projects in South Africa~~

◦~~On February 22, 2021 and April 28, 2021, our South African subsidiary, DBT, received favorable rulings from dispute adjudication panels.~~transfer, we:

▪~~In connection with the rulings, DBT received South African Rand~~ ~~126.6~~ ~~(or $8.6 at the time~~Recorded a net charge of ~~payment~~)$0.3 within our first quarter 2022 operating results; and ~~South African Rand~~ ~~82.0~~ ~~(or $6.0 at the time of payment), respectively.~~

▪AsHave eliminated the ~~rulings are subject to further arbitration, such amounts have not been reflected in our condensed consolidated statements of operations.~~

▪~~On July 5,~~ ~~2021, DBT received notice from MHI of its intent to seek final~~(i) third-party cost and ~~binding arbitration in the Kusile matter.~~

◦In ~~May 2021, and in connection with certain claims made against DBT, MHI made a demand and received payment of South African Rand~~ ~~178.7 (or $12.5 at the time of payment)~~ ~~on bonds issued by a bank.~~

▪~~Under the terms of the bonds and our senior credit agreement, we were required to fund the above payment.~~

▪~~DBT denies liability for these claims and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand~~ ~~178.7~~.

▪~~As such, the amount has been reflected as a non-current asset in our condensed consolidated balance sheet as of October 2, 2021.~~

◦~~On June 4, 2021, DBT received a revised version of an interim claim from MHI that was provided on February 26, 2019. DBT has numerous defenses and, thus, does not believe it has a probable liability~~(ii) internal resource requirements associated with administering these ~~claimed damages.~~

benefits.

◦See Note 1511 to our condensed consolidated financial statements for additional details.

•~~Cash Receipts in the Third Quarter of 2021~~

◦~~Received federal income tax refunds of $22.4.~~

◦~~Received insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter.~~

OVERVIEW OF OPERATING RESULTS

Revenues for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 totaled ~~$285.8 and $870.4, respectively,~~$307.1, compared to ~~$268.3 and $783.1~~$287.2 during the respective ~~periods~~period in ~~2020.~~2021. The increase in revenues during the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, compared to the respective prior-year ~~periods,~~period, was due primarily to the impact of the ~~ULC, Sensors & Software,~~Cincinnati Fan, Sealite, and ECS acquisitions, ~~and an increase~~partially offset by a decrease in organic ~~revenue~~.revenue. The ~~increase~~decrease in organic revenue was due primarily to ~~higher sales of heating and underground pipe and locator products, partially offset by~~ lower sales of ~~bus fare collection systems. During the first half of 2020, sales of heating and underground pipe and locator~~communication technologies products, ~~were impacted negatively by the COVID-19 pandemic. The decline in sales of bus fare collection systems was due primarily to the timing of large projects,~~ as the extent of such ~~projects~~sales can fluctuate materially from period to period.

During the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, we generated operating income of ~~$11.8 and $44.7, respectively,~~$11.4, compared to ~~$20.4 and $54.0~~$25.0 for the respective ~~periods~~period in ~~2020.~~2021. The decrease in operating income during the three months ended ~~October~~April 2, ~~2021, compared to the respective prior-year period,~~2022 was due primarily to

~~additional~~

a decrease in profitability for both our HVAC and Detection and Measurement reportable segments. The decrease in profitability for our HVAC reportable segment was due primarily to an increase in amortization expense ~~and one-time costs (e.g., charges for inventory adjusted to fair value at~~of $4.7 associated with the acquisition ~~date) associated with recent acquisitions~~of Cincinnati Fan and lower absorption of manufacturing costs ~~at certain~~resulting from (i) a high-level of ~~our businesses due to disruptions~~absenteeism during January 2022 caused by an increase in ~~their~~COVID-19 cases, (ii) supply ~~chain.~~chain delays, and (iii) labor shortages. The decrease in ~~operating income during the nine months ended October 2, 2021, compared to the respective prior-year period,~~profitability for our Detection and Measurement reportable segment was due primarily to ~~higher corporate expense related~~ ~~to increased investments in continuous improvement and other strategic initiatives and an increase in incentive compensation expense.~~lower sales of communication technologies products, as these sales typically generate high profit margins.

Cash flows ~~from~~used in operating activities associated with continuing operations totaled ~~$94.0~~$48.6 for the ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, compared to cash flows from operating activities of ~~$11.0~~$23.1 during the ~~nine~~three months ended ~~September 26, 2020.~~April 3, 2021. The ~~increase~~decrease in cash flows from operating activities was due primarily to ~~improved~~(i) decreases in cash flows ~~within~~at certain of our ~~heating and underground pipe and locator~~project-related businesses ~~associated with improved profitability and decreases in working capital~~,during the first quarter of 2022, as ~~well as third quarter 2021~~ cash receipts ~~related~~for these project-related businesses are often subject to ~~federal tax refunds~~contract milestones that can impact the timing of ~~$22.4~~cash flows from period to period, (ii) elevated purchases of raw materials and ~~insurance proceeds~~components during the first quarter of ~~$15.0~~2022 in order to manage the potential risk associated with the ~~settlement~~current supply chain environment, and (iii) a cash payment of $9.0 during the first quarter of 2022 in connection with the transfer of our postretirement life insurance benefit obligation to an ~~asbestos~~ insurance ~~coverage matter.~~carrier (see Note 11 to our condensed consolidated financial statements for additional details).

RESULTS OF CONTINUING OPERATIONS

The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our ~~2020~~2021 Annual Report on Form 10-K. Interim results are not necessarily indicative of results for the full year. We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length. Our fourth quarter ends on December 31. The interim closing dates for the first, second and third quarters of ~~2021~~2022 are April 2, July 2 and October 1, compared to the respective April 3, July 3, and October 2, ~~compared to the respective March 28, June 27 and September 26, 2020~~2021 dates. We had ~~five more days~~one less day in the first quarter of ~~2021~~2022 and will have ~~six fewer days~~one more day in the fourth quarter of ~~2021~~2022 than in the respective ~~2020~~2021 periods. It is not practicable to estimate the impact of the five additional days on our consolidated operating results for the nine months ended October 2, 2021, when compared to the consolidated operating results for the 2020 respective period.

Cyclicality of End Markets, Seasonality and Competition — The financial results of our businesses closely follow changes in the industries in which they operate and end markets in which they serve. In addition, certain of our businesses have seasonal fluctuations. For example, our heating businesses tend to be stronger in the third and fourth quarters, as customer buying habits are driven largely by seasonal weather patterns. In aggregate, our businesses tend to be stronger in the second half of the year.

Although our businesses operate in highly competitive markets, our competitive position cannot be determined accurately in the aggregate or by segment since none of our competitors offer all the same product lines or serve all the same markets as we do. In addition, specific reliable comparative figures are not available for many of our competitors. In most product groups, competition comes from numerous concerns, both large and small. The principal methods of competition are service, product performance, technical innovation and price. These methods vary with the type of product sold. We believe we compete effectively on the basis of each of these factors.

Non-GAAP Measures — Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations ~~acquisitions/divestiture~~s, and ~~the impact of a reduction in revenue during the second quarter of 2021 associated with the settlement of claims on a legacy dry cooling project.~~ acquisitions/divestitures. We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented as, when considered in conjunction with our revenues, it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors we use in internal evaluations of the overall performance of our business. This metric, however, is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”), should not be considered a substitute for net revenue growth (decline) as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.

The following table provides selected financial information for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020, respectively,~~April 3, 2021, including the reconciliation of organic revenue decrease ~~increase~~ to the net revenue ~~increase~~: increase:


		Three months ended							Nine months ended								Three months ended
		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change		April 2, 2022			April 3, 2021			% Change
Revenues	Revenues	$	285.8		$	268.3		6.5	$	870.4		$	783.1		11.1	Revenues	$	307.1		$	287.2		6.9
Gross profit	Gross profit	94.0			91.7			2.5	300.0			269.7			11.2	Gross profit	104.0			104.4			(0.4)
% of revenues	% of revenues	32.9		%	34.2		%		34.5		%	34.4		%		% of revenues	33.9		%	36.4		%
Selling, general and administrative expense	Selling, general and administrative expense	76.2			67.7			12.6	234.7			206.2			13.8	Selling, general and administrative expense	84.2			75.2			12.0
% of revenues	% of revenues	26.7		%	25.2		%		27.0		%	26.3		%		% of revenues	27.4		%	26.2		%
Intangible amortization	Intangible amortization	5.5			3.3			66.7	16.0			8.3			92.8	Intangible amortization	9.3			4.0			132.5
Special charges, net	Special charges, net	0.5			0.3			66.7	1.9			1.6			18.8	Special charges, net	—			0.2			*
Other operating (income) expense		—			—			*	2.7			(0.4)			*
Other operating income																Other operating income	(0.9)			—			*

Other income, net	Other income, net	2.9			2.7			7.4	17.2			8.5			102.4	Other income, net	6.5			7.4			(12.2)
Interest expense, net	Interest expense, net	(3.3)			(4.4)			(25.0)	(10.7)			(13.8)			(22.5)	Interest expense, net	(2.3)			(4.1)			(43.9)

Income from continuing operations before income taxes	Income from continuing operations before income taxes	11.4			18.7			(39.0)	51.2			48.7			5.1	Income from continuing operations before income taxes	15.6			28.3			(44.9)
Income tax provision	Income tax provision	(3.7)			(3.1)			19.4	(9.8)			(8.4)			16.7	Income tax provision	(2.6)			(5.3)			(50.9)
Income from continuing operations	Income from continuing operations	7.7			15.6			(50.6)	41.4			40.3			2.7	Income from continuing operations	13.0			23.0			(43.5)

Components of revenue increase:	Components of revenue increase:															Components of revenue increase:
Organic	Organic							0.7							5.4	Organic							(2.5)
Foreign currency	Foreign currency							0.7							1.0	Foreign currency							(0.5)
Acquisitions	Acquisitions							5.1							5.3	Acquisitions							9.9
Settlement of legacy dry cooling contract								—							(0.6)

Net revenue increase	Net revenue increase							6.5							11.1	Net revenue increase							6.9

_________________________________

* Not meaningful for comparison purposes.

Revenues — For the three months ended ~~October~~April 2, ~~2021,~~2022, the increase in revenues, compared to the respective period in ~~2020,~~2021, was due primarily to the impact of the acquisitions of Cincinnati Fan, Sealite, ~~ULC, Sensors and Software,~~ and ECS, and, to a lesser extent, an increase in organic revenue and the favorable impact of foreign currency exchange rates. The increase in organic revenue was due to higher sales of cooling products in the Americas region, as well as higher sales of underground pipe and locator, communication technologies, and obstruction lighting products. These increases in organic revenue were partially offset by ~~lower sales of cooling products in the EMEA region and bus fare collection systems.~~ ~~For the nine months ended October 2, 2021, the increase in revenues, compared to the respective period in 2020, was primarily due to an increase~~a decrease in organic ~~revenue and the impact of the acquisitions noted above.~~revenue. The ~~increase~~decrease in organic revenue was due primarily to ~~higher sales of heating and underground pipe and locator products, partially offset by~~ lower sales of ~~bus fare collection systems. During the first half of~~

~~2020, sales of heating and underground pipe and locator~~communication technologies products, ~~were impacted negatively by the COVID-19 pandemic. The decline in sales of bus fare collection systems was due primarily to the timing of large projects,~~ as the extent of such ~~projects~~sales can fluctuate materially from ~~period-to-period.~~period to period.

See “Results of Reportable ~~Segments and Other Operating Segment”~~Segments” for additional details.

Gross Profit — For the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, the ~~increase~~decrease in gross profit ~~compared to the respective periods in 2020, was due primarily to the increase in revenues noted above.~~ ~~The decrease in~~and gross profit as a percentage of revenues, ~~during the three months ended October 2, 2021,~~ compared to the respective period in ~~2020,~~2021, was due primarily to lower absorption of manufacturing costs atwithin our HVAC reportable segment resulting from (i) a high-level of absenteeism during January 2022 caused by an increase of COVID-19 cases, (ii) supply chain delays, and (iii) labor shortages. In addition, gross profit and gross profit as a percentage of revenues were negatively impacted by the ~~HVAC segment’s heating businesses~~lower sales of communication technologies products during the three months ended April 2, 2022, as these sales typically generate high profit margins. The impact of the above items on gross profit, for the three months ended April 2, 2022, was offset partially by the incremental gross profit associated with ~~disruptions in~~ the ~~supply chain.~~above acquisitions.

Selling, General and Administrative (“SG&A”) Expense — For the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, the increase inin SG&A expense, compared to the respective ~~periods~~period in ~~2020,~~2021, was due primarily to the incremental SG&A resulting from the acquisitions noted above.~~In addition, SG&A expense during the nine months ended October 2, 2021 was impacted by an increase in corporate expense associated with~~ ~~additional investments in connection with continuous improvement and other strategic initiatives and an increase in incentive compensation.~~

Intangible Amortization — For the three ~~and nine~~ months ended ~~October~~April 2, ~~2021, the~~2022, the increase inin intangible amortization, compared to the respective ~~periods~~period in ~~2020,~~2021, was due to the incremental amortization ~~of $2.2 and $7.8, respectively,~~ related to the acquisitions noted above.

Special Charges, net — Special charges, net, related primarily to restructuring initiatives to consolidate manufacturing, distribution, sales and administrative facilities, reduce workforce and rationalize certain product lines. See Note 7 to our condensed consolidated financial statements for the details of actions taken in the first ~~nine~~three months of ~~2021 and 2020.~~2021.

Other Operating ~~(Income) Expense~~Income — ~~Other operating expense for the nine months ended October 2, 2021 related to revisions to recorded assets for asbestos-related claims.~~ Other operating income for the ~~nine~~three months ended ~~September 26, 2020~~April 2, 2022 related to ~~revisions to estimates of certain liabilities retained~~a reduction in ~~connection~~the fair value / liability associated with the ~~2016 sale of~~contingent consideration related to the ~~dry cooling business.~~ECS acquisition.

Other Income, net — Other income, net, for the three months ended ~~October~~April 2, ~~2021~~2022 was composed primarily of a gain of ~~$1.6~~$4.4 related to a change in the estimated fair value of an equity security that we hold, income associated with a ~~gain~~transition services agreement of ~~$0.4 related to the sale of a trading security, and~~ $0.9, pension and postretirement income of $$0.8, and income derived from company owned life insurance policies of $0.7. ~~1.6, partially offset by foreign currency transaction losses of~~ $~~0.8.~~

Other income, net, for the three months ended ~~September 26, 2020~~April 3, 2021 was composed primarily of a gain of ~~$2.1~~$5.2 related to a change in the estimated fair value of an equity security that we hold, ~~and pension and postretirement~~ income of ~~$0.9, partially offset by foreign currency transaction losses of $0.3.~~

Other income, net, for the nine months ended October 2, 2021 was composed primarily of a gain of $9.0 related to a change in the estimated fair value of an equity that security we hold, pension and postretirement income of $~~4.8,~~ ~~income derived from company-owned life insurance policies of $2.7, and income of $1.7~~$1.7 related to a reduction of ~~the liability associated with~~ the parent company guarantees and bank surety bonds liability that were outstanding in connection with the 2016 sale of Balcke Dürr, and pension and postretirement income of $1.6, partially offset by foreign currency transaction losses of ~~$1.1.~~$0.7.

Other income, net, for the nine months ended September 26, 2020 was composed primarily of a gain of $7.4 related to a change in the estimated fair value of an equity security that we hold and pension and postretirement income of $2.9.

Interest Expense, net — Interest expense, net, includes both interest expense and interest income. ~~The~~The decrease inin interest expense, net, during the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, compared to the respective ~~periods~~period in ~~2020,~~2021, was the result of a lower average effective interest rate and lower average debt balances during ~~2021.~~the 2022 period.

Income Tax Provision — For the three months ended ~~October~~April 2, ~~2021,~~2022, we recorded an income tax ~~provision~~provision of ~~$3.7~~$2.6 on ~~$11.4~~$15.6 of pre-tax income from continuing operations, resulting in an effective rate of ~~32.5%~~16.7%. This compares toto an income tax provision for the three months ended ~~September 26, 2020~~April 3, 2021 of ~~$3.1~~ $5.3 on ~~$18.7~~$28.3 of pre-tax income from continuing operations, resulting in an effective rate of ~~16.6%~~18.7%. The most significant item impacting the income tax provision for the ~~third quarter~~first quarters of 2022 and 2021 was $0.7 ~~of expense related to the revaluation of certain deferred tax liabilities due to an enacted tax rate increase. The most significant item impacting the income tax provision for the third quarter of 2020 was $1.2~~ ~~of tax benefits related to our U.S. tax credits~~ and ~~incentives.~~

RESULTS OF REPORTABLE SEGMENTS ~~AND OTHER OPERATING SEGMENT~~

The following information should be read in conjunction with our condensed consolidated financial statements and related notes. These results exclude the operating results of discontinued operations for all periods presented. See Note 6 to our condensed consolidated financial statements for a description of our reportable ~~segments and other operating segment.~~segments.

Non-GAAP Measures — Throughout the following discussion of segment results, we use “organic revenue” growth (decline) to facilitate explanation of the operating performance of our segments. Organic revenue growth (decline) is a non-GAAP financial measure and is not a substitute for revenue growth (decline). Refer to the explanation of this measure and purpose of use by management under “Results of Continuing Operations—Non-GAAP Measures.”

HVAC Reportable Segment


		Three months ended							Nine months ended								Three months ended
		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change		April 2, 2022			April 3, 2021			% Change
Revenues	Revenues	$	179.3		$	182.6		(1.8)	$	540.3		$	510.6		5.8	Revenues	$	193.1		$	175.6		10.0
Income	Income	21.4			26.8			(20.1)	69.1			64.1			7.8	Income	15.2			22.3			(31.8)
% of revenues	% of revenues	11.9		%	14.7		%		12.8		%	12.6		%		% of revenues	7.9		%	12.7		%
Components of revenue increase (decrease):
Components of revenue increase:																Components of revenue increase:
Organic	Organic							(2.4)							6.0	Organic							0.4
Foreign currency	Foreign currency							0.6							0.7	Foreign currency							—
Settlement of legacy dry cooling contract								—							(0.9)
Net revenue increase (decrease)								(1.8)							5.8
Acquisition																Acquisition							9.6
Net revenue increase																Net revenue increase							10.0

Revenues — ForFor the three months ended ~~October~~April 2, ~~2021, the decrease in revenues, compared to the respective period in 2020, was due to~~ a net decline in organic revenue related primarily to the segment’s cooling business in the EMEA region, as this business had some large projects that contributed significant revenue to the segment’s results in the third quarter of 2020. Despite a significant increase in orders during the third quarter of 2021, organic revenue for the segment’s heating businesses was relatively flat during the quarter as production and shipments for the businesses were negatively impacted by disruptions in the supply chain.

~~For the nine months ended October 2, 2021,~~2022, the increase in revenues, compared to the respective period in ~~2020,~~2021, was due primarily to anthe impact of the acquisition of Cincinnati Fan, and to a much lesser extent, organic revenue growth. The increase in organic revenue ~~for the segment’s heating businesses. Sales~~was due to higher sales of ~~heating~~boiler products during the ~~first half of 2020 were impacted negatively by (i) a warmer than normal winter and (ii) the COVID-19 pandemic.~~ ~~In addition, and as indicated above, sales for the segment’s heating businesses during the third~~ quarter, ~~of 2021 were negatively impacted by disruptions in the supply chain.~~resulting primarily from price increases.

Income — For the three months ended ~~October~~April 2, ~~2021,~~2022, the decrease in income and margin, compared to the respective period in ~~2020,~~2021, was due primarily to amortization expense of $4.7 resulting from the ~~revenue decline noted above~~Cincinnati Fan acquisition and ~~a decline in~~lower absorption of manufacturing ~~cost absorption at the segment’s heating businesses~~costs associated with ~~disruptions in the supply chain.~~

~~For the nine months ended October 2, 2021, the increase in income and margin, compared~~(i) absenteeism during January 2022 related to the ~~respective period in 2020, was due primarily to~~impact of the ~~increase in revenues noted above.~~COVID-19 pandemic, (ii) supply chain delays, and (iii) labor shortages.

Backlog — The segment had backlog of ~~$204.0~~$263.4 and $~~182.6~~168.4 as of ~~October~~April 2, 2022 and April 3, 2021, ~~and September 26, 2020,~~ respectively. Backlog associated with Cincinnati Fan totaled $30.0 as of April 2, 2022.

3734

Detection and Measurement Reportable Segment


		Three months ended							Nine months ended								Three months ended
		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change		April 2, 2022			April 3, 2021			% Change
Revenues	Revenues	$	106.4		$	85.2		24.9	$	329.2		$	269.2		22.3	Revenues	$	114.0		$	111.6		2.2
Income	Income	9.9			14.2			(30.3)	41.3			48.4			(14.7)	Income	15.0			20.0			(25.0)
% of revenues	% of revenues	9.3		%	16.7		%		12.5		%	18.0		%		% of revenues	13.2		%	17.9		%
Components of revenue increase:	Components of revenue increase:															Components of revenue increase:
Organic	Organic							7.6							5.2	Organic							(7.0)
Foreign currency	Foreign currency							1.1							1.6	Foreign currency							(1.1)
Acquisitions	Acquisitions							16.2							15.5	Acquisitions							10.3
Net revenue increase	Net revenue increase							24.9							22.3	Net revenue increase							2.2

Revenues — For the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, the increase in revenues, compared to the respective ~~periods~~period in ~~2020,~~2021, was due primarily to the impact of the acquisitions of Sealite and ECS, ~~Sealite, ULC, and Sensors and Software and, to~~partially offset by a ~~lesser extent,~~decrease in organic ~~revenue growth and the impact foreign currency exchange rates.~~revenue. The ~~increase~~decrease in organic revenue was due primarily ~~the result of higher sales of underground pipe and locator products and,~~ to ~~a lesser extent, higher~~lower sales of communication technologies ~~and obstruction lighting products.These increases in organic revenue were offset partially by~~ ~~lower sales of bus fare collection systems.~~ ~~During~~products, as the first half of 2020, sales of underground pipe and locator products were impacted negatively by the COVID-19 pandemic, while the decline in in sales of bus fare collection systems in the current-year period was due primarily to the timing of large projects, as extent of such ~~projects~~sales can fluctuate materially from period to period.

Income — For the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, the decrease in income and margin, compared to the respective ~~periods~~period in ~~2020,~~2021, was due primarily to ~~increased amortization expense,~~lower sales of communication technologies products, as ~~well as~~ inventory step-up charges ($0.7 and $2.3 during the three and nine months ended October 2, 2021), associated with the acquisitions noted above, partially offset by the income associated with the increases in revenue noted above.these sales typically generate high profit margins.

Backlog — The segment had backlog of ~~$176.5~~$153.1 and $~~89.5~~109.0 as of ~~October~~April 2, 2022 and April 3, 2021, ~~and September 26, 2020,~~ respectively. ~~Aggregate backlog related to Sensors and Software,~~Backlog associated with Sealite and ECS ~~businesses acquired after September 26, 2020,~~ totaled ~~$50.2~~$46.8 as of ~~October~~April 2,~~, 2021.~~

~~Other~~

Three months ended Nine months ended
October 2, 2021 September 26, 2020 % Change October 2, 2021 September 26, 2020 % Change
Revenues $ 0.1 $ 0.5 * $ 0.9 $ 3.3 *
Loss (4.1) (5.3) * (12.6) (13.9) *
% of revenues * * * *
~~_________________________________~~

* Not meaningful for comparison purposes.

~~Revenues~~ — For the three and nine months ended October 2, 2021, the decrease in revenues, compared to the respective periods in 2020, was due to lower sales related to the large power projects in South Africa, as these projects are in the latter stages of completion. 2022.

~~Loss~~ — For the three and nine months ended October 2, 2021, the loss decreased, compared to the respective periods in 2020, as a result of the wind-down activities noted above for the large power projects in South Africa. The losses for all periods presented relate primarily to legal costs associated with the claims matters for the large power projects in South Africa.

~~Backlog~~ ~~— The operating segment had a backlog of~~ ~~$2.9~~ ~~and~~ ~~$3.9~~ ~~as of October 2, 2021 and September 26, 2020, respectively.~~

CORPORATE AND OTHER EXPENSES


		Three months ended							Nine months ended								Three months ended
		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change		April 2, 2022			April 3, 2021			% Change
Total consolidated revenues	Total consolidated revenues	$	285.8		$	268.3		6.5	$	870.4		$	783.1		11.1	Total consolidated revenues	$	307.1		$	287.2		6.9
Corporate expense	Corporate expense	11.5			11.8			(2.5)	39.0			33.8			15.4	Corporate expense	16.6			14.4			15.3
% of revenues	% of revenues	4.0		%	4.4		%		4.5		%	4.3		%		% of revenues	5.4		%	5.0		%
Long-term incentive compensation expense	Long-term incentive compensation expense	3.4			3.2			6.3	9.5			9.6			(1.0)	Long-term incentive compensation expense	3.1			2.7			14.8

Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters. The increase in corporate expense during the ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, compared to the respective ~~periods~~period in ~~2020,~~2021, was due primarily to increased investments in ~~continuous improvement and other~~various strategic initiatives and an increase in travel expense, partially offset by lower incentive compensation expense.

Long-Term Incentive Compensation Expense — Long-term incentive compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes. For the three months ended ~~October~~April 2, ~~2021,~~2022, the increase in long-term incentive compensation expense, compared to the respective period in ~~2020,~~2021, was due primarily to a ~~higher amount award forfeitures during the 2020 period. The decrease~~reduction in long-term incentive compensation during the ~~nine~~three months ended ~~October 2,~~April 3, 2021 ~~compared to the respective period in 2020, was due to~~associated with revisions to/finalization of the liability associated with the 2018 long-term cash awards that vested during ~~the first quarter of 2021, partially offset by the impact of a lower amount of award forfeitures during 2021.~~such period. See Note 14 to our condensed consolidated financial statements for additional details.

LIQUIDITY AND FINANCIAL CONDITION

Listed below are the cash flows from (used in) operating, investing, and financing activities and discontinued operations, as well as the net change in cash and equivalents for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020.~~April 3, 2021.

Nine months ended
October 2, 2021 September 26, 2020
Continuing operations:
Cash flows from operating activities $ 94.0 $ 11.0
Cash flows used in investing activities (119.3) (99.3)
Cash flows from (used in) financing activities (166.8) 64.5
Cash flows from discontinued operations 677.7 42.9
Change in cash and equivalents due to changes in foreign currency exchange rates 6.2 (3.1)
Net change in cash and equivalents $ 491.8 $ 16.0


	Three months ended
	April 2, 2022		April 3, 2021
Continuing operations:
Cash flows from (used in) operating activities	$	(48.6)	$	23.1
Cash flows from (used in) investing activities	(43.9)		1.3
Cash flows used in financing activities	(11.0)		(25.2)
Cash flows from (used in) discontinued operations	(22.9)		36.3
Change in cash and equivalents due to changes in foreign currency exchange rates	(0.1)		3.1
Net change in cash and equivalents	$	(126.5)	$	38.6

Operating Activities — The ~~increase in~~decrease in cash flows from operating activities during the ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, compared to the respective period in ~~2020,~~2021, was due primarily to ~~improved~~(i) decreases in cash flows ~~within~~at certain of our ~~underground pipe and locator and heating~~project-related businesses ~~associated with improved profitability and decreases in working capital,~~during the first quarter of 2022, as ~~well as third quarter 2021~~ cash receipts ~~related~~for these project-related businesses are often subject to ~~federal tax refunds~~contract milestones that can impact the timing of ~~$22.4~~cash flows from period to period, (ii) elevated purchases of raw materials and ~~insurance proceeds~~components during the first quarter of ~~$15.0~~2022 in order to manage the potential risk associated with the ~~settlement~~current supply chain environment, and (iii) a cash payment of $9.0 during the first quarter of 2022 in connection with the transfer of our postretirement life insurance benefit obligation to an ~~asbestos~~ insurance ~~coverage matter.~~carrier (see Note 11 to our condensed consolidated financial statements for additional details).

Investing Activities — Cash ~~flows~~flows used in investing activities for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 were comprised ~~primarily~~ of cash utilized in the ~~acquisitions~~acquisition of ~~Sealite and ECS~~ITL of ~~$80.3 and $39.4, respectively,~~$41.8 and capital expenditures of ~~$7.5, partially offset by proceeds from company-owned insurance policies of $8.2.~~

$2.1. Cash flows ~~used in~~from investing activities for the ~~nine~~three months ended ~~September 26, 2020~~April 3, 2021 were comprised of ~~cash utilized for the acquisition of ULC of $87.9 and capital expenditures of $12.5, partially offset by~~ proceeds from company-owned life insurance policies of ~~$1.1.~~$3.5, partially offset by capital expenditures of $2.2.

Financing Activities — Cash flows used in financing activities for the ~~nine~~three months ended ~~October~~April 2, 2022 were comprised of minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $6.4, net repayments under our various debt instruments of $3.3, and contingent consideration paid of $1.3 related to a prior acquisition.

Cash used in financing activities for the three months ended April 3, 2021 were comprised of net repayments under our various debt instruments of ~~$162.8~~$21.4 and minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of ~~$4.0.~~

Cash flows from financing activities for the nine months ended September 26, 2020 were comprised of net borrowings under our various debt instruments of $67.8, with such net borrowings resulting primarily from borrowings utilized to fund the ULC acquisition. The impact of these net borrowings was partially offset by (i) minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $1.8 and (ii) $1.5 related to contingent consideration paid in connection with the SGS acquisition.$3.8.

Discontinued Operations — Cash flows used in discontinued operations for the three months ended April 2, 2022 relate primarily to (i) disbursements for liabilities retained in connection with dispositions and (ii) a payment of $13.9 to the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business.

Cash flows from discontinued operations for the ~~nine~~three months ended ~~October 2,~~April 3, 2021 ~~include proceeds received~~related primarily to net cash generated from the operations of Transformer Solutions, partially offset by disbursements for liabilities retained in connection with ~~the sale of Transformers Solutions of $620.6.~~dispositions. In addition, cash flows from discontinued operations ~~for~~during the ~~nine months ended October 2,~~first quarter of 2021 ~~and September 26, 2020 include~~included cash ~~flows from operations generated by Transformers Solutions, partially offset by cash disbursements~~receipts of $15.3 related to ~~liabilities retained~~claims matters in ~~connection with dispositions.~~South Africa.

Change in Cash and Equivalents due to Changes in Foreign Currency Exchange Rates — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during the first ~~nine~~three months of ~~2021~~2022 and ~~2020.~~2021.

Borrowings and Availability

Borrowings — The following summarizes our debt activity (both current and non-current) for the ~~nine~~three months ended ~~October~~April 2, ~~2021.~~2022.


		December 31, 2020		Borrowings		Repayments		Other(5)		October 2, 2021			December 31, 2021		Borrowings		Repayments		Other		April 2, 2022
Revolving loans ~~(1)~~	Revolving loans ~~(1)~~	$	129.8	$	209.1	$	(338.9)	$	—	$	—	Revolving loans ~~(1)~~	$	—	$	—	$	—	$	—	$	—
Term loan~~(2)~~(1)	Term loan~~(2)~~(1)	248.6		—		(4.7)		0.3		244.2		Term loan~~(2)~~(1)	242.7		—		(3.1)		—		239.6

Trade receivables financing arrangement~~(3)~~(2)	Trade receivables financing arrangement~~(3)~~(2)	28.0		179.0		(207.0)		—		—		Trade receivables financing arrangement~~(3)~~(2)	—		—		—		—		—
Other indebtedness~~(4)~~(3)	Other indebtedness~~(4)~~(3)	6.0		0.6		(0.9)		(2.3)		3.4		Other indebtedness~~(4)~~(3)	3.3		—		(0.2)		—		3.1
Total debt	Total debt	412.4		$	388.7	$	(551.5)	$	(2.0)	247.6		Total debt	246.0		$	—	$	(3.3)	$	—	242.7

Less: short-term debt	Less: short-term debt	101.2								2.3		Less: short-term debt	2.2								2.0
Less: current maturities of long-term debt	Less: current maturities of long-term debt	7.2								11.4		Less: current maturities of long-term debt	13.0								13.0
Total long-term debt	Total long-term debt	$	304.0							$	233.9	Total long-term debt	$	230.8							$	227.7

___________________________

(1)While not due for repayment until December 2024 under the terms of our senior credit agreement, we classify within current liabilities the portion of the outstanding balance that we believe will be repaid over the next year, with such amount based on an estimate of cash that is expected to be generated over such period.

~~(2)~~The term loan is repayable in quarterly installments ~~beginning in the first quarter of 2021, with the quarterly installments~~ equal to ~~0.625%~~1.25% of the initial term loan balance of $250.0, ~~during 2021, 1.25%~~ in each of the four quarters of 2022 and 2023, and 1.25% during the first three quarters of 2024. The remaining balance is payable in full on December 17, 2024. Balances are net of unamortized debt issuance costs of ~~$1.1 and $1.4~~$1.0 at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021.

~~(4)~~(3)Primarily includes balances under a purchase card program of ~~$2.3~~$2.0 and ~~$1.7~~$2.2 and finance lease obligations of $1.1 and $1.1 ~~and $2.6~~ at ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term ~~debt.~~

~~(5)~~
“Other” primarily includes debt assumed, foreign currency translation on any debt instruments denominated in currencies other than the U.S. dollar, and the impact of amortization of debt issuance costs associated with the term loan.

At ~~October~~April 2, ~~2021,~~2022, we were in compliance with all covenants of our senior credit agreement.

Availability — At ~~October~~April 2, ~~2021,~~2022, we had ~~$437.8~~$438.2 of available borrowing capacity under our revolving credit facilities, after giving effect to ~~$12.2~~$11.8 reserved for ~~domestic~~ letters of credit. ~~During the second quarter of 2021, we reduced the available issuance capacity under our foreign credit instrument facilities from $100.0 to $55.0. At October~~In addition, at April 2, ~~2021,~~2022, we had ~~$31.2~~$28.9 of available issuance capacity under our foreign credit instrument facilities after giving effect to ~~$23.8~~$26.1 reserved for outstanding letters of credit.

Financing instruments may be used from time to time including, but not limited to, public and private debt and equity offerings, operating leases, finance leases and securitizations. We expect that we will continue to access these markets as appropriate to maintain liquidity and to provide sources of funds for general corporate purposes, acquisitions or to refinance existing debt.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, insurance recovery assets associated with asbestos product liability matters, and interest rate swap and foreign currency forwards contracts. These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions and insurance companies throughout the world. We periodically evaluate the credit standing of these financial institutions and insurance companies.

We maintain cash levels in bank accounts that, at times, may exceed federally-insured limits. We have not experienced, and believe we are not exposed to, significant risk of loss in these accounts.

We have credit loss exposure in the event of nonperformance by counterparties to the above financial instruments, but have no other off-balance-sheet credit risk of accounting loss. We anticipate, however, that counterparties will be able to fully

satisfy their obligations under the contracts. We do not obtain collateral or other security to support financial instruments subject to credit risk.

Concentrations of credit risk arising from trade accounts receivable are due to selling to customers in a particular industry. Credit risks are mitigated by performing ongoing credit evaluations of our customers’ financial conditions and obtaining collateral, advance payments, or other security when appropriate. No one customer, or group of customers that to our knowledge are under common control, accounted for more than 10% of our revenues for any period presented.

Other Matters

Contractual Obligations — There have been no material changes in the amounts of our contractual obligations from those disclosed in our ~~2020~~2021 Annual Report on Form 10-K. Our total net liabilities for unrecognized tax benefits including interest were ~~$8.9~~$9.8 as of ~~October~~April 2, ~~2021.~~2022. Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up toto $5.0.

Contingencies and Other Matters — Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., contracts, intellectual property, and competitive claims), environmental matters, claims with respect to the large power projects in South Africa, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate. We accrue for these contingencies when we believe a liability is probable and can be reasonably estimated. As events change and resolutions occur, these accruals may be adjusted and could differ materially from amounts originally estimated. See Note 15 to the condensed consolidated financial statements for a further discussion of contingencies and other matters.

Our Certificate of Incorporation provides that we shall indemnify our officers and directors to the fullest extent permitted by the Delaware General Corporation Law for any personal liability in connection with their employment or service with us. While we maintain insurance for this type of liability, the liability could exceed the amount of the insurance coverage.

In addition, you should read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Other Matters” and “Risk Factors” in our ~~2020~~2021 Annual Report on Form 10-K, as well as similar sections in any future filings for an understanding of the risks, uncertainties, and trends facing our businesses.

Critical Accounting Policies and Use of Estimates

~~General~~ — The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. The accounting policies that we believe are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties are discussed in our ~~2020~~2021 Annual Report on Form 10-K, the discussion within which is incorporated herein by reference. We have affected no material change in either our critical accounting policies or use of estimates since the filing of our ~~2020~~2021 Annual Report on Form 10-K.

4238

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Management does not believe our exposure to market risk has significantly changed since December 31, ~~2020~~2021 and does not believe that such risks will result in significant adverse impacts to our financial condition, results of operations or cash flows.

ITEM 4. Controls and Procedures

SPX management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures, pursuant to Exchange Act Rule 13a-15(b), as of ~~October~~April 2, ~~2021.~~2022. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of ~~October~~April 2, ~~2021.~~2022 due to the material weakness discussed below related to the accounting for asbestos-related insurance recovery assets.

Previously Identified Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with our 2021 Annual Report on Form 10-K, management, with the participation of our Chief Executive Officer and Chief Financial Officer, identified a deficiency in the design and operating effectiveness of our internal controls related to the insurance recovery assets associated with alleged exposure to asbestos-containing materials. While the deficiency did not result in a material misstatement to the financial statements, it presented a reasonable possibility that a material misstatement to the financial statements could have occurred.

Status of Remediation

Our remediation efforts are in process and we have designed control procedures to address the material weakness. The actions taken by management include, but are not limited to:

•Reconciling data used in our accounting assessments to the records of external legal counsel and third-party administrators to verify the completeness of recorded insurance recovery assets associated with alleged exposure to asbestos-containing materials.

•Monitoring changes in available insurance and, if applicable, confirming any changes with external legal counsel and third-party administrators to verify that such changes are properly reflected in the insurance availability reports.

We will document policies and procedures for, and test the implementation and operating effectiveness of, the newly-designed controls in future periods. The material weakness in our internal control over financial reporting will not be considered remediated until sufficient time has passed to allow management to test the design and operational effectiveness of the corrective actions.

Changes in Internal Control Over Financial Reporting

In connection with the evaluation by SPX management, including the Chief Executive Officer and the Chief Financial Officer, of our internal control over financial reporting, pursuant to Exchange Act Rule 13a-15(d), no changes during the quarter ended ~~October~~April 2, ~~2021~~2022 were identified that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4339

PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings

The information required by this Item is incorporated by reference from the footnotes to the condensed consolidated financial statements, specifically Note 15, included under Part I of this Form 10-Q.

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our ~~2020~~2021 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results.

~~ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

~~None.~~

ITEM 6. Exhibits



~~2.1~~			Stock Purchase Agreement among SPX Corporation, SPX Transformer Solutions, Inc., GE Prolec Transformers, Inc. and Prolec GE Internacional, S. DE RL. DE CV. dated as of June 8, 2021, incorporated by reference from our Current Report on Form 8-K filed on June 9, 2021 (File no. 1-6948).

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.1~~101.INS*			~~SPX Corporation financial information from its Form 10-Q for the quarterly period ended October 2, 2021, formatted in~~ Inline XBRL ~~including: (i) Condensed Consolidated Statements of Operations and Comprehensive Income for~~Instance Document (the instance document does not appear in the three and nine months ended October 2, 2021 and September 26, 2020; (ii) Condensed Consolidated Balance Sheets at October 2, 2021 and December 31, 2020; (iii) Condensed Consolidated Statements of Equity forInteractive Data File because its XBRL tags are embedded within the three and nine months ended October 2, 2021 and September 26, 2020; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2021 and September 26, 2020; and (v) Notes to Condensed Consolidated Financial Statements.Inline XBRL)
101.SCH*			Inline XBRL Taxonomy Extension Schema Document
101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*			Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit ~~101.1)~~101.*)

4440

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		SPX CORPORATION
		(Registrant)

Date: ~~November 3, 2021~~May 4, 2022	By		/s/ Eugene J. Lowe, III
			President and Chief Executive Officer


Date: ~~November 3, 2021~~May 4, 2022	By		/s/ James E. Harris
			Vice President, Chief Financial Officer and Treasurer

4541



PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements
Condensed Consolidated Statements of Operations and Comprehensive Income						3
Condensed Consolidated Balance Sheets						4
Condensed Consolidated Statements of Stockholders' Equity						5
Condensed Consolidated Statements of Cash Flows						6
Notes to Condensed Consolidated Financial Statements						7
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations						3230
Item 3 – Quantitative and Qualitative Disclosures About Market Risk						4339
Item 4 – Controls and Procedures						4339

PART 2 – OTHER INFORMATION
Item 1 – Legal Proceedings						4440
Item 1A – Risk Factors						4440
~~Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds~~						44
Item 6 – Exhibits						4440

SIGNATURES						4541


	Nine months ended October 2, 2021
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at December 31, 2020	$	0.5	$	1,319.9	$	(488.1)	$	248.5	$	(451.6)	$	629.2
Net income	—		—		419.4		—		—		419.4
Other comprehensive loss, net	—		—		—		(4.0)		—		(4.0)
Incentive plan activity	—		9.8		—		—		—		9.8
Long-term incentive compensation expense	—		10.8		—		—		—		10.8
Restricted stock unit vesting	—		(12.3)		—		—		7.4		(4.9)
Balance at October 2, 2021	$	0.5	$	1,328.2	$	(68.7)	$	244.5	$	(444.2)	$	1,060.3