Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 27, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | SPX FLOW, Inc. | |
Entity Central Index Key | 1,641,991 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 42,520,886 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Income Statement [Abstract] | ||
Revenues | $ 490.3 | $ 433.2 |
Cost of products sold | 334.6 | 294.1 |
Gross profit | 155.7 | 139.1 |
Selling, general and administrative | 115.5 | 115.3 |
Intangible amortization | 4.4 | 4.6 |
Special charges | 2.6 | 8.6 |
Operating income | 33.2 | 10.6 |
Other expense, net | (4.6) | (2.1) |
Interest expense, net | (12.5) | (15.9) |
Income (loss) before income taxes | 16.1 | (7.4) |
Income tax benefit (provision) | (0.8) | 0.1 |
Net income (loss) | 15.3 | (7.3) |
Less: Net income (loss) attributable to noncontrolling interests | (0.2) | 0.1 |
Net income (loss) attributable to SPX FLOW, Inc. | $ 15.5 | $ (7.4) |
Basic income (loss) per share of common stock (in dollars per share) | $ 0.37 | $ (0.18) |
Diluted income (loss) per share of common stock (in dollars per share) | $ 0.36 | $ (0.18) |
Weighted average number of common shares outstanding - basic (in shares) | 41,978 | 41,647 |
Weighted average number of common shares outstanding - diluted (in shares) | 42,530 | 41,647 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 15.3 | $ (7.3) |
Other comprehensive income, net - foreign currency translation adjustments | 40 | 49.5 |
Total comprehensive income | 55.3 | 42.2 |
Less: Total comprehensive income (loss) attributable to noncontrolling interests | (0.2) | 0.9 |
Total comprehensive income attributable to SPX FLOW, Inc. | $ 55.5 | $ 41.3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and equivalents | $ 243.9 | $ 263.7 |
Accounts receivable, net | 377.5 | 381.4 |
Contract assets | 75.2 | 57.7 |
Inventories, net | 329.2 | 293.9 |
Other current assets | 52 | 50 |
Total current assets | 1,077.8 | 1,046.7 |
Property, plant and equipment: | ||
Land | 35.8 | 35.1 |
Buildings and leasehold improvements | 240.7 | 238.3 |
Machinery and equipment | 476.8 | 461.6 |
Property, plant and equipment, gross | 753.3 | 735 |
Accumulated depreciation | (388.5) | (374.1) |
Property, plant and equipment, net | 364.8 | 360.9 |
Goodwill | 786.6 | 771.3 |
Intangibles, net | 354.3 | 350.3 |
Other assets | 155.3 | 159.8 |
TOTAL ASSETS | 2,738.8 | 2,689 |
Current liabilities: | ||
Accounts payable | 235.1 | 219.4 |
Contract liabilities | 218 | 182.3 |
Accrued expenses | 180.8 | 207.3 |
Income taxes payable | 22.5 | 21.6 |
Short-term debt | 26.1 | 24.2 |
Current maturities of long-term debt | 20.5 | 20.5 |
Total current liabilities | 703 | 675.3 |
Long-term debt | 816.7 | 850.9 |
Deferred and other income taxes | 59.8 | 63.3 |
Other long-term liabilities | 128.7 | 125.5 |
Total long-term liabilities | 1,005.2 | 1,039.7 |
Commitments and contingent liabilities (Note 11) | ||
Mezzanine equity | 22.5 | 22.2 |
SPX FLOW, Inc. shareholders’ equity: | ||
Preferred stock, no par value, 3,000,000 shares authorized, and no shares issued and outstanding | 0 | 0 |
Common stock, par value $0.01 per share, 300,000,000 shares authorized, 42,884,761 issued and 42,519,801 outstanding at March 31, 2018, and 42,690,342 issued and 42,405,222 outstanding at December 31, 2017 | 0.4 | 0.4 |
Paid-in capital | 1,658.4 | 1,650.9 |
Accumulated deficit | (306.2) | (327.5) |
Accumulated other comprehensive loss | (340.1) | (372.8) |
Common stock in treasury (364,960 shares at March 31, 2018, and 285,120 shares at December 31, 2017) | (12.9) | (8.9) |
Total SPX FLOW, Inc. shareholders' equity | 999.6 | 942.1 |
Noncontrolling interests | 8.5 | 9.7 |
Total equity | 1,008.1 | 951.8 |
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY | $ 2,738.8 | $ 2,689 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 3,000,000 | 3,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 42,884,761 | 42,690,342 |
Common stock, shares outstanding (in shares) | 42,519,801 | 42,405,222 |
Common stock in treasury (in shares) | 364,960 | 285,120 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions | Total | Total SPX FLOW, Inc. Shareholders' Equity | Common Stock | Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Common Stock in Treasury | Noncontrolling Interests |
Beginning balance at Dec. 31, 2016 | $ 742.1 | $ 740.6 | $ 0.4 | $ 1,640.4 | $ (373.9) | $ (521.4) | $ (4.9) | $ 1.5 |
Beginning balance (in shares) at Dec. 31, 2016 | 41,900,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (7.3) | (7.4) | (7.4) | 0.1 | ||||
Other comprehensive income, net | 49.5 | 48.7 | 48.7 | 0.8 | ||||
Incentive plan activity | 1.6 | 1.6 | 1.6 | |||||
Incentive plan activity (in shares) | 100,000 | |||||||
Stock-based compensation expense | 4 | 4 | 4 | |||||
Restricted stock and restricted stock unit vesting, net of tax withholdings | (3) | (3) | 0.3 | (3.3) | ||||
Restricted stock and restricted stock unit vesting, net of tax withholdings (in shares) | 300,000 | |||||||
Dividends attributable to noncontrolling interests and other | 0.2 | 0.2 | ||||||
Ending balance at Apr. 01, 2017 | 787.1 | 784.5 | $ 0.4 | 1,646.3 | (381.3) | (472.7) | (8.2) | 2.6 |
Ending balance (in shares) at Apr. 01, 2017 | 42,300,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Adoption of accounting standards | (1.5) | (1.5) | 5.8 | (7.3) | ||||
Beginning balance at Dec. 31, 2017 | $ 951.8 | 942.1 | $ 0.4 | 1,650.9 | (327.5) | (372.8) | (8.9) | 9.7 |
Beginning balance (in shares) at Dec. 31, 2017 | 42,405,222 | 42,400,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | $ 15.3 | 15.5 | 15.5 | (0.2) | ||||
Other comprehensive income, net | 40 | 40 | 40 | |||||
Incentive plan activity | 2.4 | 2.4 | 2.4 | |||||
Stock-based compensation expense | 5.1 | 5.1 | 5.1 | |||||
Restricted stock and restricted stock unit vesting, net of tax withholdings | (4) | (4) | (4) | |||||
Restricted stock and restricted stock unit vesting, net of tax withholdings (in shares) | 100,000 | |||||||
Dividends attributable to noncontrolling interests and other | (1) | (1) | ||||||
Ending balance at Mar. 31, 2018 | $ 1,008.1 | $ 999.6 | $ 0.4 | $ 1,658.4 | $ (306.2) | $ (340.1) | $ (12.9) | $ 8.5 |
Ending balance (in shares) at Mar. 31, 2018 | 42,519,801 | 42,500,000 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 15.3 | $ (7.3) |
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||
Special charges | 2.6 | 8.6 |
Deferred income taxes | 3.5 | (3.2) |
Depreciation and amortization | 15.1 | 15.7 |
Stock-based compensation | 5.1 | 4 |
Pension and other employee benefits | 3.1 | 1.2 |
Changes in operating assets and liabilities: | ||
Accounts receivable and other assets | 14.1 | 21.5 |
Contract assets and liabilities, net | 10.6 | 23.9 |
Inventories | (21.9) | (21.5) |
Accounts payable, accrued expenses and other | (28.1) | (10.4) |
Cash spending on restructuring actions | (3.8) | (9.4) |
Net cash from operating activities | 15.6 | 23.1 |
Cash flows from (used in) investing activities: | ||
Proceeds from asset sales and other, net | 0 | 20.3 |
Capital expenditures | (5.2) | (4.8) |
Net cash from (used in) investing activities | (5.2) | 15.5 |
Cash flows used in financing activities: | ||
Borrowings under senior credit facilities | 19.5 | 84.5 |
Repayments of senior credit facilities | (54.5) | (133.5) |
Borrowings under trade receivables financing arrangement | 28 | 38.1 |
Repayments of trade receivables financing arrangement | (23) | (35.9) |
Repayments of other financing arrangements | (3.1) | (8) |
Minimum withholdings paid on behalf of employees for net share settlements, net | (4) | (3.2) |
Dividends paid to noncontrolling interests in subsidiary | (1) | (0.1) |
Net cash used in financing activities | (38.1) | (58.1) |
Change in cash, cash equivalents and restricted cash due to changes in foreign currency exchange rates | 7.9 | 13.1 |
Net change in cash, cash equivalents and restricted cash | (19.8) | (6.4) |
Consolidated cash, cash equivalents and restricted cash, beginning of period | 264.9 | 216.2 |
Consolidated cash, cash equivalents and restricted cash, end of period | $ 245.1 | $ 209.8 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION SPX FLOW, Inc. and its consolidated subsidiaries (“SPX FLOW,” ‘‘the Company,’’ “we,” “us,” or “our”) operate in three business segments. We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “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. 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 and combined financial statements contained in our 2017 Annual Report on Form 10-K. Interim results are not necessarily indicative of full year results and the condensed consolidated financial statements may not be indicative of the Company’s future performance. Certain customer contract-related amounts in the accompanying condensed consolidated balance sheet as of December 31, 2017 and condensed consolidated statement of cash flows for the three months ended April 1, 2017 have been reclassified to conform to the current year presentation. 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 2018 are March 31, June 30, and September 29, compared to the respective April 1, July 1, and September 30, 2017 dates. We had one less day in the first quarter of 2018 and will have one more day in the fourth quarter of 2018 than in the respective 2017 periods. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS The following is a summary of new accounting pronouncements that apply or may apply to our business. New Revenue Recognition Pronouncement Effects of Adoption - In May 2014, and as subsequently amended, the Financial Accounting Standards Board (the "FASB") issued a new standard on revenue recognition that outlines a single comprehensive model for accounting for revenue arising from contracts with customers and supersedes most revenue recognition guidance. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in accordance with the transfer of control over those goods and services. The new standard also requires a number of disclosures intended to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue, and the related cash flows. We adopted the standard effective January 1, 2018 using the modified retrospective adoption method. In connection with our adoption of the new revenue recognition pronouncement, we recorded a reduction in our accumulated deficit of $2.3 , representing the net earnings which would have been recognized as of December 31, 2017 under the new standard on executed customer contracts (“orders”) in effect on that date. This reduction in our accumulated deficit reflects the net effects of (1) an increase in the amount of revenue to be recognized over time, as described below for certain product lines that were previously recognized at a point in time under the previous standard, partially offset by (2) a decrease in the amount of revenue recognized over time under the previous standard for certain contracts which do not contain a contractual enforceable right to payment in the event of customer cancellation or default, which are being recognized at a point in time under the new standard. The impacts of the new standard on our reportable segments are as follows: • Food and Beverage - Under previous accounting principles, we recognized revenue on certain long-term systems projects, most of which are customer-owned assets, over time using the cost-to-cost method, and revenue on long-term service contracts on a straight-line basis over the life of the related agreements. All other revenues were recognized at a point in time when the risks and rewards of ownership transferred to the customer. Under the new standard, revenue for (1) all customer-owned systems projects and service contracts, is recognized over time on a cost-to-cost basis, and (2) skids assembled in our factories or systems projects not owned by the customer during execution, as well as customer contracts for the sale of component and aftermarket parts, are recognized at a point in time upon transfer of control to the customer. • Power and Energy - Under previous accounting principles, we recognized revenue on certain long-term contracts for large pumps over time using the cost-to-cost method. We recognized all other product revenues in this segment, including revenues for most service contracts, at a point in time. In assessing the new standard, we determined our large pumps manufactured for use in upstream oil and nuclear power generation applications generally have limited alternative use. Likewise, our larger and more complex valve products and metering systems have limited alternative use. Our contractual enforceable rights to payment for performance completed to date in the event of customer cancellation or default is contract-specific for substantially all product lines in the segment. Under the new standard, revenue is recognized over time, if a contract explicitly provides an enforceable right to payment, for large pumps, large and/or complex valve products and metering systems. Revenue for service contracts is recognized over time. Revenue for all other products is recognized at a point in time, upon transfer of control of the product to the customer . • Industrial - Under previous accounting principles, substantially all of this segment’s revenue was recognized at a point in time when the risks and rewards of ownership transferred to the customer. In assessing the new standard, we determined that certain original equipment ("OE") products such as large mixers constructed with unique metals, custom-enclosed heat exchangers, and certain dehydration systems have little to no alternative use. Our contractual enforceable rights to payment for performance completed to date in the event of customer cancellation or default is contract specific for substantially all product lines in this segment. Under the new standard, revenue is recognized over time, if a contract explicitly provides for enforceable right to payment, for certain OE mixer types, custom-enclosed heat exchanger units, unique dehydration systems and service contracts. Revenue for all other products within this segment is recognized at a point in time, upon transfer of control of the product to the customer (i.e., effectively no change). Application of New Revenue Recognition Standard to Contract Revenues Recognized Over Time: Under the new revenue recognition standard, a contract with a customer is an agreement approved by both parties that creates enforceable rights and obligations, has commercial substance and includes identified payment terms under which collectability is probable. Once the Company has entered a contract, it is evaluated to identify performance obligations. For OE contracts that are recognized over time, our customers generally contract with us to provide a service of integrating a complex set of tasks and components into a single project of a highly engineered and tailored capability that generally cannot be re-sold to another customer without significant re-engineering and/or re-work cost. Such contracts are typically accounted for as a single performance obligation. For aftermarket service contracts, our customers generally receive and consume the benefits of the service as we perform, or our performance enhances a customer-controlled asset. As noted above, we generally recognize revenue over time using costs incurred to date relative to total estimated costs at completion (“EAC’s”) for these OE and service contracts. This measure best depicts the transfer of control to customers continuously over time which occurs as we incur costs related to satisfaction of performance obligation(s) under our contracts. This transfer of control over time is also supported by the work being either customer-owned throughout the life of the project or by termination clauses which allow us to recover costs incurred plus a reasonable profit. Revenues, including estimated profits, are recorded proportionally as costs are incurred. For certain long-term aftermarket maintenance contracts where we stand ready to perform at any time, we recognize revenue ratably over the life of the related contract. During the three months ended March 31, 2018, we recognized revenues of $62.6 , $27.9 and $18.7 under contracts for which control transferred over time in our Food and Beverage, Power and Energy, and Industrial segments, respectively. We have established controls and procedures to update project EAC’s for cost-to-cost contracts at least quarterly. Costs to fulfill include primarily labor, materials and subcontractors’ costs, as well as other direct costs. Our cost estimation process is based upon (i) historical experience, (ii) the professional judgment and knowledge of our engineers, project managers, and operations and financial professionals, and (iii) an assessment of key factors such as progress towards completion and the related program schedule, identified opportunities and risks and the related changes in estimates of revenues and costs. EAC adjustments are recognized in the period in which they become known, including the resulting impact on revenues and operating income. These adjustments may result from positive (or negative) project performance, and may result in an increase (or decrease) in operating income during performance, depending on whether or not we are successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. If and when EAC costs exceed revenue to be earned on the project, a provision for the entire expected loss on the performance obligation is recognized in the period the loss is determined. The impact of EAC adjustments on our revenues and operating income was insignificant during the three months ended March 31, 2018. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year, and had recorded $0.5 in “Other current assets” in our condensed consolidated balance sheets for such costs as of March 31, 2018 and December 31, 2017. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is expected to be less than one year. These costs primarily include the Company's internal sales force compensation program; under the terms of these programs these are generally earned and the costs are recognized at the time the revenue is recognized. Disaggregated Information about Revenues: Our aftermarket revenues generally include sales of parts and service/maintenance services, and OE revenues generally include all other revenue streams described above. The following table provides disaggregated information about our OE, including Food and Beverage systems, and aftermarket revenues by reportable segment for the three months ended March 31, 2018: For the Three Months Ended March 31, 2018 Original Equipment Aftermarket Total Revenues Food and Beverage $ 103.3 (1) $ 63.2 $ 166.5 Power and Energy 73.9 70.8 144.7 Industrial 122.6 56.5 179.1 Total revenues $ 299.8 $ 190.5 $ 490.3 (1) Includes $54.1 of revenue realized from the sale of highly engineered Food and Beverage systems. Contract Assets and Liabilities: Contract assets include unbilled amounts typically resulting from sales under cost-to-cost contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Contract assets are generally classified as current, as we expect to bill the amounts within the next twelve months. Contract liabilities include billings in excess of revenue recognized for cost-to-cost contracts and advance payments received from customers related to product sales (unearned revenue). We classify contract liabilities as a current liability, as we expect to recognize the related revenue within the next twelve months. Our contract assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period. Our contract assets and liabilities, and changes in such balances, were as follows: March 31, 2018 December 31, 2017 Change (1) % Change Contract assets $ 75.2 $ 57.7 $ 17.5 30.3 % Contract liabilities (218.0 ) (182.3 ) (35.7 ) 19.6 % Net contract liabilities $ (142.8 ) $ (124.6 ) $ (18.2 ) (1) The $18.2 increase in our net contract liabilities from December 31, 2017 to March 31, 2018 was primarily due to the timing of advance and milestone payments received on certain Food and Beverage and Power and Energy cost-to-cost contracts, consistent with the increase in our remaining performance obligations from December 31, 2017 to March 31, 2018 of those segments of $38.2 . Reconciliation of Operating Results and Balance Sheet - Previous vs. Current Revenue Recognition Standard: In accordance with the new revenue recognition standard requirements, the disclosure of the impact of adoption on our condensed consolidated statement of operations and balance sheet is as follows: For the three months ended March 31, 2018 Statement of Operations Amounts without adoption of new revenue standard Effect of adoption As Reported Revenues $ 481.0 $ 9.3 $ 490.3 Cost of products sold 328.0 6.6 334.6 Selling, general and administrative 115.5 — 115.5 Income tax provision (0.5 ) (0.3 ) (0.8 ) Net income 12.9 2.4 15.3 Net income attributable to SPX FLOW, Inc. 13.1 2.4 15.5 As of March 31, 2018 Balance Sheet Amounts without adoption of new revenue standard Effect of adoption As Reported Assets Contract assets $ 56.9 $ 18.3 $ 75.2 Inventories, net 330.0 (0.8 ) 329.2 Other current assets 51.5 0.5 52.0 Other assets 155.8 (0.5 ) 155.3 Liabilities Contract liabilities 206.3 11.7 218.0 Accrued expenses 181.0 (0.2 ) 180.8 Income taxes payable 22.1 0.4 22.5 Deferred and other income taxes 58.9 0.9 59.8 Equity Accumulated deficit (310.9 ) 4.7 (306.2 ) Remaining Performance Obligations: Remaining performance obligations represent the transaction price of orders for which (i) control of goods or services has not been transferred to the customer or we have not otherwise met our performance obligations, or (ii) where revenue is accounted for over time, proportional costs have not yet been incurred. Such remaining performance obligations exclude unexercised contract options and potential orders under “blanket order” contracts (e.g., with indefinite delivery dates or quantities). As of March 31, 2018, the aggregate amount of our remaining performance obligations was $1,050.8 . The Company expects to recognize revenue on approximately 85% and substantially all of our remaining performance obligations within the next 12 and 24 months, respectively, with an insignificant remaining amount expected to be recognized thereafter. Other New Accounting Pronouncements In February 2016, the FASB issued a new standard which requires a lessee to recognize on its balance sheet the assets and liabilities associated with the rights and obligations created by leases with terms that exceed twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of costs and cash flows arising from a lease. The new standard is effective for interim and annual reporting periods beginning after December 15, 2018 and requires a modified retrospective approach to adoption for lessees related to capital and operating leases existing at, or entered into after, the earliest comparative period presented in the financial statements, with certain practical expedients available. Early adoption is permitted. We are currently evaluating the effect that this new standard will have on our consolidated financial statements. In October 2016, the FASB issued an amendment that requires recognition of the income tax consequences of an intra-entity transfer of assets other than inventory. Under current authoritative guidance, the tax effects of intra-entity asset transfers (intercompany sales) are deferred until the transferred asset is sold to a third party or otherwise recovered through use. This amendment requires tax expense and deferred tax asset recognition from the intra-entity sale of the asset in the seller’s tax jurisdiction when the asset transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. We adopted this amendment as of the beginning of the first quarter of 2018 using modified retrospective application, and recorded a cumulative charge of $3.8 to accumulated deficit during the quarter. In November 2016, the FASB issued an amendment to guidance for statement of cash flow presentation, which requires that entities explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents in the statement of cash flows. Entities are also required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. We adopted this amendment in the first quarter of 2018 using retrospective application. We held $1.2 of restricted cash as of March 31, 2018 and December 31, 2017 , and $1.1 of restricted cash as of April 1, 2017 and December 31, 2016, which was reported in "Other current assets" in our condensed consolidated balance sheets and included in "Cash, cash equivalents and restricted cash" in our condensed consolidated statements of cash flows as of their respective dates. Such restricted cash balances consist primarily of deposits which serve as bank guarantees related to our performance under customer contracts and are required by law in certain international jurisdictions in lieu of letters or credit or other forms of security. In February 2018, the FASB issued an amendment to guidance which allows entities to reclassify certain stranded income tax effects from accumulated other comprehensive income/loss to retained earnings resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “Tax Act”), as well as additional financial statement disclosures to clarify the effects of adoption. The Company adopted this amendment as of the beginning of the first quarter of 2018 and elected to reclassify the income tax effects of the Tax Act between accumulated other comprehensive loss and accumulated deficit. The Company recorded a cumulative reduction of $7.3 of accumulated deficit and corresponding charge to accumulated other comprehensive loss during the quarter. The tax effects reclassified under this standard included the change in federal tax rate (net of the change in federal benefit of state tax, where applicable) pursuant to the Tax Act on the foreign exchange gains (losses) recorded through accumulated other comprehensive loss and the reversal of the tax impact of certain gains (losses) where the Tax Act impacted the Company’s intention to repatriate certain earnings that were previously taxed but would result in a tax on the foreign exchange gain (loss) upon repatriation. In March 2018, the FASB issued an amendment to update the FASB Accounting Standards Codification (the "Codification") and XBRL Taxonomy as a result of the Tax Act, and to incorporate Staff Accounting Bulletin No. 118 as released by the SEC, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Act in the period of enactment. This amendment is effective for interim and annual reporting periods beginning after December 15, 2018. The Company continues to evaluate the impact this tax reform legislation may have on its consolidated financial statements. Summary of Effects of Retrospective Accounting Standard Changes Adopted in First Quarter of 2018 The cumulative effects of the changes made to our condensed consolidated balance sheet as of the beginning of the first quarter of 2018 as a result of the adoption of the accounting standard updates on (i) revenue recognition, (ii) income tax consequences of intra-entity non-inventory asset transfers and (iii) reclassification of certain stranded income tax effects from accumulated other comprehensive loss ("AOCL") to accumulated deficit, were as follows: Effects of adoption of accounting standards updates related to: Balance Sheet As filed December 31, 2017 Revenue recognition Tax effects of intra-entity non-inventory asset transfers Stranded AOCL reclassifications due to the Tax Act Total effects of adoption With effect of accounting standard updates January 1, 2018 Assets Contract assets $ 57.7 $ 17.8 $ — $ — $ 17.8 $ 75.5 Inventories, net 293.9 5.8 — — 5.8 299.7 Other current assets 50.0 0.5 — — 0.5 50.5 Other assets 159.8 (0.5 ) (3.8 ) — (4.3 ) 155.5 Liabilities Contract liabilities 182.3 20.5 — — 20.5 202.8 Accrued expenses 207.3 (0.2 ) — — (0.2 ) 207.1 Income taxes payable 21.6 0.2 — — 0.2 21.8 Deferred and other income taxes 63.3 0.8 — — 0.8 64.1 Equity Accumulated deficit (327.5 ) 2.3 (3.8 ) 7.3 5.8 (321.7 ) Accumulated other comprehensive loss (372.8 ) — — (7.3 ) (7.3 ) (380.1 ) |
INFORMATION ON REPORTABLE SEGME
INFORMATION ON REPORTABLE SEGMENTS, CORPORATE EXPENSE AND OTHER | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
INFORMATION ON REPORTABLE SEGMENTS, CORPORATE EXPENSE AND OTHER | INFORMATION ON REPORTABLE SEGMENTS, CORPORATE EXPENSE AND OTHER We innovate with customers to help feed and enhance the world by designing, delivering and servicing high value solutions at the heart of growing and sustaining our diverse communities with operations in over 30 countries and sales in over 150 countries around the world. The Company's product offering is concentrated in rotating, actuating and hydraulic technologies, as well as automated process systems, into food and beverage, industrial and power and energy markets. We have three reportable segments: Food and Beverage, Power and Energy, and Industrial. In determining our segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification to operating income or loss of each segment before considering impairment and special charges, pension and postretirement service costs and other indirect corporate expenses (including corporate stock-based compensation). This is consistent with the way our chief operating decision maker evaluates the results of each segment. Food and Beverage The Food and Beverage reportable segment operates in a regulated, global industry with customers who demand highly engineered, turn-key solutions. Key demand drivers include dairy consumption, emerging market capacity expansion, sustainability and productivity initiatives, customer product innovation and food safety. Key products for the segment include mixing, drying, evaporation and separation systems and components, heat exchangers, and reciprocating and centrifugal pump technologies. We also design and construct turn-key systems that integrate many of these products for our customers. Our core brands include Anhydro, APV, Bran+Luebbe, Gerstenberg Schroeder, LIGHTNIN, Seital, and Waukesha Cherry-Burrell. Power and Energy The Power and Energy reportable segment primarily serves customers in the oil and gas industry and, to a lesser extent, the nuclear and other conventional power industries. A large portion of the segment's revenues are concentrated in oil extraction, production and transportation at existing wells, and in pipeline applications. The underlying driver of this segment includes demand for power and energy. Key products for the segment include pumps, valves and related accessories, while the core brands include APV, Bran+Luebbe, ClydeUnion Pumps, Copes-Vulcan, Dollinger Filtration, LIGHTNIN, M&J Valve, Plenty, and Vokes. Industrial The Industrial reportable segment primarily serves customers in the chemical, air treatment, mining, pharmaceutical, marine, shipbuilding, infrastructure construction, general industrial and water treatment industries. Key demand drivers of this segment are tied to macroeconomic conditions and growth in the respective end markets we serve. Key products for the segment are air dryers, filtration equipment, mixers, pumps, hydraulic technologies and heat exchangers. Core brands include Airpel, APV, Bolting Systems, Delair, Deltech, Hankison, Jemaco, Johnson Pump, LIGHTNIN, Power Team, and Stone. Corporate Expense Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters and our Asia Pacific center in Shanghai, China. Reportable Segment Financial Data Financial data for our reportable segments for the three months ended March 31, 2018 and April 1, 2017 were as follows: Three months ended March 31, 2018 April 1, 2017 Revenues (1) : Food and Beverage $ 166.5 $ 165.9 Power and Energy 144.7 105.9 Industrial 179.1 161.4 Total revenues $ 490.3 $ 433.2 Income (loss): Food and Beverage $ 17.9 $ 15.5 Power and Energy 12.2 (1.5 ) Industrial 20.5 21.1 Total income for reportable segments 50.6 35.1 Corporate expense 14.4 15.5 Pension and postretirement service costs 0.4 0.4 Special charges 2.6 8.6 Consolidated operating income $ 33.2 $ 10.6 (1) We recognized revenues of $109.2 and $60.4 over time in the three months ended March 31, 2018 and April 1, 2017 , respectively. |
SPECIAL CHARGES
SPECIAL CHARGES | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
SPECIAL CHARGES | SPECIAL CHARGES Special charges for the three months ended March 31, 2018 and April 1, 2017 were as follows: Three months ended March 31, 2018 April 1, 2017 Food and Beverage $ 0.1 $ 1.5 Power and Energy 2.1 1.0 Industrial 0.4 2.8 Other — 3.3 Total $ 2.6 $ 8.6 Special Charges By Reportable Segment Unless otherwise noted below, charges for the three months ended April 1, 2017 related to our multi-year global realignment program which concluded in the fourth quarter of 2017. Refer to the notes to our consolidated and combined financial statements in our 2017 Annual Report on Form 10-K for additional information regarding the global realignment program. Food and Beverage — Charges for the three months ended April 1, 2017 related primarily to severance and other costs associated with (i) the consolidation and relocation of a manufacturing facility in Germany to an existing facility in Poland and (ii) a reorganization and consolidation of certain administrative functions primarily in Europe and the Asia Pacific region. Power and Energy — Charges for the three months ended March 31, 2018 related primarily to severance and other costs associated with a reduction in workforce of the manufacturing operations of a facility in the U.K. Charges for the three months ended April 1, 2017 related primarily to severance and other costs associated with (i) various locations in North America, and (ii) the reorganization and consolidation of certain administrative functions primarily in the EMEA region. Industrial — Charges for the three months ended March 31, 2018 related primarily to severance and other costs associated with (i) operations personnel in North America and the Asia Pacific region, partially offset by (ii) revisions of estimates related to certain previously announced restructuring activities. Charges for the three months ended April 1, 2017 related primarily to severance and other costs associated with (i) the consolidation and relocation of a manufacturing facility in Sweden to an existing facility in Poland and, to a lesser extent, (ii) the reorganization and consolidation of certain administrative functions in the U.S., EMEA and Asia Pacific. Other — Charges for the three months ended April 1, 2017 reflected primarily asset impairment and other related charges of $ 3.6 in connection with the sale of certain corporate assets during the period. Expected charges still to be incurred under actions approved as of March 31, 2018 were approximately $0.6 . The following is an analysis of our restructuring liabilities for the three months ended March 31, 2018 and April 1, 2017 : Three months ended March 31, 2018 April 1, 2017 Balance at beginning of year $ 12.4 $ 33.6 Special charges (1) 2.6 5.0 Utilization — cash (3.8 ) (9.4 ) Currency translation adjustment and other 0.3 0.3 Balance at end of period $ 11.5 $ 29.5 (1) Amounts that impacted special charges but not the restructuring liabilities included $3.6 of asset impairment and other related charges during the three months ended April 1, 2017 . |
INVENTORIES, NET
INVENTORIES, NET | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES, NET Inventories at March 31, 2018 and December 31, 2017 comprised the following: March 31, 2018 December 31, 2017 Finished goods $ 102.3 $ 92.3 Work in process 118.5 99.2 Raw materials and purchased parts 114.9 108.9 Total FIFO cost 335.7 300.4 Excess of FIFO cost over LIFO inventory value (6.5 ) (6.5 ) Total inventories $ 329.2 $ 293.9 Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated net realizable values. Certain domestic inventories are valued using the last-in, first-out (“LIFO”) method. These inventories were approximately 8% and 7% of total inventory at March 31, 2018 and December 31, 2017 , respectively. Other inventories are valued using the first-in, first-out (“FIFO”) method. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The changes in the carrying amount of goodwill by reportable segment during the three months ended March 31, 2018 were as follows: December 31, 2017 Impairments Foreign Currency Translation and Other March 31, 2018 Food and Beverage $ 271.8 $ — $ 8.5 $ 280.3 Power and Energy (1) 272.4 — 6.3 278.7 Industrial (2) 227.1 — 0.5 227.6 Total $ 771.3 $ — $ 15.3 $ 786.6 (1) The carrying amount of goodwill included $262.5 and $256.5 of accumulated impairments as of March 31, 2018 and December 31, 2017 , respectively. (2) The carrying amount of goodwill included $67.7 of accumulated impairments as of March 31, 2018 and December 31, 2017 . As of March 31, 2018 , there were no indicators necessitating an interim impairment test of any of our reporting units, based on management's review of operating performance. We will perform our annual impairment testing of goodwill (and indefinite-lived intangible assets that are not amortized), during the fourth quarter of 2018 in conjunction with our annual financial planning process. In performing that annual impairment testing, we will assess, among other items, order trends and the operating cash flow performance of our reporting units. Other Intangibles, Net Identifiable intangible assets were as follows: March 31, 2018 December 31, 2017 Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with determinable lives: Customer relationships $ 231.6 $ (127.6 ) $ 104.0 $ 226.1 $ (121.9 ) $ 104.2 Technology 96.9 (53.7 ) 43.2 94.1 (50.9 ) 43.2 Patents 6.8 (5.2 ) 1.6 6.8 (5.1 ) 1.7 Other 14.3 (11.6 ) 2.7 13.8 (11.1 ) 2.7 349.6 (198.1 ) 151.5 340.8 (189.0 ) 151.8 Trademarks with indefinite lives 202.8 — 202.8 198.5 — 198.5 Total $ 552.4 $ (198.1 ) $ 354.3 $ 539.3 $ (189.0 ) $ 350.3 As of March 31, 2018 , the net carrying value of intangible assets with determinable lives consisted of the following by reportable segment: $76.8 in Power and Energy, $51.9 in Food and Beverage, and $22.8 in Industrial. Trademarks with indefinite lives consisted of the following by reportable segment: $104.3 in Food and Beverage, $61.5 in Industrial, and $37.0 in Power and Energy. No impairment charges were recorded during the three months ended March 31, 2018 or April 1, 2017 . Changes in the gross carrying values of trademarks and other identifiable intangible assets during the three months ended March 31, 2018 related to foreign currency translation. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS SPX FLOW sponsors a number of defined benefit pension plans and a postretirement plan. For all of these plans, changes in the fair value of plan assets and actuarial gains and losses are recognized to earnings in the fourth quarter of each year, unless earlier remeasurement is required. The remaining components of pension and postretirement expense, primarily service and interest costs and expected return on plan assets, are recorded on a quarterly basis. Components of Net Periodic Pension and Postretirement Benefit Expense (Income) Net periodic benefit expense (income) for our foreign pension plans and our domestic pension and postretirement plans for the three months ended March 31, 2018 and April 1, 2017 included the following components: Foreign Pension Plans Domestic Pension and Postretirement Plans Total Statement of Operations Caption in Which Expense (Income) is Reported Three months ended March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 Service cost $ 0.2 0.2 $ 0.2 $ 0.2 $ 0.4 $ 0.4 Selling, general and administrative Interest cost 0.2 0.1 0.1 0.2 0.3 0.3 Other expense, net Curtailment gain (1) — (1.1 ) — — — (1.1 ) Other expense, net Total net periodic benefit expense (income) $ 0.4 $ (0.8 ) $ 0.3 $ 0.4 $ 0.7 $ (0.4 ) (1) Gain is related to the cessation of accrual of future benefits by participants in a defined benefit pension plan in the Netherlands effective March 31, 2017. The accumulated obligations for future pension payments to participants in this plan were also transferred to an insurance company at that time. Under the agreement, the insurance company irrevocably assumed the obligation to make future pension payments to the approximately 60 participants of the plan. Employer Contributions During the three months ended March 31, 2018 and April 1, 2017 , contributions to the foreign and domestic pension plans we sponsor were less than $0.1 . |
INDEBTEDNESS
INDEBTEDNESS | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | INDEBTEDNESS Debt at March 31, 2018 and December 31, 2017 was comprised of the following: March 31, 2018 December 31, 2017 Term loan (1) $ 235.0 $ 270.0 5.625% senior notes, due in August 2024 300.0 300.0 5.875% senior notes, due in August 2026 300.0 300.0 Trade receivables financing arrangement 5.0 — Other indebtedness (2) 32.9 35.8 Less: deferred financing fees (3) (9.6 ) (10.2 ) Total debt 863.3 895.6 Less: short-term debt 26.1 24.2 Less: current maturities of long-term debt 20.5 20.5 Total long-term debt $ 816.7 $ 850.9 (1) The term loan, which had an initial principal balance of $400.0 , is repayable in quarterly installments of 5.0% annually which began with our third quarter of 2016, with the remaining balance repayable in full on September 24, 2020. On January 31, 2018, we made a voluntary principal prepayment in the amount of $30.0 under the term loan facility, funded by cash on hand. There was no penalty associated with this prepayment. (2) Primarily includes capital lease obligations of $11.8 and $11.6 and balances under a purchase card program of $19.7 and $21.9 as of March 31, 2018 and December 31, 2017 , respectively. The purchase card program allows for payment beyond customary 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. (3) Deferred financing fees were comprised of fees related to the term loan and senior notes. A detailed description of our senior credit facilities and senior notes is included in our consolidated and combined financial statements included in our 2017 Annual Report on Form 10-K. The weighted-average interest rate of outstanding borrowings under our senior credit facilities was approximately 3.6% and 4.1% at March 31, 2018 and December 31, 2017 , respectively. At March 31, 2018 , we had $443.0 of borrowing capacity under our revolving credit facilities after giving effect to $7.0 reserved for outstanding letters of credit. At March 31, 2018 , we had $30.7 of available borrowing capacity under our trade receivables financing arrangement after giving effect to borrowings of $5.0 . Our trade receivables financing arrangement provides for a total commitment of $50.0 from associated lenders, depending upon our trade receivables balance and other factors. In addition, at March 31, 2018 , we had $324.0 of available issuance capacity under our foreign credit instrument facilities after giving effect to $176.0 reserved for outstanding bank guarantees and standby letters of credit. At March 31, 2018 , in addition to the revolving lines of credit described above, we had approximately $7.1 of letters of credit outstanding under separate arrangements in China and India. During the first quarter of 2018 and as a result of our consolidated leverage and interest coverage ratios being less than or equal to 3.25 :1.00 and greater than or equal to 3.50 :1.00, respectively, the Company voluntarily ended its covenant relief period prior to its December 31, 2018 termination date, in accordance with provisions provided in the second amendment to our senior credit facilities. At March 31, 2018 , we were in compliance with all covenants of our senior credit facilities and senior notes. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency ("FX") 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 Euro, Chinese Yuan and British Pound. We had FX forward contracts with an aggregate notional amount of $41.8 and $44.6 outstanding as of March 31, 2018 and December 31, 2017 , respectively, with all such contracts scheduled to mature within one year . We also had FX embedded derivatives with an aggregate notional amount of $17.2 and $16.9 at March 31, 2018 and December 31, 2017 , respectively, with scheduled maturities of $16.7 and $0.5 within one and two years , respectively. There were no unrealized gains or losses recorded in accumulated other comprehensive loss related to FX forward contracts as of March 31, 2018 and December 31, 2017 , respectively. The net losses recorded in " Other expense, net " related to FX losses totaled $4.3 and $1.8 for the three months ended March 31, 2018 and April 1, 2017 , respectively. We enter into arrangements designed to provide the right of setoff in the event of counterparty default or insolvency, and have elected to offset the fair values of our FX forward contracts in our condensed consolidated balance sheets. The gross fair values of our FX forward contracts and FX embedded derivatives, in aggregate, were $2.1 and $2.3 (gross assets) and $0.1 and $0.0 (gross liabilities) at March 31, 2018 and December 31, 2017 , respectively. |
EQUITY AND STOCK-BASED COMPENSA
EQUITY AND STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
EQUITY AND STOCK-BASED COMPENSATION | EQUITY AND STOCK-BASED COMPENSATION Income (Loss) Per Share The following table sets forth the number of weighted-average shares outstanding used in the computation of basic and diluted income (loss) per share: Three months ended March 31, 2018 April 1, 2017 Weighted-average shares outstanding, basic 41.978 41.647 Dilutive effect of share-based awards 0.552 — Weighted-average shares outstanding, dilutive (1) 42.530 41.647 (1) For the three months ended March 31, 2018 , 0.216 of unvested restricted stock shares/units were not included in the computation of diluted income per share because required internal performance thresholds for vesting (as discussed below) were not met. For the three months ended March 31, 2018 , 0.342 of stock options outstanding were excluded from the computation of diluted income per share because their exercise price was greater than the average market price of common shares. For the three months ended April 1, 2017 , an aggregate of 0.943 unvested restricted stock shares, restricted stock units, and stock options outstanding were excluded from the computation of diluted loss per share as we incurred a net loss during the period. For the three months ended April 1, 2017 , the number of anti-dilutive unvested restricted stock shares and restricted stock units outstanding excluded from the computation of diluted loss per share was 0.166 . Stock-Based Compensation SPX FLOW stock-based compensation awards may be granted to certain eligible employees or non-employee directors under the SPX FLOW Stock Compensation Plan (the “Stock Plan”). Under the Stock Plan, up to 0.972 unissued shares of our common stock were available for future grant as of March 31, 2018 . The Stock Plan permits the issuance of authorized but unissued shares or shares from treasury upon the vesting of restricted stock units, granting of restricted stock shares or exercise of stock options. Each restricted stock share, restricted stock unit and stock option granted reduces share availability under the Stock Plan by one share. Restricted stock shares or restricted stock units may be granted to certain eligible employees or non-employee directors in accordance with the Stock Plan and applicable award agreements. Subject to participants' continued service and other award terms and conditions, the restrictions lapse and awards generally vest over a period of time, generally three years (or one year for awards to non-employee directors). In some instances, such as death, disability, or retirement, awards may vest concurrently with or following an employee's termination. Approximately half of such restricted stock shares and restricted stock unit awards vest based on performance thresholds, while the remaining portion vest based on the passage of time since grant date. Eligible employees, including officers, were granted 2018 target performance awards during the three months ended March 31, 2018 in which the employee can earn between 50% and 150% of the target performance award in the event, and to the extent, the award meets the required performance vesting criteria. Such awards are generally subject to the employees’ continued employment during the three -year vesting period, and may be completely forfeited if the threshold performance criteria are not met. Vesting for the 2018 target performance awards is based on SPX FLOW shareholder return versus the performance of a composite group of companies, as established under the awards (the "Composite Group"), over the three -year period from January 1, 2018 through December 31, 2020. In addition, certain eligible employees, including officers, were granted 2018 internal performance metric awards during the three months ended March 31, 2018 that vest subject to attainment of stated improvements in a three -year average annual return on invested capital (as defined under the awards) measured at the conclusion of the measurement period ending December 31, 2020 (including eligible employees’ continued employment during the measurement period). These target performance and internal performance metric awards were issued as restricted stock units to eligible non-officer employees and restricted stock shares to eligible officers. Eligible employees, including officers, also were granted 2018 awards during the three months ended March 31, 2018 that vest ratably over three years , subject to the passage of time and the employees’ continued employment during such period. In some instances, such as death, disability, or retirement, awards may vest concurrently with or following an employee's termination. These awards were issued as restricted stock units to eligible non-officer employees and restricted stock shares to eligible officers. Restricted stock share and unit awards granted to eligible employees, including officers, during the three months ended March 31, 2018 include early retirement provisions which permit recipients to be eligible for vesting generally upon reaching the age of 60 and completing ten years of service (and, if applicable, subject to the attainment of performance measures). Restricted stock shares and restricted stock units that do not vest within the applicable vesting period are forfeited. Stock options may be granted to eligible employees in the form of incentive stock options or nonqualified stock options. The option price per share may be no less than the fair market value of our common stock at the close of business on the date of grant. Upon exercise, the employee has the option to surrender previously owned shares at current value in payment of the exercise price and/or for withholding tax obligations. The recognition of compensation expense for share-based awards is based on their grant-date fair values. The fair value of each award is amortized over the lesser of the award's requisite or derived service period, which is generally up to three years as noted above. For the three months ended March 31, 2018 and April 1, 2017 , we recognized compensation expense related to share-based programs in “Selling, general and administrative” expense in the accompanying condensed consolidated statements of operations as follows: Three months ended March 31, 2018 April 1, 2017 Stock-based compensation expense $ 5.1 $ 4.0 Income tax benefit (1.2 ) (1.3 ) Stock-based compensation expense, net of income tax benefit $ 3.9 $ 2.7 Restricted Stock Share and Restricted Stock Unit Awards The Monte Carlo simulation model valuation technique was used to determine the fair value of our restricted stock shares and restricted stock units that contain a “market condition.” 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 restricted stock share and restricted stock unit award. The following assumptions were used in determining the fair value of the awards granted on the date indicated below: Annual Expected Stock Price Volatility Annual Expected Dividend Yield Risk-free Interest Rate Correlations Between Total Shareholder Return for SPX FLOW and Individual Companies in the Composite Group Minimum Average Maximum March 6, 2018: SPX FLOW 42.0 % — % 2.36 % 0.1216 0.4193 0.6928 Composite Group 27.9 % n/a 2.36 % As SPX FLOW shares have been traded only since our spin-off (the "Spin-Off") from SPX Corporation (the "former Parent") in September 2015 (i.e., with less historical performance than the generally three -year vesting period of the related awards), annual expected stock price volatility was based on the weighted average of SPX FLOW’s historical volatility (since the Spin-Off) and the average historical volatility of the Composite Group, as of the grant date. An expected annual dividend yield was not assumed as dividends are not currently granted on common shares by SPX FLOW. The average risk-free interest rate was based on an interpolation of the two -year and three -year daily treasury yield curve rate as of the grant date. The following table summarizes the unvested restricted stock share and restricted stock unit activity for the three months ended March 31, 2018 : Unvested Restricted Stock Shares and Restricted Stock Units Weighted-Average Grant-Date Fair Value Per Share Outstanding at December 31, 2017 1.132 $32.65 Granted 0.350 49.07 Vested (0.240) 38.78 Forfeited and other (0.014) 29.63 Outstanding at March 31, 2018 1.228 $36.16 As of March 31, 2018 , there was $25.9 of unrecognized compensation cost related to restricted stock share and restricted stock unit compensation arrangements. We expect this cost to be recognized over a weighted-average period of 2.1 years. Stock Options There were 0.342 of SPX FLOW stock options outstanding as of March 31, 2018 and December 31, 2017 , all of which were exercisable as of March 31, 2018 . The weighted-average exercise price per share of the stock options is $61.29 and the weighted-average grant-date fair value per share is $19.33 . The term of these options expires on January 2, 2025 (subject to earlier expiration upon a recipient's termination of service as provided under the awards). There was no unrecognized compensation cost related to these stock options as of March 31, 2018 . Accumulated Other Comprehensive Loss Substantially all of accumulated other comprehensive loss as of March 31, 2018 and December 31, 2017 , and in the changes thereof during the three months then ended, was foreign currency translation adjustment. The sole component of accumulated other comprehensive loss as of April 1, 2017 and December 31, 2016 , and in the changes thereof during the three months then ended, was foreign currency translation adjustment. Common Stock in Treasury During the three months ended March 31, 2018 and April 1, 2017 , “Common stock in treasury” was increased by $4.0 and $3.3 , respectively, for common stock that was surrendered by recipients of restricted stock as a means of funding the related minimum income tax withholding requirements. Incentive Plan Activity As of the market close on March 29, 2018, the Company amended the SPX FLOW Retirement Savings Plan (the "401(k) Plan") to institute a freeze of new investments (whether through contributions, transfers, exchanges or rebalancing) directed into the SPX FLOW Stock Fund investment option provided under the 401(k) Plan. All Company matching contributions to the 401(k) Plan related to payroll periods ending after March 29, 2018 will be contributed in cash instead of Company common stock and, as a result of this change, Company matching contributions after such date will not impact the number of outstanding shares or "Paid-In Capital." |
LITIGATION, CONTINGENT LIABILIT
LITIGATION, CONTINGENT LIABILITIES AND OTHER MATTERS | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION, CONTINGENT LIABILITIES AND OTHER MATTERS | LITIGATION, CONTINGENT LIABILITIES AND OTHER MATTERS We are subject to litigation 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. We are subject to domestic and international environmental protection laws and regulations with respect to our business operations and are operating in compliance with, or taking action aimed at ensuring compliance with, these laws and regulations. We believe our compliance obligations with environmental protection laws and regulations should not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows. Mezzanine Equity Independent noncontrolling shareholders in certain foreign subsidiaries of the Company have put options under their respective joint venture operating agreements that allow them to sell their common stock to the controlling shareholders (wholly-owned subsidiaries of SPX FLOW) upon the satisfaction of certain conditions, including the passage of time. The respective carrying values presented in "Mezzanine equity" of our condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017 are stated at the the current exercise value of the put options, irrespective of whether the options are currently exercisable. To the extent the noncontrolling interests' put option price is correlated with the estimated fair value of the subsidiary, we have used the market method to estimate such fair values. This represents a Level 3 fair value measurement as described in Note 13. None of the noncontrolling interest put options are exercisable at this time. If and when such options are exercised, we expect to settle the option value in cash. Of the $22.5 of current exercise value of the put options outstanding as of March 31, 2018 , options with a value of $12.0 become exercisable during our third quarter of 2018. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Enactment of the Tax Cuts and Jobs Act On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act included numerous changes to existing tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21% . The rate reduction was effective for the Company as of January 1, 2018. As a result of the reduction in the federal corporate income tax rate, the Company revalued its net U.S. federal deferred tax liability. The Company substantially completed its accounting for the revaluation of its net U.S. federal deferred tax liabilities and recorded a tax benefit of approximately $17.8 in the fourth quarter of 2017, excluding the impact for rate change on earnings which were not considered indefinitely reinvested. There were certain deferred tax balances that could only be estimated during the fourth quarter of 2017, so the rate change on these balances was a provisional estimate as of December 31, 2017. No revisions to the December 31, 2017 provisional estimate were made during the quarter ended March 31, 2018, and the accounting for the revaluation of the Company’s net U.S. federal deferred tax liabilities remains substantially complete as of March 31, 2018. The Tax Act provides a full dividends received deduction for any future dividends from non-U.S. subsidiaries to their U.S. parent company. Generally, this will allow the Company to repatriate cash more freely than under the historical U.S. tax system. To transition to this new tax regime, the Tax Act also provided for a mandatory one-time "deemed repatriation" of accumulated post-1986 foreign earnings which had not been previously taxed. The Company recorded a provisional estimate for this transition tax of $50.4 in the fourth quarter of 2017. As of March 31, 2018, the Company revised this estimate based on additional analysis of the provisions of the Tax Act and a change in certain elections available pursuant to the Tax Act. This revision resulted in a $1.8 increase to the previously estimated transition tax, resulting in a cumulative provision estimate of $52.2 for the transition tax. Previously, the Company had recorded taxes of $59.8 on earnings not indefinitely reinvested. In the fourth quarter of 2017, the Company recorded a benefit of $53.4 for the reduced tax rate on such earnings. Additionally, during the quarter ended March 31, 2018, the Company analyzed a provision of the Tax Act that allows for additional foreign tax credits upon the subsequent distribution of amounts subject to the transition tax. As a result, the Company recorded a benefit of $9.4 during the first quarter of 2018. Based on the mechanisms of the transition tax calculation, these additional foreign tax credits will be utilized to offset the transition tax. As of March 31, 2018, the Company expects to pay U.S. federal tax of approximately $11.9 on the deemed repatriation after utilization of tax loss and foreign tax credit carryforwards. The Company will pay this amount over a period of up to the next nine years as a result of fiscal year-ends of certain foreign subsidiaries ending after December 31, 2017. The accounting for the transition tax as required by the Tax Act remains provisional at March 31, 2018 due to (1) anticipated guidance from the U.S. Treasury department on interpreting various provisions of the Tax Act, (2) foreign subsidiaries with differing U.S. tax year-ends where final cash balances will not be known until November 2018 and (3) final foreign tax credit amounts from foreign subsidiaries that have not yet filed tax returns. The Tax Act is a comprehensive bill containing several other provisions, some of which will not materially impact the Company. Other provisions, such as the taxation of Global Intangible Low-Taxed Income (“GILTI”) and the limitation of deductions for interest expense, could have significant impact to the Company’s future tax position and cash taxes. The Company has not yet adopted an accounting policy related to the provision of deferred taxes related to GILTI. As such, the Company has not recorded any deferred taxes for GILTI but treated it as a period cost in computing the tax provision for the quarter ended March 31, 2018. The Company anticipates future issuance of U.S. Treasury department regulations and notices that will clarify significant issues dealing with the application and computation of taxes due under the GILTI provisions. The Tax Act made significant changes to the taxation of undistributed foreign earnings, requiring that all previously untaxed earnings and profits of our controlled foreign corporations be subjected to a one-time mandatory repatriation tax as described above. The transition tax substantially eliminated the basis difference that existed previously for purposes of Section 740 of the Codification. However, there are limited other taxes that could continue to apply such as foreign withholding and certain state taxes. At March 31, 2018, the Company is still evaluating the full impact of the Tax Act on our assertion regarding the indefinite reinvestment of the earnings of our foreign corporations. The Company recorded a charge of $1.1 in the first quarter of 2018 for a change in the expected liability upon the future repatriation of certain earnings resulting from the changes to the transition tax, as described above. Unrecognized Tax Benefits As of March 31, 2018 , we had gross unrecognized tax benefits of $5.7 (net unrecognized tax benefits of $2.3 ), of which $2.3 , if recognized, would impact our effective tax rate. We classify interest and penalties related to unrecognized tax benefits as a component of our income tax provision. As of March 31, 2018 , gross accrued interest totaled $0.3 (net accrued interest of $0.2 ), and there was 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 $0.0 to $1.5 . The previously unrecognized tax benefits relate to transfer pricing matters. The unrecognized tax benefits described above represent amounts that were included in tax returns filed by the Company. Historically, a portion of the Company's operations were included in tax returns filed by the former Parent or its subsidiaries that were not part of the Spin-Off. As a result, some uncertain tax positions related to the Company's operations resulted in unrecognized tax benefits that are now potential obligations of the former Parent or its subsidiaries that were part of the Spin-Off. In addition, some of the Company's tax returns included the operations of the former Parent's subsidiaries that were not part of the Spin-Off. In certain of these cases, these subsidiaries' activities gave rise to unrecognized tax benefits for which the Company could be potentially liable. When required under the Income Taxes Topic of the Codification, we have recorded a liability for these uncertain tax positions within our condensed consolidated balance sheets. Other Tax Matters During the three months ended March 31, 2018 , we recorded an income tax provision of $0.8 on $16.1 of pre-tax income, resulting in an effective tax rate of 5.0% . This compares to an income tax benefit for the three months ended April 1, 2017 of $0.1 on $7.4 of pre-tax loss, resulting in an effective tax rate of 1.4% . The effective tax rate for the first quarter of 2018 was impacted by a benefit of $9.4 resulting from additional foreign tax credits available to the Company arising from distributions of income taxed under the transition tax provisions of the Tax Act and partially offset by charges of (i) $1.8 resulting from a refinement of the transition tax calculation, (ii) $1.1 resulting from an increase to the liability for earnings not considered indefinitely reinvested caused by the changes to the transition tax calculation, and (iii) $1.3 resulting from losses occurring in certain jurisdictions where the tax benefit of those losses is not expected to be realized. The effective tax rate for the first quarter of 2017 was impacted by a tax charge of $1.4 related to the vesting of certain restricted stock shares and restricted stock units during the period. We review our income tax positions on a continuous basis and record unrecognized tax benefits for potential uncertain positions when we determine that an uncertain position meets the criteria of the Income Taxes Topic of the Codification. As events change and resolutions occur, adjustments are made to amounts previously provided, such as in the case of audit settlements with taxing authorities. In connection with the Spin-Off, we and the former Parent entered into a Tax Matters Agreement which, among other matters, addresses the allocation of certain tax adjustments that might arise upon examination of the 2013, 2014 and the pre-Spin-Off portion of the 2015 federal income tax returns of the former Parent. None of those returns are currently under examination, and we believe any contingencies have been 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 appropriately reflected as unrecognized tax benefits. We have various non-U.S. income tax returns under examination. The most significant of these is the examination in Germany for the 2010 through 2014 tax years. We expect this examination will conclude in 2018. We believe that any uncertain tax positions related to these examinations have been appropriately reflected as unrecognized tax benefits. An unfavorable resolution of one or more of the above matters could have a material adverse effect 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 or we have not yet reached the final stages of the appeals process, the timing of the ultimate resolution and any payments that may be required for the above matters cannot be determined at this time. |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | 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 basis. There were no transfers between the three levels of the fair value hierarchy during the periods presented. The following section describes the valuation methodologies we use to measure different financial instruments at fair value on a recurring basis. Derivative Financial Instruments Our derivative financial assets and liabilities include FX forward contracts and FX embedded derivatives, 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 March 31, 2018 and December 31, 2017 , the gross fair values of our derivative financial assets and liabilities, in aggregate, were $2.1 and $2.3 (gross assets) and $0.1 and $0.0 (gross liabilities), respectively. As of March 31, 2018 , there had 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 had been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risks. Equity Security Investment Until June 2017, we had an investment in an equity security that was accounted for under the fair value option, but not readily marketable, and therefore which was classified as a Level 3 asset in the fair value hierarchy. In April 2017, we entered into an agreement to sell our investment in the equity security to a third party, and the security’s value as of the end of the first quarter of 2017 reflected the sales price under this agreement. We received proceeds from the sale of the equity security during the second quarter of 2017. We held no equity securities required to be stated at fair value as of March 31, 2018 and December 31, 2017 . The table below presents a reconciliation of our investment in the equity security measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended April 1, 2017 , including net unrealized losses recorded to “ Other expense, net .” Three months ended April 1, 2017 Balance at beginning of year $ 7.6 Unrealized losses recorded to earnings (1.4 ) Balance at end of period $ 6.2 Mezzanine Equity To the extent the noncontrolling interests' put option price is correlated with the estimated fair value of the subsidiary, we use the market method to estimate the fair values of noncontrolling interest put options reported in "Mezzanine equity" using unobservable inputs (Level 3) on a recurring basis. Changes to the noncontrolling interest put option values are reflected as adjustments to "Mezzanine equity" and "Accumulated deficit." Refer to Note 11 for further discussion. 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 impairment would require that the asset be recorded at its fair value. At March 31, 2018 , we did not have any significant non-financial assets or liabilities that were required to be measured at fair value on a recurring or non-recurring basis. Refer to Note 6 for further discussion pertaining to our annual evaluation of goodwill and other intangible assets for impairment. Indebtedness and Other The estimated fair values of other financial liabilities (excluding capital leases and deferred financing fees) not measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value Term loan (1) $ 235.0 $ 235.0 $ 270.0 $ 270.0 5.625% Senior notes (1) 300.0 303.0 300.0 315.0 5.875% Senior notes (1) 300.0 305.3 300.0 320.3 Trade receivables financing arrangement 5.0 5.0 — — Other indebtedness 21.1 21.1 24.2 24.2 (1) Carrying amount reflected herein excludes related deferred financing fees. The following methods and assumptions were used in estimating the fair value of these financial instruments: • The fair values of the senior notes were determined using Level 2 inputs within the fair value hierarchy and were based on quoted market prices for the same or similar instruments or on current rates offered to us for debt with similar maturities, subordination and credit default expectations. • The fair values of amounts outstanding under our term loan and trade receivables financing arrangement approximated carrying value due primarily to the variable-rate nature and credit spreads of these instruments, when compared to other similar instruments. • The fair values of other indebtedness approximated carrying value due primarily to the short-term nature of these instruments. The carrying amounts of cash and equivalents, receivables and contract assets reported in our condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017 approximate fair value due to the short-term nature of those instruments. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “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. 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 and combined financial statements contained in our 2017 Annual Report on Form 10-K. Interim results are not necessarily indicative of full year results and the condensed consolidated financial statements may not be indicative of the Company’s future performance. Certain customer contract-related amounts in the accompanying condensed consolidated balance sheet as of December 31, 2017 and condensed consolidated statement of cash flows for the three months ended April 1, 2017 have been reclassified to conform to the current year presentation. 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 2018 are March 31, June 30, and September 29, compared to the respective April 1, July 1, and September 30, 2017 dates. We had one less day in the first quarter of 2018 and will have one more day in the fourth quarter of 2018 than in the respective 2017 periods. |
New Accounting Pronouncements | The following is a summary of new accounting pronouncements that apply or may apply to our business. New Revenue Recognition Pronouncement Effects of Adoption - In May 2014, and as subsequently amended, the Financial Accounting Standards Board (the "FASB") issued a new standard on revenue recognition that outlines a single comprehensive model for accounting for revenue arising from contracts with customers and supersedes most revenue recognition guidance. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in accordance with the transfer of control over those goods and services. The new standard also requires a number of disclosures intended to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue, and the related cash flows. We adopted the standard effective January 1, 2018 using the modified retrospective adoption method. In connection with our adoption of the new revenue recognition pronouncement, we recorded a reduction in our accumulated deficit of $2.3 , representing the net earnings which would have been recognized as of December 31, 2017 under the new standard on executed customer contracts (“orders”) in effect on that date. This reduction in our accumulated deficit reflects the net effects of (1) an increase in the amount of revenue to be recognized over time, as described below for certain product lines that were previously recognized at a point in time under the previous standard, partially offset by (2) a decrease in the amount of revenue recognized over time under the previous standard for certain contracts which do not contain a contractual enforceable right to payment in the event of customer cancellation or default, which are being recognized at a point in time under the new standard. The impacts of the new standard on our reportable segments are as follows: • Food and Beverage - Under previous accounting principles, we recognized revenue on certain long-term systems projects, most of which are customer-owned assets, over time using the cost-to-cost method, and revenue on long-term service contracts on a straight-line basis over the life of the related agreements. All other revenues were recognized at a point in time when the risks and rewards of ownership transferred to the customer. Under the new standard, revenue for (1) all customer-owned systems projects and service contracts, is recognized over time on a cost-to-cost basis, and (2) skids assembled in our factories or systems projects not owned by the customer during execution, as well as customer contracts for the sale of component and aftermarket parts, are recognized at a point in time upon transfer of control to the customer. • Power and Energy - Under previous accounting principles, we recognized revenue on certain long-term contracts for large pumps over time using the cost-to-cost method. We recognized all other product revenues in this segment, including revenues for most service contracts, at a point in time. In assessing the new standard, we determined our large pumps manufactured for use in upstream oil and nuclear power generation applications generally have limited alternative use. Likewise, our larger and more complex valve products and metering systems have limited alternative use. Our contractual enforceable rights to payment for performance completed to date in the event of customer cancellation or default is contract-specific for substantially all product lines in the segment. Under the new standard, revenue is recognized over time, if a contract explicitly provides an enforceable right to payment, for large pumps, large and/or complex valve products and metering systems. Revenue for service contracts is recognized over time. Revenue for all other products is recognized at a point in time, upon transfer of control of the product to the customer . • Industrial - Under previous accounting principles, substantially all of this segment’s revenue was recognized at a point in time when the risks and rewards of ownership transferred to the customer. In assessing the new standard, we determined that certain original equipment ("OE") products such as large mixers constructed with unique metals, custom-enclosed heat exchangers, and certain dehydration systems have little to no alternative use. Our contractual enforceable rights to payment for performance completed to date in the event of customer cancellation or default is contract specific for substantially all product lines in this segment. Under the new standard, revenue is recognized over time, if a contract explicitly provides for enforceable right to payment, for certain OE mixer types, custom-enclosed heat exchanger units, unique dehydration systems and service contracts. Revenue for all other products within this segment is recognized at a point in time, upon transfer of control of the product to the customer (i.e., effectively no change). Application of New Revenue Recognition Standard to Contract Revenues Recognized Over Time: Under the new revenue recognition standard, a contract with a customer is an agreement approved by both parties that creates enforceable rights and obligations, has commercial substance and includes identified payment terms under which collectability is probable. Once the Company has entered a contract, it is evaluated to identify performance obligations. For OE contracts that are recognized over time, our customers generally contract with us to provide a service of integrating a complex set of tasks and components into a single project of a highly engineered and tailored capability that generally cannot be re-sold to another customer without significant re-engineering and/or re-work cost. Such contracts are typically accounted for as a single performance obligation. For aftermarket service contracts, our customers generally receive and consume the benefits of the service as we perform, or our performance enhances a customer-controlled asset. As noted above, we generally recognize revenue over time using costs incurred to date relative to total estimated costs at completion (“EAC’s”) for these OE and service contracts. This measure best depicts the transfer of control to customers continuously over time which occurs as we incur costs related to satisfaction of performance obligation(s) under our contracts. This transfer of control over time is also supported by the work being either customer-owned throughout the life of the project or by termination clauses which allow us to recover costs incurred plus a reasonable profit. Revenues, including estimated profits, are recorded proportionally as costs are incurred. For certain long-term aftermarket maintenance contracts where we stand ready to perform at any time, we recognize revenue ratably over the life of the related contract. During the three months ended March 31, 2018, we recognized revenues of $62.6 , $27.9 and $18.7 under contracts for which control transferred over time in our Food and Beverage, Power and Energy, and Industrial segments, respectively. We have established controls and procedures to update project EAC’s for cost-to-cost contracts at least quarterly. Costs to fulfill include primarily labor, materials and subcontractors’ costs, as well as other direct costs. Our cost estimation process is based upon (i) historical experience, (ii) the professional judgment and knowledge of our engineers, project managers, and operations and financial professionals, and (iii) an assessment of key factors such as progress towards completion and the related program schedule, identified opportunities and risks and the related changes in estimates of revenues and costs. EAC adjustments are recognized in the period in which they become known, including the resulting impact on revenues and operating income. These adjustments may result from positive (or negative) project performance, and may result in an increase (or decrease) in operating income during performance, depending on whether or not we are successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. If and when EAC costs exceed revenue to be earned on the project, a provision for the entire expected loss on the performance obligation is recognized in the period the loss is determined. The impact of EAC adjustments on our revenues and operating income was insignificant during the three months ended March 31, 2018. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year, and had recorded $0.5 in “Other current assets” in our condensed consolidated balance sheets for such costs as of March 31, 2018 and December 31, 2017. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is expected to be less than one year. These costs primarily include the Company's internal sales force compensation program; under the terms of these programs these are generally earned and the costs are recognized at the time the revenue is recognized. Disaggregated Information about Revenues: Our aftermarket revenues generally include sales of parts and service/maintenance services, and OE revenues generally include all other revenue streams described above. The following table provides disaggregated information about our OE, including Food and Beverage systems, and aftermarket revenues by reportable segment for the three months ended March 31, 2018: For the Three Months Ended March 31, 2018 Original Equipment Aftermarket Total Revenues Food and Beverage $ 103.3 (1) $ 63.2 $ 166.5 Power and Energy 73.9 70.8 144.7 Industrial 122.6 56.5 179.1 Total revenues $ 299.8 $ 190.5 $ 490.3 (1) Includes $54.1 of revenue realized from the sale of highly engineered Food and Beverage systems. Contract Assets and Liabilities: Contract assets include unbilled amounts typically resulting from sales under cost-to-cost contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Contract assets are generally classified as current, as we expect to bill the amounts within the next twelve months. Contract liabilities include billings in excess of revenue recognized for cost-to-cost contracts and advance payments received from customers related to product sales (unearned revenue). We classify contract liabilities as a current liability, as we expect to recognize the related revenue within the next twelve months. Our contract assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period. Our contract assets and liabilities, and changes in such balances, were as follows: March 31, 2018 December 31, 2017 Change (1) % Change Contract assets $ 75.2 $ 57.7 $ 17.5 30.3 % Contract liabilities (218.0 ) (182.3 ) (35.7 ) 19.6 % Net contract liabilities $ (142.8 ) $ (124.6 ) $ (18.2 ) (1) The $18.2 increase in our net contract liabilities from December 31, 2017 to March 31, 2018 was primarily due to the timing of advance and milestone payments received on certain Food and Beverage and Power and Energy cost-to-cost contracts, consistent with the increase in our remaining performance obligations from December 31, 2017 to March 31, 2018 of those segments of $38.2 . Reconciliation of Operating Results and Balance Sheet - Previous vs. Current Revenue Recognition Standard: In accordance with the new revenue recognition standard requirements, the disclosure of the impact of adoption on our condensed consolidated statement of operations and balance sheet is as follows: For the three months ended March 31, 2018 Statement of Operations Amounts without adoption of new revenue standard Effect of adoption As Reported Revenues $ 481.0 $ 9.3 $ 490.3 Cost of products sold 328.0 6.6 334.6 Selling, general and administrative 115.5 — 115.5 Income tax provision (0.5 ) (0.3 ) (0.8 ) Net income 12.9 2.4 15.3 Net income attributable to SPX FLOW, Inc. 13.1 2.4 15.5 As of March 31, 2018 Balance Sheet Amounts without adoption of new revenue standard Effect of adoption As Reported Assets Contract assets $ 56.9 $ 18.3 $ 75.2 Inventories, net 330.0 (0.8 ) 329.2 Other current assets 51.5 0.5 52.0 Other assets 155.8 (0.5 ) 155.3 Liabilities Contract liabilities 206.3 11.7 218.0 Accrued expenses 181.0 (0.2 ) 180.8 Income taxes payable 22.1 0.4 22.5 Deferred and other income taxes 58.9 0.9 59.8 Equity Accumulated deficit (310.9 ) 4.7 (306.2 ) Remaining Performance Obligations: Remaining performance obligations represent the transaction price of orders for which (i) control of goods or services has not been transferred to the customer or we have not otherwise met our performance obligations, or (ii) where revenue is accounted for over time, proportional costs have not yet been incurred. Such remaining performance obligations exclude unexercised contract options and potential orders under “blanket order” contracts (e.g., with indefinite delivery dates or quantities). As of March 31, 2018, the aggregate amount of our remaining performance obligations was $1,050.8 . The Company expects to recognize revenue on approximately 85% and substantially all of our remaining performance obligations within the next 12 and 24 months, respectively, with an insignificant remaining amount expected to be recognized thereafter. Other New Accounting Pronouncements In February 2016, the FASB issued a new standard which requires a lessee to recognize on its balance sheet the assets and liabilities associated with the rights and obligations created by leases with terms that exceed twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of costs and cash flows arising from a lease. The new standard is effective for interim and annual reporting periods beginning after December 15, 2018 and requires a modified retrospective approach to adoption for lessees related to capital and operating leases existing at, or entered into after, the earliest comparative period presented in the financial statements, with certain practical expedients available. Early adoption is permitted. We are currently evaluating the effect that this new standard will have on our consolidated financial statements. In October 2016, the FASB issued an amendment that requires recognition of the income tax consequences of an intra-entity transfer of assets other than inventory. Under current authoritative guidance, the tax effects of intra-entity asset transfers (intercompany sales) are deferred until the transferred asset is sold to a third party or otherwise recovered through use. This amendment requires tax expense and deferred tax asset recognition from the intra-entity sale of the asset in the seller’s tax jurisdiction when the asset transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. We adopted this amendment as of the beginning of the first quarter of 2018 using modified retrospective application, and recorded a cumulative charge of $3.8 to accumulated deficit during the quarter. In November 2016, the FASB issued an amendment to guidance for statement of cash flow presentation, which requires that entities explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents in the statement of cash flows. Entities are also required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. We adopted this amendment in the first quarter of 2018 using retrospective application. We held $1.2 of restricted cash as of March 31, 2018 and December 31, 2017 , and $1.1 of restricted cash as of April 1, 2017 and December 31, 2016, which was reported in "Other current assets" in our condensed consolidated balance sheets and included in "Cash, cash equivalents and restricted cash" in our condensed consolidated statements of cash flows as of their respective dates. Such restricted cash balances consist primarily of deposits which serve as bank guarantees related to our performance under customer contracts and are required by law in certain international jurisdictions in lieu of letters or credit or other forms of security. In February 2018, the FASB issued an amendment to guidance which allows entities to reclassify certain stranded income tax effects from accumulated other comprehensive income/loss to retained earnings resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “Tax Act”), as well as additional financial statement disclosures to clarify the effects of adoption. The Company adopted this amendment as of the beginning of the first quarter of 2018 and elected to reclassify the income tax effects of the Tax Act between accumulated other comprehensive loss and accumulated deficit. The Company recorded a cumulative reduction of $7.3 of accumulated deficit and corresponding charge to accumulated other comprehensive loss during the quarter. The tax effects reclassified under this standard included the change in federal tax rate (net of the change in federal benefit of state tax, where applicable) pursuant to the Tax Act on the foreign exchange gains (losses) recorded through accumulated other comprehensive loss and the reversal of the tax impact of certain gains (losses) where the Tax Act impacted the Company’s intention to repatriate certain earnings that were previously taxed but would result in a tax on the foreign exchange gain (loss) upon repatriation. In March 2018, the FASB issued an amendment to update the FASB Accounting Standards Codification (the "Codification") and XBRL Taxonomy as a result of the Tax Act, and to incorporate Staff Accounting Bulletin No. 118 as released by the SEC, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Act in the period of enactment. This amendment is effective for interim and annual reporting periods beginning after December 15, 2018. The Company continues to evaluate the impact this tax reform legislation may have on its consolidated financial statements. |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Disaggregated information about revenues by reportable segment | The following table provides disaggregated information about our OE, including Food and Beverage systems, and aftermarket revenues by reportable segment for the three months ended March 31, 2018: For the Three Months Ended March 31, 2018 Original Equipment Aftermarket Total Revenues Food and Beverage $ 103.3 (1) $ 63.2 $ 166.5 Power and Energy 73.9 70.8 144.7 Industrial 122.6 56.5 179.1 Total revenues $ 299.8 $ 190.5 $ 490.3 (1) Includes $54.1 of revenue realized from the sale of highly engineered Food and Beverage systems. |
Contract assets and liabilities and changes in balances | Our contract assets and liabilities, and changes in such balances, were as follows: March 31, 2018 December 31, 2017 Change (1) % Change Contract assets $ 75.2 $ 57.7 $ 17.5 30.3 % Contract liabilities (218.0 ) (182.3 ) (35.7 ) 19.6 % Net contract liabilities $ (142.8 ) $ (124.6 ) $ (18.2 ) (1) The $18.2 increase in our net contract liabilities from December 31, 2017 to March 31, 2018 was primarily due to the timing of advance and milestone payments received on certain Food and Beverage and Power and Energy cost-to-cost contracts, consistent with the increase in our remaining performance obligations from December 31, 2017 to March 31, 2018 of those segments of $38.2 . |
Impact of adoption on financial statements | The cumulative effects of the changes made to our condensed consolidated balance sheet as of the beginning of the first quarter of 2018 as a result of the adoption of the accounting standard updates on (i) revenue recognition, (ii) income tax consequences of intra-entity non-inventory asset transfers and (iii) reclassification of certain stranded income tax effects from accumulated other comprehensive loss ("AOCL") to accumulated deficit, were as follows: Effects of adoption of accounting standards updates related to: Balance Sheet As filed December 31, 2017 Revenue recognition Tax effects of intra-entity non-inventory asset transfers Stranded AOCL reclassifications due to the Tax Act Total effects of adoption With effect of accounting standard updates January 1, 2018 Assets Contract assets $ 57.7 $ 17.8 $ — $ — $ 17.8 $ 75.5 Inventories, net 293.9 5.8 — — 5.8 299.7 Other current assets 50.0 0.5 — — 0.5 50.5 Other assets 159.8 (0.5 ) (3.8 ) — (4.3 ) 155.5 Liabilities Contract liabilities 182.3 20.5 — — 20.5 202.8 Accrued expenses 207.3 (0.2 ) — — (0.2 ) 207.1 Income taxes payable 21.6 0.2 — — 0.2 21.8 Deferred and other income taxes 63.3 0.8 — — 0.8 64.1 Equity Accumulated deficit (327.5 ) 2.3 (3.8 ) 7.3 5.8 (321.7 ) Accumulated other comprehensive loss (372.8 ) — — (7.3 ) (7.3 ) (380.1 ) In accordance with the new revenue recognition standard requirements, the disclosure of the impact of adoption on our condensed consolidated statement of operations and balance sheet is as follows: For the three months ended March 31, 2018 Statement of Operations Amounts without adoption of new revenue standard Effect of adoption As Reported Revenues $ 481.0 $ 9.3 $ 490.3 Cost of products sold 328.0 6.6 334.6 Selling, general and administrative 115.5 — 115.5 Income tax provision (0.5 ) (0.3 ) (0.8 ) Net income 12.9 2.4 15.3 Net income attributable to SPX FLOW, Inc. 13.1 2.4 15.5 As of March 31, 2018 Balance Sheet Amounts without adoption of new revenue standard Effect of adoption As Reported Assets Contract assets $ 56.9 $ 18.3 $ 75.2 Inventories, net 330.0 (0.8 ) 329.2 Other current assets 51.5 0.5 52.0 Other assets 155.8 (0.5 ) 155.3 Liabilities Contract liabilities 206.3 11.7 218.0 Accrued expenses 181.0 (0.2 ) 180.8 Income taxes payable 22.1 0.4 22.5 Deferred and other income taxes 58.9 0.9 59.8 Equity Accumulated deficit (310.9 ) 4.7 (306.2 ) |
INFORMATION ON REPORTABLE SEG23
INFORMATION ON REPORTABLE SEGMENTS, CORPORATE EXPENSE AND OTHER (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of financial data for reportable segments | Financial data for our reportable segments for the three months ended March 31, 2018 and April 1, 2017 were as follows: Three months ended March 31, 2018 April 1, 2017 Revenues (1) : Food and Beverage $ 166.5 $ 165.9 Power and Energy 144.7 105.9 Industrial 179.1 161.4 Total revenues $ 490.3 $ 433.2 Income (loss): Food and Beverage $ 17.9 $ 15.5 Power and Energy 12.2 (1.5 ) Industrial 20.5 21.1 Total income for reportable segments 50.6 35.1 Corporate expense 14.4 15.5 Pension and postretirement service costs 0.4 0.4 Special charges 2.6 8.6 Consolidated operating income $ 33.2 $ 10.6 (1) We recognized revenues of $109.2 and $60.4 over time in the three months ended March 31, 2018 and April 1, 2017 , respectively. |
SPECIAL CHARGES (Tables)
SPECIAL CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of special charges, net | Special charges for the three months ended March 31, 2018 and April 1, 2017 were as follows: Three months ended March 31, 2018 April 1, 2017 Food and Beverage $ 0.1 $ 1.5 Power and Energy 2.1 1.0 Industrial 0.4 2.8 Other — 3.3 Total $ 2.6 $ 8.6 |
Schedule of the analysis of restructuring liabilities | The following is an analysis of our restructuring liabilities for the three months ended March 31, 2018 and April 1, 2017 : Three months ended March 31, 2018 April 1, 2017 Balance at beginning of year $ 12.4 $ 33.6 Special charges (1) 2.6 5.0 Utilization — cash (3.8 ) (9.4 ) Currency translation adjustment and other 0.3 0.3 Balance at end of period $ 11.5 $ 29.5 (1) Amounts that impacted special charges but not the restructuring liabilities included $3.6 of asset impairment and other related charges during the three months ended April 1, 2017 . |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories at March 31, 2018 and December 31, 2017 comprised the following: March 31, 2018 December 31, 2017 Finished goods $ 102.3 $ 92.3 Work in process 118.5 99.2 Raw materials and purchased parts 114.9 108.9 Total FIFO cost 335.7 300.4 Excess of FIFO cost over LIFO inventory value (6.5 ) (6.5 ) Total inventories $ 329.2 $ 293.9 |
GOODWILL AND OTHER INTANGIBLE26
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying amount of goodwill, by reportable segment | The changes in the carrying amount of goodwill by reportable segment during the three months ended March 31, 2018 were as follows: December 31, 2017 Impairments Foreign Currency Translation and Other March 31, 2018 Food and Beverage $ 271.8 $ — $ 8.5 $ 280.3 Power and Energy (1) 272.4 — 6.3 278.7 Industrial (2) 227.1 — 0.5 227.6 Total $ 771.3 $ — $ 15.3 $ 786.6 (1) The carrying amount of goodwill included $262.5 and $256.5 of accumulated impairments as of March 31, 2018 and December 31, 2017 , respectively. (2) The carrying amount of goodwill included $67.7 of accumulated impairments as of March 31, 2018 and December 31, 2017 . |
Schedule of finite-lived intangible assets | Identifiable intangible assets were as follows: March 31, 2018 December 31, 2017 Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with determinable lives: Customer relationships $ 231.6 $ (127.6 ) $ 104.0 $ 226.1 $ (121.9 ) $ 104.2 Technology 96.9 (53.7 ) 43.2 94.1 (50.9 ) 43.2 Patents 6.8 (5.2 ) 1.6 6.8 (5.1 ) 1.7 Other 14.3 (11.6 ) 2.7 13.8 (11.1 ) 2.7 349.6 (198.1 ) 151.5 340.8 (189.0 ) 151.8 Trademarks with indefinite lives 202.8 — 202.8 198.5 — 198.5 Total $ 552.4 $ (198.1 ) $ 354.3 $ 539.3 $ (189.0 ) $ 350.3 |
Schedule of indefinite-lived intangible assets | Identifiable intangible assets were as follows: March 31, 2018 December 31, 2017 Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with determinable lives: Customer relationships $ 231.6 $ (127.6 ) $ 104.0 $ 226.1 $ (121.9 ) $ 104.2 Technology 96.9 (53.7 ) 43.2 94.1 (50.9 ) 43.2 Patents 6.8 (5.2 ) 1.6 6.8 (5.1 ) 1.7 Other 14.3 (11.6 ) 2.7 13.8 (11.1 ) 2.7 349.6 (198.1 ) 151.5 340.8 (189.0 ) 151.8 Trademarks with indefinite lives 202.8 — 202.8 198.5 — 198.5 Total $ 552.4 $ (198.1 ) $ 354.3 $ 539.3 $ (189.0 ) $ 350.3 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of net periodic benefit expense (income) | Net periodic benefit expense (income) for our foreign pension plans and our domestic pension and postretirement plans for the three months ended March 31, 2018 and April 1, 2017 included the following components: Foreign Pension Plans Domestic Pension and Postretirement Plans Total Statement of Operations Caption in Which Expense (Income) is Reported Three months ended March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 Service cost $ 0.2 0.2 $ 0.2 $ 0.2 $ 0.4 $ 0.4 Selling, general and administrative Interest cost 0.2 0.1 0.1 0.2 0.3 0.3 Other expense, net Curtailment gain (1) — (1.1 ) — — — (1.1 ) Other expense, net Total net periodic benefit expense (income) $ 0.4 $ (0.8 ) $ 0.3 $ 0.4 $ 0.7 $ (0.4 ) (1) Gain is related to the cessation of accrual of future benefits by participants in a defined benefit pension plan in the Netherlands effective March 31, 2017. The accumulated obligations for future pension payments to participants in this plan were also transferred to an insurance company at that time. Under the agreement, the insurance company irrevocably assumed the obligation to make future pension payments to the approximately 60 participants of the plan. |
INDEBTEDNESS (Tables)
INDEBTEDNESS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Debt at March 31, 2018 and December 31, 2017 was comprised of the following: March 31, 2018 December 31, 2017 Term loan (1) $ 235.0 $ 270.0 5.625% senior notes, due in August 2024 300.0 300.0 5.875% senior notes, due in August 2026 300.0 300.0 Trade receivables financing arrangement 5.0 — Other indebtedness (2) 32.9 35.8 Less: deferred financing fees (3) (9.6 ) (10.2 ) Total debt 863.3 895.6 Less: short-term debt 26.1 24.2 Less: current maturities of long-term debt 20.5 20.5 Total long-term debt $ 816.7 $ 850.9 (1) The term loan, which had an initial principal balance of $400.0 , is repayable in quarterly installments of 5.0% annually which began with our third quarter of 2016, with the remaining balance repayable in full on September 24, 2020. On January 31, 2018, we made a voluntary principal prepayment in the amount of $30.0 under the term loan facility, funded by cash on hand. There was no penalty associated with this prepayment. (2) Primarily includes capital lease obligations of $11.8 and $11.6 and balances under a purchase card program of $19.7 and $21.9 as of March 31, 2018 and December 31, 2017 , respectively. The purchase card program allows for payment beyond customary 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. (3) Deferred financing fees were comprised of fees related to the term loan and senior notes. |
EQUITY AND STOCK-BASED COMPEN29
EQUITY AND STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of weighted average shares outstanding used in computation of basic and diluted income (loss) per share | The following table sets forth the number of weighted-average shares outstanding used in the computation of basic and diluted income (loss) per share: Three months ended March 31, 2018 April 1, 2017 Weighted-average shares outstanding, basic 41.978 41.647 Dilutive effect of share-based awards 0.552 — Weighted-average shares outstanding, dilutive (1) 42.530 41.647 (1) For the three months ended March 31, 2018 , 0.216 of unvested restricted stock shares/units were not included in the computation of diluted income per share because required internal performance thresholds for vesting (as discussed below) were not met. For the three months ended March 31, 2018 , 0.342 of stock options outstanding were excluded from the computation of diluted income per share because their exercise price was greater than the average market price of common shares. For the three months ended April 1, 2017 , an aggregate of 0.943 unvested restricted stock shares, restricted stock units, and stock options outstanding were excluded from the computation of diluted loss per share as we incurred a net loss during the period. For the three months ended April 1, 2017 , the number of anti-dilutive unvested restricted stock shares and restricted stock units outstanding excluded from the computation of diluted loss per share was 0.166 . |
Schedule of compensation expense related to share-based programs recognized in selling, general and administrative expense | For the three months ended March 31, 2018 and April 1, 2017 , we recognized compensation expense related to share-based programs in “Selling, general and administrative” expense in the accompanying condensed consolidated statements of operations as follows: Three months ended March 31, 2018 April 1, 2017 Stock-based compensation expense $ 5.1 $ 4.0 Income tax benefit (1.2 ) (1.3 ) Stock-based compensation expense, net of income tax benefit $ 3.9 $ 2.7 |
Summary of restricted stock share and restricted stock unit activity | The following table summarizes the unvested restricted stock share and restricted stock unit activity for the three months ended March 31, 2018 : Unvested Restricted Stock Shares and Restricted Stock Units Weighted-Average Grant-Date Fair Value Per Share Outstanding at December 31, 2017 1.132 $32.65 Granted 0.350 49.07 Vested (0.240) 38.78 Forfeited and other (0.014) 29.63 Outstanding at March 31, 2018 1.228 $36.16 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Reconciliation of investments in equity securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) | The table below presents a reconciliation of our investment in the equity security measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended April 1, 2017 , including net unrealized losses recorded to “ Other expense, net .” Three months ended April 1, 2017 Balance at beginning of year $ 7.6 Unrealized losses recorded to earnings (1.4 ) Balance at end of period $ 6.2 |
Estimated fair values of other financial liabilities not measured at fair value on a recurring basis | The estimated fair values of other financial liabilities (excluding capital leases and deferred financing fees) not measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value Term loan (1) $ 235.0 $ 235.0 $ 270.0 $ 270.0 5.625% Senior notes (1) 300.0 303.0 300.0 315.0 5.875% Senior notes (1) 300.0 305.3 300.0 320.3 Trade receivables financing arrangement 5.0 5.0 — — Other indebtedness 21.1 21.1 24.2 24.2 (1) Carrying amount reflected herein excludes related deferred financing fees. |
BASIS OF PRESENTATION - Narrat
BASIS OF PRESENTATION - Narrative (Details) | 3 Months Ended |
Mar. 31, 2018segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of business segments | 3 |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||||
Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accumulated deficit | $ (306.2) | $ (321.7) | $ (327.5) | ||
Revenue | 490.3 | ||||
Remaining performance obligation | 1,050.8 | ||||
Restricted cash | 1.2 | 1.2 | $ 1.1 | $ 1.1 | |
Cumulative reduction of accumulated deficit | 7.3 | ||||
Incremental costs of obtaining a contract | 0.5 | $ 0.5 | |||
Food and Beverage | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | 166.5 | ||||
Food and Beverage | Transferred Over Time | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | 62.6 | ||||
Power and Energy | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | 144.7 | ||||
Power and Energy | Transferred Over Time | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | 27.9 | ||||
Industrial | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | 179.1 | ||||
Industrial | Transferred Over Time | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | 18.7 | ||||
ASU 2014-09 | Effects of adoption of accounting standards updates related to Revenue recognition | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accumulated deficit | 4.7 | 2.3 | |||
ASU 2016-16 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accumulated deficit | $ (3.8) | ||||
Cumulative catch-up charge to retained earnings | $ 3.8 |
NEW ACCOUNTING PRONOUNCEMENTS33
NEW ACCOUNTING PRONOUNCEMENTS - Disaggregated Information about Revenue (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 490.3 |
Food and Beverage | |
Disaggregation of Revenue [Line Items] | |
Revenue | 166.5 |
Power and Energy | |
Disaggregation of Revenue [Line Items] | |
Revenue | 144.7 |
Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 179.1 |
Original Equipment | |
Disaggregation of Revenue [Line Items] | |
Revenue | 299.8 |
Original Equipment | Food and Beverage | |
Disaggregation of Revenue [Line Items] | |
Revenue | 103.3 |
Original Equipment | Power and Energy | |
Disaggregation of Revenue [Line Items] | |
Revenue | 73.9 |
Original Equipment | Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 122.6 |
Aftermarket | |
Disaggregation of Revenue [Line Items] | |
Revenue | 190.5 |
Aftermarket | Food and Beverage | |
Disaggregation of Revenue [Line Items] | |
Revenue | 63.2 |
Aftermarket | Power and Energy | |
Disaggregation of Revenue [Line Items] | |
Revenue | 70.8 |
Aftermarket | Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 56.5 |
Original Equipment, Highly engineered systems | Food and Beverage | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 54.1 |
NEW ACCOUNTING PRONOUNCEMENTS34
NEW ACCOUNTING PRONOUNCEMENTS - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||
Contract assets | $ 75.2 | $ 75.5 | $ 57.7 |
Change in contract assets | $ 17.5 | ||
Percentage change in contract assets | 30.30% | ||
Contract liabilities | $ (218) | $ (202.8) | (182.3) |
Change in contract liabilities | $ (35.7) | ||
Percentage change in contract liabilities | 19.60% | ||
Net contract liabilities | $ (142.8) | $ (124.6) | |
Change in net contract liabilities | (18.2) | ||
Increase in remaining performance obligations | $ 38.2 |
NEW ACCOUNTING PRONOUNCEMENTS35
NEW ACCOUNTING PRONOUNCEMENTS - Impact of Adoption on Condensed Consolidated Statement of Operations and Balance Sheet (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2018 | Apr. 01, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 490.3 | $ 433.2 | ||
Cost of products sold | 334.6 | 294.1 | ||
Selling, general and administrative | 115.5 | 115.3 | ||
Income tax provision | (0.8) | 0.1 | ||
Net income | 15.3 | (7.3) | ||
Net income attributable to SPX FLOW, Inc. | 15.5 | $ (7.4) | ||
Assets | ||||
Contract assets | 75.2 | $ 75.5 | $ 57.7 | |
Inventories, net | 329.2 | 299.7 | 293.9 | |
Other current assets | 52 | 50.5 | 50 | |
Other assets | 155.3 | 155.5 | 159.8 | |
Liabilities | ||||
Contract liabilities | 218 | 202.8 | 182.3 | |
Accrued expenses | 180.8 | 207.1 | 207.3 | |
Income taxes payable | 22.5 | 21.8 | 21.6 | |
Deferred and other income taxes | 59.8 | 64.1 | 63.3 | |
Equity | ||||
Accumulated deficit | (306.2) | (321.7) | $ (327.5) | |
Amounts without adoption of new revenue standard | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 481 | |||
Cost of products sold | 328 | |||
Selling, general and administrative | 115.5 | |||
Income tax provision | (0.5) | |||
Net income | 12.9 | |||
Net income attributable to SPX FLOW, Inc. | 13.1 | |||
Assets | ||||
Contract assets | 56.9 | |||
Inventories, net | 330 | |||
Other current assets | 51.5 | |||
Other assets | 155.8 | |||
Liabilities | ||||
Contract liabilities | 206.3 | |||
Accrued expenses | 181 | |||
Income taxes payable | 22.1 | |||
Deferred and other income taxes | 58.9 | |||
Equity | ||||
Accumulated deficit | (310.9) | |||
Effect of adoption higher / (lower) | ASU 2014-09 | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 9.3 | |||
Cost of products sold | 6.6 | |||
Selling, general and administrative | 0 | |||
Income tax provision | (0.3) | |||
Net income | 2.4 | |||
Net income attributable to SPX FLOW, Inc. | 2.4 | |||
Assets | ||||
Contract assets | 18.3 | 17.8 | ||
Inventories, net | (0.8) | 5.8 | ||
Other current assets | 0.5 | 0.5 | ||
Other assets | (0.5) | (0.5) | ||
Liabilities | ||||
Contract liabilities | 11.7 | 20.5 | ||
Accrued expenses | (0.2) | (0.2) | ||
Income taxes payable | 0.4 | 0.2 | ||
Deferred and other income taxes | 0.9 | 0.8 | ||
Equity | ||||
Accumulated deficit | $ 4.7 | $ 2.3 |
NEW ACCOUNTING PRONOUNCEMENTS36
NEW ACCOUNTING PRONOUNCEMENTS - Remaining performance obligation (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | 3 Months Ended |
Mar. 31, 2018 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 85.00% |
Expected timing of satisfaction, period | 1 year |
NEW ACCOUNTING PRONOUNCEMENTS37
NEW ACCOUNTING PRONOUNCEMENTS - Cumulative Effects of the Changes Made to Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets | |||
Contract assets | $ 75.2 | $ 75.5 | $ 57.7 |
Inventories, net | 329.2 | 299.7 | 293.9 |
Other current assets | 52 | 50.5 | 50 |
Other assets | 155.3 | 155.5 | 159.8 |
Liabilities | |||
Contract liabilities | 218 | 202.8 | 182.3 |
Accrued expenses | 180.8 | 207.1 | 207.3 |
Income taxes payable | 22.5 | 21.8 | 21.6 |
Deferred and other income taxes | 59.8 | 64.1 | 63.3 |
Equity | |||
Accumulated deficit | (306.2) | (321.7) | (327.5) |
Accumulated other comprehensive loss | (340.1) | (380.1) | $ (372.8) |
Adjustments for New Accounting Pronouncement [Member] | |||
Assets | |||
Contract assets | 17.8 | ||
Inventories, net | 5.8 | ||
Other current assets | 0.5 | ||
Other assets | (4.3) | ||
Liabilities | |||
Contract liabilities | 20.5 | ||
Accrued expenses | (0.2) | ||
Income taxes payable | 0.2 | ||
Deferred and other income taxes | 0.8 | ||
Equity | |||
Accumulated deficit | 5.8 | ||
Accumulated other comprehensive loss | (7.3) | ||
ASU 2016-16 | |||
Assets | |||
Contract assets | 0 | ||
Inventories, net | 0 | ||
Other current assets | 0 | ||
Other assets | (3.8) | ||
Liabilities | |||
Contract liabilities | 0 | ||
Accrued expenses | 0 | ||
Income taxes payable | 0 | ||
Deferred and other income taxes | 0 | ||
Equity | |||
Accumulated deficit | (3.8) | ||
Accumulated other comprehensive loss | 0 | ||
ASU 2018-02 | |||
Assets | |||
Contract assets | 0 | ||
Inventories, net | 0 | ||
Other current assets | 0 | ||
Other assets | 0 | ||
Liabilities | |||
Contract liabilities | 0 | ||
Accrued expenses | 0 | ||
Income taxes payable | 0 | ||
Deferred and other income taxes | 0 | ||
Equity | |||
Accumulated deficit | 7.3 | ||
Accumulated other comprehensive loss | (7.3) | ||
Effects of adoption of accounting standards updates related to Revenue recognition | ASU 2014-09 | |||
Assets | |||
Contract assets | 18.3 | 17.8 | |
Inventories, net | (0.8) | 5.8 | |
Other current assets | 0.5 | 0.5 | |
Other assets | (0.5) | (0.5) | |
Liabilities | |||
Contract liabilities | 11.7 | 20.5 | |
Accrued expenses | (0.2) | (0.2) | |
Income taxes payable | 0.4 | 0.2 | |
Deferred and other income taxes | 0.9 | 0.8 | |
Equity | |||
Accumulated deficit | $ 4.7 | 2.3 | |
Accumulated other comprehensive loss | $ 0 |
INFORMATION ON REPORTABLE SEG38
INFORMATION ON REPORTABLE SEGMENTS, CORPORATE EXPENSE AND OTHER - Narrative (Details) | 3 Months Ended |
Mar. 31, 2018segmentcountry | |
Segment Reporting [Abstract] | |
Number of countries in which entity operates (more than) | 30 |
Number of countries in which entity sells its products and services (more than) | 150 |
Number of reportable segments | segment | 3 |
INFORMATION ON REPORTABLE SEG39
INFORMATION ON REPORTABLE SEGMENTS, CORPORATE EXPENSE AND OTHER - Financial Data for Reportable Segments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Revenues: | ||
Total revenues | $ 490.3 | $ 433.2 |
Income (loss): | ||
Total income for reportable segments | 33.2 | 10.6 |
Special charges | 2.6 | 8.6 |
Transferred Over Time | ||
Revenues: | ||
Total revenues | 109.2 | 60.4 |
Reporting segments | ||
Revenues: | ||
Total revenues | 490.3 | 433.2 |
Income (loss): | ||
Total income for reportable segments | 50.6 | 35.1 |
Reporting segments | Food and Beverage | ||
Revenues: | ||
Total revenues | 166.5 | 165.9 |
Income (loss): | ||
Total income for reportable segments | 17.9 | 15.5 |
Special charges | 0.1 | 1.5 |
Reporting segments | Power and Energy | ||
Revenues: | ||
Total revenues | 144.7 | 105.9 |
Income (loss): | ||
Total income for reportable segments | 12.2 | (1.5) |
Special charges | 2.1 | 1 |
Reporting segments | Industrial | ||
Revenues: | ||
Total revenues | 179.1 | 161.4 |
Income (loss): | ||
Total income for reportable segments | 20.5 | 21.1 |
Special charges | 0.4 | 2.8 |
Other | ||
Income (loss): | ||
Corporate expense | 14.4 | 15.5 |
Special charges | 0 | 3.3 |
Segment reconciling items | ||
Income (loss): | ||
Pension and postretirement service costs | 0.4 | 0.4 |
Special charges | $ 2.6 | $ 8.6 |
SPECIAL CHARGES - Schedule (De
SPECIAL CHARGES - Schedule (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||
Special charges | $ 2.6 | $ 8.6 |
Reporting segments | Food and Beverage | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | 0.1 | 1.5 |
Reporting segments | Power and Energy | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | 2.1 | 1 |
Reporting segments | Industrial | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | 0.4 | 2.8 |
Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | $ 0 | $ 3.3 |
SPECIAL CHARGES - Narrative (D
SPECIAL CHARGES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2017 | Mar. 31, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||
Expected charges to be incurred | $ 0.6 | |
Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Asset impairment charges | $ 3.6 |
SPECIAL CHARGES - Analysis of
SPECIAL CHARGES - Analysis of Restructuring Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Restructuring Liabilities | ||
Balance at beginning of year | $ 12.4 | $ 33.6 |
Special charges | 2.6 | 5 |
Utilization — cash | (3.8) | (9.4) |
Currency translation adjustment and other | 0.3 | 0.3 |
Balance at end of period | $ 11.5 | 29.5 |
Other | ||
Restructuring Liabilities | ||
Asset impairment and non-cash charges | $ 3.6 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Inventory, Net [Abstract] | |||
Finished goods | $ 102.3 | $ 92.3 | |
Work in process | 118.5 | 99.2 | |
Raw materials and purchased parts | 114.9 | 108.9 | |
Total FIFO cost | 335.7 | 300.4 | |
Excess of FIFO cost over LIFO inventory value | (6.5) | (6.5) | |
Total inventories | $ 329.2 | $ 299.7 | $ 293.9 |
Domestic inventories, valued using the last-in, first-out method, as a percentage of total inventory | 8.00% | 7.00% |
GOODWILL AND OTHER INTANGIBLE44
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Changes in the carrying amount of goodwill | ||
Beginning Balance | $ 771.3 | |
Impairments | 0 | |
Foreign Currency Translation and Other | 15.3 | |
Ending Balance | 786.6 | |
Food and Beverage | ||
Changes in the carrying amount of goodwill | ||
Beginning Balance | 271.8 | |
Impairments | 0 | |
Foreign Currency Translation and Other | 8.5 | |
Ending Balance | 280.3 | |
Power and Energy | ||
Changes in the carrying amount of goodwill | ||
Beginning Balance | 272.4 | |
Impairments | 0 | |
Foreign Currency Translation and Other | 6.3 | |
Ending Balance | 278.7 | |
Accumulated impairment included in carrying amount of goodwill | 262.5 | $ 256.5 |
Industrial | ||
Changes in the carrying amount of goodwill | ||
Beginning Balance | 227.1 | |
Impairments | 0 | |
Foreign Currency Translation and Other | 0.5 | |
Ending Balance | 227.6 | |
Accumulated impairment included in carrying amount of goodwill | $ 67.7 | $ 67.7 |
GOODWILL AND OTHER INTANGIBLE45
GOODWILL AND OTHER INTANGIBLE ASSETS - Identifiable Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 349.6 | $ 340.8 |
Accumulated Amortization | (198.1) | (189) |
Net Carrying Value | 151.5 | 151.8 |
Total gross carrying value | 552.4 | 539.3 |
Total net carrying value | 354.3 | 350.3 |
Trademarks with indefinite lives | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Trademarks with indefinite lives | 202.8 | 198.5 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 231.6 | 226.1 |
Accumulated Amortization | (127.6) | (121.9) |
Net Carrying Value | 104 | 104.2 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 96.9 | 94.1 |
Accumulated Amortization | (53.7) | (50.9) |
Net Carrying Value | 43.2 | 43.2 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 6.8 | 6.8 |
Accumulated Amortization | (5.2) | (5.1) |
Net Carrying Value | 1.6 | 1.7 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 14.3 | 13.8 |
Accumulated Amortization | (11.6) | (11.1) |
Net Carrying Value | $ 2.7 | $ 2.7 |
GOODWILL AND OTHER INTANGIBLE46
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Dec. 31, 2017 | |
Goodwill [Line Items] | |||
Net carrying value of intangible assets with determinable lives | $ 151,500,000 | $ 151,800,000 | |
Impairment charges recorded | 0 | $ 0 | |
Trademarks with indefinite lives | |||
Goodwill [Line Items] | |||
Trademarks with indefinite lives | 202,800,000 | $ 198,500,000 | |
Power and Energy | |||
Goodwill [Line Items] | |||
Net carrying value of intangible assets with determinable lives | 76,800,000 | ||
Power and Energy | Trademarks with indefinite lives | |||
Goodwill [Line Items] | |||
Trademarks with indefinite lives | 37,000,000 | ||
Food and Beverage | |||
Goodwill [Line Items] | |||
Net carrying value of intangible assets with determinable lives | 51,900,000 | ||
Food and Beverage | Trademarks with indefinite lives | |||
Goodwill [Line Items] | |||
Trademarks with indefinite lives | 104,300,000 | ||
Industrial | |||
Goodwill [Line Items] | |||
Net carrying value of intangible assets with determinable lives | 22,800,000 | ||
Industrial | Trademarks with indefinite lives | |||
Goodwill [Line Items] | |||
Trademarks with indefinite lives | $ 61,500,000 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018USD ($) | Apr. 01, 2017USD ($) | Mar. 31, 2017participant | |
Employee Benefit Plans | |||
Service cost | $ 0.4 | $ 0.4 | |
Interest cost | 0.3 | 0.3 | |
Curtailment gain | 0 | (1.1) | |
Total net periodic benefit expense (income) | 0.7 | (0.4) | |
Pension plan | |||
Employee Benefit Plans | |||
Domestic pension payments (less than) | 0.1 | 0.1 | |
Foreign Plan | Pension plan | |||
Employee Benefit Plans | |||
Service cost | 0.2 | 0.2 | |
Interest cost | 0.2 | 0.1 | |
Curtailment gain | 0 | (1.1) | |
Total net periodic benefit expense (income) | 0.4 | (0.8) | |
United States | |||
Employee Benefit Plans | |||
Service cost | 0.2 | 0.2 | |
Interest cost | 0.1 | 0.2 | |
Curtailment gain | 0 | 0 | |
Total net periodic benefit expense (income) | $ 0.3 | $ 0.4 | |
Netherlands | Pension plan | |||
Employee Benefit Plans | |||
Number of participants of the plan | participant | 60 |
INDEBTEDNESS - Schedule of Deb
INDEBTEDNESS - Schedule of Debt (Details) - USD ($) | Jan. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | |||
Short-term debt | $ 26,100,000 | $ 24,200,000 | |
Other indebtedness | 32,900,000 | 35,800,000 | |
Debt Instrument [Line Items] | |||
Less: deferred financing fees | (9,600,000) | (10,200,000) | |
Long-term debt and capital lease obligations | 863,300,000 | 895,600,000 | |
Less: current maturities of long-term debt | 20,500,000 | 20,500,000 | |
Total long-term debt | 816,700,000 | 850,900,000 | |
Trade receivables financing arrangement | |||
Short-term Debt [Line Items] | |||
Short-term debt | 5,000,000 | 0 | |
Other indebtedness | 19,700,000 | 21,900,000 | |
Capital lease obligations | |||
Short-term Debt [Line Items] | |||
Other indebtedness | 11,800,000 | 11,600,000 | |
Term loan | |||
Debt Instrument [Line Items] | |||
Domestic revolving loan facility | 235,000,000 | 270,000,000 | |
Aggregate principal amount | $ 400,000,000 | ||
Percentage of face amount repayable annually | 5.00% | ||
Voluntary prepayment amount | $ 30,000,000 | ||
Senior notes | 5.625% senior notes, due in August 2024 | |||
Debt Instrument [Line Items] | |||
Domestic revolving loan facility | $ 300,000,000 | 300,000,000 | |
Stated interest rate | 5.625% | ||
Senior notes | 5.875% senior notes, due in August 2026 | |||
Debt Instrument [Line Items] | |||
Domestic revolving loan facility | $ 300,000,000 | $ 300,000,000 | |
Stated interest rate | 5.875% |
INDEBTEDNESS - Narrative (Deta
INDEBTEDNESS - Narrative (Details) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Line of Credit Facility [Line Items] | ||
Short-term debt | $ 26,100,000 | $ 24,200,000 |
Trade receivables financing arrangement | ||
Line of Credit Facility [Line Items] | ||
Available borrowing capacity | 30,700,000 | |
Short-term debt | 5,000,000 | $ 0 |
Maximum borrowing amount | 50,000,000 | |
Foreign line of credit | ||
Line of Credit Facility [Line Items] | ||
Outstanding letters of credit | 7,100,000 | |
Secured debt | Letter of credit | ||
Line of Credit Facility [Line Items] | ||
Outstanding letters of credit | 7,000,000 | |
Secured debt | Foreign line of credit | ||
Line of Credit Facility [Line Items] | ||
Available borrowing capacity | 324,000,000 | |
Outstanding letters of credit | $ 176,000,000 | |
Senior credit facility | ||
Line of Credit Facility [Line Items] | ||
Maintained consolidated leverage ratio (less than or equal to) | 3.25 | |
Maintained interest coverage ratio (greater than or equal to) | 3.50 | |
Senior credit facility | Secured debt | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate of outstanding borrowings | 3.60% | 4.10% |
Available borrowing capacity | $ 443,000,000 |
DERIVATIVE FINANCIAL INSTRUME50
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | Dec. 31, 2017 | |
Derivative [Line Items] | |||
Unrealized gains (losses), net of tax, recorded in AOCI | $ 0 | $ 0 | |
FX forward contracts | |||
Derivative [Line Items] | |||
Aggregate notional amount | $ 41,800,000 | $ 44,600,000 | |
Period contracts are scheduled to mature | 1 year | 1 year | |
FX embedded derivatives | |||
Derivative [Line Items] | |||
Aggregate notional amount | $ 17,200,000 | $ 16,900,000 | |
Derivative contracts with scheduled maturities within one year | 16,700,000 | ||
Derivative contracts with scheduled maturities within two years | 500,000 | ||
Forward contracts | |||
Derivative [Line Items] | |||
Fair value of derivative contract, gross assets | 2,100,000 | ||
Fair value of derivative contract, gross assets setoff | 2,300,000 | ||
Fair value of derivative contract, gross liabilities | 100,000 | ||
Fair value of derivative contract, gross liabilities setoff | $ 0 | ||
Forward contracts | Other income (expense), net | |||
Derivative [Line Items] | |||
Net gains (losses) recorded in other income (expense), net | $ (4,300,000) | $ (1,800,000) |
EQUITY AND STOCK-BASED COMPEN51
EQUITY AND STOCK-BASED COMPENSATION - Income (Loss) Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||
Weighted-average shares outstanding, basic (in shares) | 41,978 | 41,647 |
Dilutive effect of share-based awards (in shares) | 552 | 0 |
Weighted-average shares outstanding, dilutive (in shares) | 42,530 | 41,647 |
Restricted stock shares/Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities not included in computation of diluted income per share (in shares) | 216 | 166 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities not included in computation of diluted income per share (in shares) | 342 | |
Restricted stock shares/Restricted stock units/Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities not included in computation of diluted income per share (in shares) | 943 |
EQUITY AND STOCK-BASED COMPEN52
EQUITY AND STOCK-BASED COMPENSATION - Stock-Based Compensation (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award's requisite service period | 3 years |
Stock Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for future grants (up to) (in shares) | shares | 972,000 |
Restricted stock units | Non-officer employees | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 3 years |
Restricted stock shares and restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost | $ | $ 25.9 |
Vesting period | 3 years |
Fair value assumptions, expected volatility rate, period of historical volatility | 3 years |
Restricted stock shares and restricted stock units | Early retirement provision | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 10 years |
Eligible for vesting, age | 60 years |
Restricted stock shares and restricted stock units | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of shares equivalent to minimum vesting | 50.00% |
Restricted stock shares and restricted stock units | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of shares equivalent to minimum vesting | 150.00% |
Restricted stock shares and restricted stock units | Non-employee directors | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 1 year |
Restricted stock shares and restricted stock units | Officers | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 3 years |
EQUITY AND STOCK-BASED COMPEN53
EQUITY AND STOCK-BASED COMPENSATION - Compensation Expense Related to Share-based Programs (Details) - Selling, general and administrative expenses - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 5.1 | $ 4 |
Income tax benefit | (1.2) | (1.3) |
Stock-based compensation expense, net of income tax benefit | $ 3.9 | $ 2.7 |
EQUITY AND STOCK-BASED COMPEN54
EQUITY AND STOCK-BASED COMPENSATION - Restricted Stock Share and Restricted Stock Unit Awards, Fair Value Assumptions (Details) - Restricted stock shares and restricted stock units | Mar. 06, 2018$ / shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Annual Expected Stock Price Volatility | 42.00% |
Annual Expected Dividend Yield | 0.00% |
Risk-free Interest Rate | 2.36% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Correlations Between Total Shareholder Return for SPX FLOW and Individual Companies in the Composite Group | $ 0.1216 |
Average | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Correlations Between Total Shareholder Return for SPX FLOW and Individual Companies in the Composite Group | 0.4193 |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Correlations Between Total Shareholder Return for SPX FLOW and Individual Companies in the Composite Group | $ 0.6928 |
Composite Group | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Annual Expected Stock Price Volatility | 27.90% |
Risk-free Interest Rate | 2.36% |
EQUITY AND STOCK-BASED COMPEN55
EQUITY AND STOCK-BASED COMPENSATION - Restricted Stock Share and Restricted Stock Unit Awards (Details) - Restricted stock shares and restricted stock units $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Unvested Restricted Stock Shares and Restricted Stock Units | |
Outstanding at beginning of year (in shares) | shares | 1,132 |
Granted (in shares) | shares | 350 |
Vested (in shares) | shares | (240) |
Forfeited and other (in shares) | shares | (14) |
Outstanding at the end of period (in shares) | shares | 1,228 |
Weighted-Average Grant-Date Fair Value Per Share | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 32.65 |
Granted (in dollars per share) | $ / shares | 49.07 |
Vested (in dollars per share) | $ / shares | 38.78 |
Forfeited and other (in dollars per share) | $ / shares | 29.63 |
Outstanding at the end of period (in dollars per share) | $ / shares | $ 36.16 |
Unrecognized compensation cost | $ | $ 25.9 |
Weighted-average period cost expected to be recognized | 2 years 1 month 19 days |
EQUITY AND STOCK-BASED COMPEN56
EQUITY AND STOCK-BASED COMPENSATION - Stock Options (Details) - Stock options - SPX FLOW stock options $ / shares in Units, shares in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock options outstanding (in shares) | shares | 342 |
Weighted-average exercise price per share (in dollars per share) | $ 61.29 |
Weighted-average grant-date fair value (in dollars per share) | $ 19.33 |
Unrecognized compensation cost | $ | $ 0 |
EQUITY AND STOCK-BASED COMPEN57
EQUITY AND STOCK-BASED COMPENSATION - Accumulated Other Comprehensive Loss and Stock in Treasury (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Common Stock in Treasury | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Common stock surrendered as a means of funding income tax withholding requirements | $ 4 | $ 3.3 |
LITIGATION, CONTINGENT LIABIL58
LITIGATION, CONTINGENT LIABILITIES AND OTHER MATTERS - Additional Information (Details) - USD ($) $ in Millions | Sep. 29, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Redeemable Noncontrolling Interest [Line Items] | |||
Exercise value of put option outstanding | $ 22.5 | $ 22.2 | |
Forecast | |||
Redeemable Noncontrolling Interest [Line Items] | |||
Value options exercisable | $ 12 |
INCOME TAXES - Narrative (Deta
INCOME TAXES - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Apr. 01, 2017 | Dec. 31, 2017 | |
Valuation Allowance [Line Items] | ||||
Tax benefit, tax cuts and job acts of 2017 | $ 17,800,000 | |||
Transition tax on accumulated foreign earnings, tax cuts and jobs act of 2017 | $ 52,200,000 | $ 50,400,000 | ||
Increase to previously estimated transition tax on accumulated foreign earnings, tax cuts and jobs act of 2017 | 1,800,000 | |||
Taxes on earnings not indefinitely reinvested | 59,800,000 | $ 59,800,000 | ||
Transition tax for accumulated foreign earnings, income tax benefit | 9,400,000 | $ 53,400,000 | ||
Federal tax on deemed repatriation | 11,900,000 | |||
Change to transition tax on accumulated foreign earnings, tax cuts and jobs act of 2017 | 1,100,000 | |||
Unrecognized tax benefits | 5,700,000 | |||
Unrecognized tax benefits, net | 2,300,000 | |||
Unrecognized tax benefits that would impact effective tax rate | 2,300,000 | |||
Unrecognized tax benefits, interest on income taxes accrued | 300,000 | |||
Unrecognized tax benefits, interest on income taxes accrued, net | 200,000 | |||
Unrecognized tax benefits, accrual for penalties | 0 | |||
Income tax provision (benefit) | 800,000 | $ (100,000) | ||
Pre-tax income (loss) | $ 16,100,000 | $ (7,400,000) | ||
Effective income tax rate | 5.00% | 1.40% | ||
Charges related to pre-tax losses | $ 1,300,000 | |||
Tax charge related to the vesting of certain restricted stock shares and restricted stock units | $ 1,400,000 | |||
Minimum | ||||
Valuation Allowance [Line Items] | ||||
Reasonably possible decrease in unrecognized tax benefits | 0 | |||
Maximum | ||||
Valuation Allowance [Line Items] | ||||
Reasonably possible decrease in unrecognized tax benefits | $ 1,500,000 |
FAIR VALUE - Derivative Financ
FAIR VALUE - Derivative Financial Instruments (Details) - Forward contracts - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Derivative [Line Items] | ||
Fair value of derivative contract, gross assets | $ 2.1 | |
Fair value of derivative contract, gross assets setoff | $ 2.3 | |
Fair value of derivative contract, gross liabilities | $ 0.1 | |
Fair value of derivative contract, gross liabilities setoff | $ 0 |
FAIR VALUE - Equity Security I
FAIR VALUE - Equity Security Investment (Details) $ in Millions | 3 Months Ended |
Apr. 01, 2017USD ($) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at beginning of year | $ 7.6 |
Unrealized losses recorded to earnings | (1.4) |
Balance at end of period | $ 6.2 |
FAIR VALUE - Indebtedness and
FAIR VALUE - Indebtedness and Other (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other indebtedness | $ 26.1 | $ 24.2 |
Trade receivables financing arrangement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other indebtedness | $ 5 | 0 |
Senior notes | 5.625% senior notes, due in August 2024 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate | 5.625% | |
Senior notes | 5.875% senior notes, due in August 2026 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate | 5.875% | |
Fair value, measurements, nonrecurring | Level 1 | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other indebtedness | $ 21.1 | 24.2 |
Fair value, measurements, nonrecurring | Level 1 | Carrying Amount | Trade receivables financing arrangement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other indebtedness | 5 | 0 |
Fair value, measurements, nonrecurring | Level 1 | Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other indebtedness | 21.1 | 24.2 |
Fair value, measurements, nonrecurring | Level 1 | Fair Value | Trade receivables financing arrangement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other indebtedness | 5 | 0 |
Fair value, measurements, nonrecurring | Level 2 | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Term loan | 235 | 270 |
Fair value, measurements, nonrecurring | Level 2 | Carrying Amount | Senior notes | 5.625% senior notes, due in August 2024 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior notes | 300 | 300 |
Fair value, measurements, nonrecurring | Level 2 | Carrying Amount | Senior notes | 5.875% senior notes, due in August 2026 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior notes | 300 | 300 |
Fair value, measurements, nonrecurring | Level 2 | Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Term loan | 235 | 270 |
Fair value, measurements, nonrecurring | Level 2 | Fair Value | Senior notes | 5.625% senior notes, due in August 2024 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior notes | 303 | 315 |
Fair value, measurements, nonrecurring | Level 2 | Fair Value | Senior notes | 5.875% senior notes, due in August 2026 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior notes | $ 305.3 | $ 320.3 |