UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 2017
July 2, 2022
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
 
Commission file numberFile Number 1-6948

SPX CORPORATION
(Exact Name of Registrantregistrant as Specifiedspecified in Its Charter)
its charter)
Delaware38-1016240
(State or Other Jurisdictionother jurisdiction of Incorporationincorporation or
Organization)

organization)		(I.R.S. Employer Identification No.)
 
13320-A Ballantyne Corporate Place,6325 Ardrey Kell Road, Suite 400, Charlotte, North Carolina 28277
(Address of Principal Executive Offices)principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code (980) 474-3700
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(Former Name, Former Address,name, former address, and Former Fiscal Year,former fiscal year, if Changed Since Last Report)changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbols(s)Name of each exchange on which registered
Common Stock, par value $0.01SPXCNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x☒ Yes ¨☐ No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x☒ Yes ¨☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Large accelerated filer x
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
(Do not check if a smaller reporting company)
Emerging growth company¨
☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to useduse the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨☐ Yes x☒ No.
Common shares outstanding October 27, 2017, 42,609,256
July 29, 2022, 45,212,562





SPX CORPORATION AND SUBSIDIARIES
FORM 10-Q INDEX

3
4
Condensed Consolidated Statements of Stockholders' Equity
5
56
67
2733
3742
3742
3843
3843
3843
38
Item 6 – Exhibits
3943
4045
INDEX TO EXHIBITS
41








PART I—FINANCIAL INFORMATION
 
ITEM 1. Financial Statements
 
SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited; in millions, except per share amounts)
 Three months endedSix months ended
July 2,
2022		July 3,
2021		July 2,
2022		July 3,
2021
Revenues$354.0 $296.6 $661.1 $583.8 
Costs and expenses: 
Cost of products sold229.4 194.3 432.5 377.1 
Selling, general and administrative88.3 75.4 172.5 150.6 
Intangible amortization7.1 6.5 16.4 10.5 
Special charges, net0.1 0.6 0.1 0.8 
Other operating expense, net1.9 2.7 1.0 2.7 
Operating income27.2 17.1 38.6 42.1 
Other income (expense), net(1.7)6.4 4.8 13.8 
Interest expense(2.3)(3.4)(4.7)(7.6)
Interest income0.3 — 0.4 0.1 
Income from continuing operations before income taxes23.5 20.1 39.1 48.4 
Income tax provision(4.4)(2.4)(7.0)(7.7)
Income from continuing operations19.1 17.7 32.1 40.7 
Income from discontinued operations, net of tax— 40.1 — 44.7 
Income (loss) on disposition of discontinued operations, net of tax(6.1)4.1 (7.7)3.3 
Income (loss) from discontinued operations, net of tax(6.1)44.2 (7.7)48.0 
Net income$13.0 $61.9 $24.4 $88.7 
Basic income per share of common stock: 
Income from continuing operations$0.42 $0.39 $0.71 $0.90 
Income (loss) from discontinued operations(0.13)0.98 (0.17)1.06 
Net income per share$0.29 $1.37 $0.54 $1.96 
Weighted-average number of common shares outstanding — basic45.444 45.271 45.500 45.201 
Diluted income per share of common stock: 
Income from continuing operations$0.41 $0.38 $0.69 $0.88 
Income (loss) from discontinued operations(0.13)0.95 (0.16)1.03 
Net income per share$0.28 $1.33 $0.53 $1.91 
Weighted-average number of common shares outstanding — diluted46.289 46.545 46.370 46.408 
Comprehensive income$0.1 $61.3 $14.5 $90.8 
 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Revenues$348.5
 $345.0
 $1,038.8
 $1,077.0
Costs and expenses: 
  
  
  
Cost of products sold263.4
 264.2
 789.5
 815.2
Selling, general and administrative62.9
 68.5
 203.9
 215.6
Intangible amortization0.2
 0.8
 0.5
 2.6
Special charges, net1.0
 1.9
 2.0
 4.8
Impairment of intangible assets—
 —
 —
 4.0
Gain on contract settlement10.2
 —
 10.2
 —
Gain on sale of dry cooling business—
 1.7
 —
 18.4
Operating income31.2
 11.3
 53.1
 53.2
        
Other income (expense), net(0.3) 0.9
 (3.1) 2.2
Interest expense(4.3) (3.8) (12.9) (11.1)
Interest income0.2
 —
 0.9
 0.4
Loss on early extinguishment of debt—
 (1.3) —
 (1.3)
Income from continuing operations before income taxes26.8
 7.1
 38.0
 43.4
Income tax provision(4.8) (0.5) (14.0) (10.1)
Income from continuing operations22.0
 6.6
 24.0
 33.3
        
Loss from discontinued operations, net of tax—
 (4.0) —
 (12.6)
Gain (loss) on disposition of discontinued operations, net of tax0.3
 (0.7) 6.7
 (2.2)
Income (loss) from discontinued operations, net of tax0.3
 (4.7) 6.7
 (14.8)
        
Net income22.3
 1.9
 30.7
 18.5
Less: Net loss attributable to redeemable noncontrolling interests—
 —
 —
 (0.4)
Net income attributable to SPX Corporation common shareholders22.3
 1.9
 30.7
 18.9
Adjustment related to redeemable noncontrolling interest (Note 13)—
 —
 —
 (18.1)
Net income attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest$22.3
 $1.9
 $30.7
 $0.8
        
Amounts attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest: 
  
  
  
Income from continuing operations, net of tax$22.0
 $6.6
 $24.0
 $15.6
Income (loss) from discontinued operations, net of tax0.3
 (4.7) 6.7
 (14.8)
Net income$22.3
 $1.9
 $30.7
 $0.8
        
Basic income per share of common stock: 
  
  
  
Income from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest$0.51
 $0.16
 $0.56
 $0.38
Income (loss) from discontinued operations attributable to SPX Corporation common shareholders0.01
 (0.12) 0.16
 (0.36)
Net income per share attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest$0.52
 $0.04
 $0.72
 $0.02
        
Weighted-average number of common shares outstanding — basic42.540
 41.721
 42.347
 41.537
        
Diluted income per share of common stock: 
  
  
  
Income from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest$0.50
 $0.16
 $0.55
 $0.37
Income (loss) from discontinued operations attributable to SPX Corporation common shareholders0.01
 (0.12) 0.15
 (0.35)
Net income per share attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest$0.51
 $0.04
 $0.70
 $0.02
        
Weighted-average number of common shares outstanding — diluted44.064
 42.475
 43.728
 41.884
        
Comprehensive income (loss)$41.4
 $(4.9) $48.9
 $(30.6)

The accompanying notes are an integral part of these statements.

3


SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except share data)
July 2,
2022		December 31,
2021
ASSETS  
Current assets:  
Cash and equivalents$189.8 $388.2 
Accounts receivable, net240.5 223.4 
Contract assets33.9 28.9 
Inventories, net235.8 189.8 
Other current assets78.6 73.1 
Total current assets778.6 903.4 
Property, plant and equipment:  
Land13.9 13.9 
Buildings and leasehold improvements62.5 62.9 
Machinery and equipment234.0 231.4 
310.4 308.2 
Accumulated depreciation(200.8)(194.9)
Property, plant and equipment, net109.6 113.3 
Goodwill459.7 457.3 
Intangibles, net416.1 415.5 
Other assets662.9 675.9 
Deferred income taxes16.2 11.0 
Assets of DBT and Heat Transfer (includes cash and cash equivalents of $5.4 and $7.8 at July 2, 2022 and December 31, 2021, respectively)46.5 52.2 
TOTAL ASSETS$2,489.6 $2,628.6 
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities: 
Accounts payable$116.2 $119.6 
Contract liabilities45.4 44.7 
Accrued expenses182.7 217.9 
Income taxes payable8.8 42.1 
Short-term debt2.1 2.2 
Current maturities of long-term debt13.0 13.0 
Total current liabilities368.2 439.5 
Long-term debt224.5 230.8 
Deferred and other income taxes27.5 31.3 
Other long-term liabilities746.4 788.5 
Liabilities of DBT and Heat Transfer34.4 35.6 
Total long-term liabilities1,032.8 1,086.2 
Commitments and contingent liabilities (Note 15)00
Stockholders' Equity: 
Common stock (53,247,919 and 45,185,089 issued and outstanding at July 2, 2022, respectively, and 53,011,255 and 45,467,768 issued and outstanding at December 31, 2021, respectively)0.5 0.5 
Paid-in capital1,327.3 1,334.2 
Retained deficit(27.4)(51.8)
Accumulated other comprehensive income254.0 263.9 
Common stock in treasury (8,062,830 and 7,543,487 shares at July 2, 2022 and December 31, 2021, respectively)(465.8)(443.9)
Total stockholders' equity1,088.6 1,102.9 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$2,489.6 $2,628.6 
 September 30,
2017		 December 31,
2016
ASSETS 
  
Current assets: 
  
Cash and equivalents$87.2
 $99.6
Accounts receivable, net266.6
 251.7
Inventories, net165.6
 145.7
Other current assets39.6
 30.6
Total current assets559.0
 527.6
Property, plant and equipment: 
  
Land15.6
 15.4
Buildings and leasehold improvements119.7
 117.3
Machinery and equipment335.2
 329.8
 470.5
 462.5
Accumulated depreciation(281.7) (267.0)
Property, plant and equipment, net188.8
 195.5
Goodwill345.4
 340.4
Intangibles, net117.7
 117.9
Other assets675.0
 680.5
Deferred income taxes46.9
 50.6
TOTAL ASSETS$1,932.8
 $1,912.5
LIABILITIES AND EQUITY 
  
Current liabilities: 
  
Accounts payable$143.3
 $137.6
Accrued expenses284.3
 304.3
Income taxes payable1.4
 1.7
Short-term debt39.0
 14.8
Current maturities of long-term debt18.0
 17.9
Total current liabilities486.0
 476.3
Long-term debt311.0
 323.5
Deferred and other income taxes39.6
 42.4
Other long-term liabilities841.2
 878.7
Total long-term liabilities1,191.8
 1,244.6
Commitments and contingent liabilities (Note 13)

 

Equity: 
  
Common stock (51,113,497 and 42,573,512 issued and outstanding at September 30, 2017, respectively, 50,754,779 and 41,940,089 issued and outstanding at December 31, 2016, respectively)0.5
 0.5
Paid-in capital1,305.7
 1,307.9
Retained deficit(800.9) (831.6)
Accumulated other comprehensive income253.3
 235.1
Common stock in treasury (8,539,985 and 8,814,690 shares at September 30, 2017 and December 31, 2016, respectively)(503.6) (520.3)
Total equity255.0
 191.6
TOTAL LIABILITIES AND EQUITY$1,932.8
 $1,912.5

The accompanying notes are an integral part of these statements.

4


SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited; in millions)

Three months ended July 2, 2022
Common StockPaid-In CapitalRetained DeficitAccum. Other Comprehensive IncomeCommon Stock In TreasurySPX Corporation Stockholders’ Equity
Balance at April 2, 2022$0.5 $1,321.2 $(40.4)$266.9 $(432.4)$1,115.8 
Net income— — 13.0 — — 13.0 
Other comprehensive loss, net— — — (12.9)— (12.9)
Incentive plan activity— 4.0 — — — 4.0 
Long-term incentive compensation expense— 2.5 — — — 2.5 
Restricted stock unit vesting— (0.4)— — 0.3 (0.1)
Common stock repurchases— — — — (33.7)(33.7)
Balance at July 2, 2022$0.5 $1,327.3 $(27.4)$254.0 $(465.8)$1,088.6 

Six months ended July 2, 2022
Common StockPaid-In CapitalRetained DeficitAccum. Other Comprehensive IncomeCommon Stock In TreasurySPX Corporation Stockholders’ Equity
Balance at December 31, 2021$0.5 $1,334.2 $(51.8)$263.9 $(443.9)$1,102.9 
Net income— — 24.4 — — 24.4 
Other comprehensive loss, net— — — (9.9)— (9.9)
Incentive plan activity— 6.5 — — — 6.5 
Long-term incentive compensation expense— 5.6 — — — 5.6 
Restricted stock unit vesting— (19.0)— — 11.8 (7.2)
Common stock repurchases— — — — (33.7)(33.7)
Balance at July 2, 2022$0.5 $1,327.3 $(27.4)$254.0 $(465.8)$1,088.6 


Three months ended July 3, 2021
Common StockPaid-In CapitalRetained DeficitAccum. Other Comprehensive IncomeCommon Stock In TreasurySPX Corporation Stockholders’ Equity
Balance at April 3, 2021$0.5 $1,315.8 $(450.4)$251.2 $(445.4)$671.7 
Net income— — 61.9 — — 61.9 
Other comprehensive loss, net— — — (0.6)— (0.6)
Incentive plan activity— 3.0 — — — 3.0 
Long-term incentive compensation expense— 3.6 — — — 3.6 
Restricted stock unit vesting— (1.2)— — 1.1 (0.1)
Balance at July 3, 2021$0.5 $1,321.2 $(388.5)$250.6 $(444.3)$739.5 

Six months ended July 3, 2021
Common StockPaid-In CapitalRetained DeficitAccum. Other Comprehensive IncomeCommon Stock In TreasurySPX Corporation Stockholders’ Equity
Balance at December 31, 2020$0.5 $1,319.9 $(477.2)$248.5 $(451.6)$640.1 
Net income— — 88.7 — — 88.7 
Other comprehensive income, net— — — 2.1 — 2.1 
Incentive plan activity— 6.8 — — — 6.8 
Long-term incentive compensation expense— 6.6 — — — 6.6 
Restricted stock unit vesting— (12.1)— — 7.3 (4.8)
Balance at July 3, 2021$0.5 $1,321.2 $(388.5)$250.6 $(444.3)$739.5 


The accompanying notes are an integral part of these statements.
5

SPX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
 Six months ended
July 2,
2022		July 3,
2021
Cash flows from (used in) operating activities:  
Net income$24.4 $88.7 
Less: Income (loss) from discontinued operations, net of tax(7.7)48.0 
Income from continuing operations32.1 40.7 
Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities: 
Special charges, net0.1 0.8 
Gain on change in fair value of equity security(4.4)(7.4)
Deferred and other income taxes(9.0)2.2 
Depreciation and amortization25.6 19.9 
Pension and other employee benefits6.3 1.0 
Long-term incentive compensation5.6 6.0 
Other, net1.0 3.2 
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable and other assets(5.0)31.3 
Inventories(44.9)(6.3)
Accounts payable, accrued expenses and other(90.6)(50.6)
Cash spending on restructuring actions(0.3)(1.2)
Net cash from (used in) continuing operations(83.5)39.6 
Net cash from (used in) discontinued operations(13.0)39.3 
Net cash from (used in) operating activities(96.5)78.9 
Cash flows from (used in) investing activities:
Proceeds related to company-owned life insurance policies, net1.6 3.9 
Business acquisitions, net of cash acquired(41.4)(81.9)
Capital expenditures(6.0)(4.2)
Net cash used in continuing operations(45.8)(82.2)
Net cash used in discontinued operations(13.9)(1.2)
Net cash used in investing activities(59.7)(83.4)
Cash flows from (used in) financing activities:
Borrowings under senior credit facilities— 102.0 
Repayments under senior credit facilities(6.3)(94.9)
Borrowings under trade receivables arrangement— 132.0 
Repayments under trade receivables arrangement— (134.0)
Net repayments under other financing arrangements(0.2)— 
Payment of contingent consideration(1.3)— 
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options(5.2)(3.8)
Repurchases of common stock(33.7)— 
Net cash from (used in) continuing operations(46.7)1.3 
Net cash from (used in) discontinued operations0.3 (0.4)
Net cash from (used in) financing activities(46.4)0.9 
Change in cash and equivalents due to changes in foreign currency exchange rates1.8 4.4 
Net change in cash and equivalents(200.8)0.8 
Consolidated cash and equivalents, beginning of period396.0 68.3 
Consolidated cash and equivalents, end of period$195.2 $69.1 
 Nine months ended
 September 30,
2017		 October 1,
2016
Cash flows used in operating activities: 
  
Net Income$30.7
 $18.5
Less: Income (loss) from discontinued operations, net of tax6.7
 (14.8)
Income from continuing operations24.0
 33.3
Adjustments to reconcile income from continuing operations to net cash used in operating activities: 
 0
Special charges, net2.0
 4.8
Gain on sale of dry cooling business—
 (18.4)
Impairment of intangible assets—
 4.0
Loss on early extinguishment of debt—
 1.3
Deferred and other income taxes(0.7) 6.8
Depreciation and amortization18.9
 20.2
Pension and other employee benefits8.3
 11.9
Long-term incentive compensation10.4
 10.2
Other, net2.9
 0.2
Changes in operating assets and liabilities, net of effects from divestiture:  

Accounts receivable and other assets(18.0) 53.8
Inventories(17.2) (11.2)
Accounts payable, accrued expenses and other(31.6) (126.4)
Cash spending on restructuring actions(1.4) (1.8)
Net cash used in continuing operations(2.4) (11.3)
Net cash used in discontinued operations(6.1) (34.3)
Net cash used in operating activities(8.5) (45.6)
Cash flows from (used in) investing activities: 
  
Proceeds from asset sales—
 47.7
Capital expenditures(8.4) (7.8)
Net cash from (used in) continuing operations(8.4) 39.9
Net cash used in discontinued operations—
 (2.3)
Net cash from (used in) investing activities(8.4) 37.6
Cash flows from (used in) financing activities: 
  
Borrowings under senior credit facilities46.4
 56.2
Repayments under senior credit facilities(59.5) (60.6)
Borrowings under trade receivables financing arrangement70.0
 44.0
Repayments under trade receivables financing arrangement(39.0) (44.0)
Net repayments under other financing arrangements(7.8) (7.1)
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options and other(1.1) (1.6)
Net cash from (used in) continuing operations9.0
 (13.1)
Net cash from (used in) discontinued operations—
 —
Net cash from (used in) financing activities9.0
 (13.1)
Change in cash and equivalents due to changes in foreign currency exchange rates(4.5) 3.1
Net change in cash and equivalents(12.4) (18.0)
Consolidated cash and equivalents, beginning of period99.6
 101.4
Consolidated cash and equivalents, end of period$87.2
 $83.4
Six months ended
July 2,
2022		July 3,
2021
Components of cash and equivalents:
Cash and cash equivalents$189.8 $50.3 
Cash and cash equivalents included in assets of DBT and Heat Transfer5.418.8
Total cash and equivalents$195.2 $69.1 

The accompanying notes are an integral part of these statements.

6


SPX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; in millions, except per share data)data and asbestos-related claims)
 
(1)
(1)    BASIS OF PRESENTATION

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

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

Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only (see Note 3 for information on discontinued operations).
We account for investments in unconsolidated companies where we exercise significant influence but do not have control using the equity method. In determining whether we are the primary beneficiary of a variable interest entity (“VIE”), we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties to determine which party has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and which party has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We have an interest in a VIE, in which weAll of our VIE's are not the primary beneficiary, as a result of the sale of Balcke Dürr. See below and Note 15 for further discussion of the sale of Balcke Dürr. All other VIEs are considered immaterial, individually and in aggregate, to our condensed consolidated financial statements.

Sale of Dry CoolingTransformer Solutions Business

On March 30, 2016,October 1, 2021, we completed the sale of our dry cooling business, a business previously within our EngineeredSPX Transformer Solutions, reportable segment,Inc. (“Transformer Solutions”) pursuant to Paharpur Cooling Towers Limited (“Paharpur”the terms of the Stock Purchase Agreement dated June 8, 2021 with GE-Prolec Transformers, Inc. (the “Purchaser”) for cash proceedsand Prolec GE Internacional, S. de R.L. de C.V. During the first quarter of $45.9 (net2022, we agreed to the final adjustment of cash transferred with the business of $3.0), resultingpurchase price which resulted in a gain duringpayment to the quarter ended April 2, 2016Purchaser of $17.9. The gain includes a reclassification from “Equity” of other comprehensive income totaling $40.4 related$13.9 with an increase to foreign currency translation.

During the second quarter of 2016, we reduced the gain by $1.2on sale of $0.2. Historically, Transformer Solutions’ operations have had a significant impact on our consolidated financial results, with revenues totaling approximately 25% of our total consolidated revenues. As we no longer have a consequential presence in connection with adjustmentsthe power transmission and distribution markets, and given Transformer Solutions' significance to certain liabilities retained from the sale. During the third quarter of 2016,our historical consolidated financial results, we increased the gain by $1.7 in connection with the settlement of the final working capital associated with the business.

In connection with the sale, we provided customary indemnifications to Paharpur. Accordingly, it is possibleconcluded that the sales price and resulting gain for this divestiture may be materially adjusted in subsequent periods.

Sale of Balcke Dürr Business

On December 30, 2016, we completed the sale of Balcke Dürr toTransformer Solutions represented a subsidiary of mutares AG (the “Buyer”) for cash proceeds of less than $0.1. In addition,strategic shift. Accordingly, we left $21.1 of cash in Balcke Dürr athave classified the time of the sale and provided the Buyer with a non-interest bearing loan of $9.1, payable in installments due at the end of 2018 and 2019. The results of Balcke Dürr are presentedbusiness as a discontinued operation withinin the accompanying condensed consolidated financial statements. In connectionSee Note 3 for additional details.

Wind-Down of DBT Technologies Business
During the fourth quarter of 2021, we substantially ceased all operations of DBT Technologies (PTY) LTD (“DBT”). As a result, we are reporting DBT as a discontinued operation in the accompanying condensed consolidated financial statements. DBT continues to be involved in various dispute resolution matters related to 2 large power projects. See Note 3 for additional details regarding DBT's presentation as a discontinued operation and Note 15 regarding the dispute resolution matters.
Acquisition of Sealite
On April 19, 2021, we completed the acquisition of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, “Sealite”). Sealite is a leader in the design and manufacture of marine and aviation Aids to Navigation products. We purchased Sealite for cash consideration of $80.3, net of cash acquired of $2.3, which included a final settlement of working capital that resulted in a reduction of the purchase price of $1.3 in the third quarter of 2021. The post acquisition operating results of Sealite are reflected within our Detection and Measurement reportable segment.

7

Acquisition of ECS

On August 2, 2021, we completed the acquisition of Enterprise Control Systems Ltd (“ECS”), a leader in the design and manufacture of highly-engineered tactical datalinks and radio frequency (“RF”) countermeasures, including counter-drone and counter-IED RF jammers. We purchased ECS for cash consideration of $39.4, net of cash acquired of $5.1. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $16.4, with the sale, we recorded a net loss of $78.6payment to be made in the fourth quarter of 20162022 upon successful achievement of certain financial performance milestones. During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to “Gain (loss) on dispositiona delay in the execution of discontinued operations, netcertain large orders, resulting in a reduction of tax.”the estimated liability of $6.7. During the first quarterand second quarters of 2017,2022, we further reduced the estimated liability by $0.9 and $0.4, respectively, with such amounts recorded within “Other operating expense, net.” The estimated fair value of such contingent consideration, which we have reflected as a liability in our condensed consolidated balance sheets, was $0.0 and $1.5 at July 2, 2022 and December 31, 2021, respectively. The post acquisition operating results of ECS are reflected within our Detection and Measurement reportable segment.

Acquisition of Cincinnati Fan

On December 15, 2021, we completed the acquisition of Cincinnati Fan & Ventilator Co., Inc. (“Cincinnati Fan”), a leader in engineered air movement solutions, including blowers and critical exhaust systems. We purchased Cincinnati Fan for cash consideration of $145.2, net loss associated with the sale of Balcke Dürr by $7.2. The reduction was comprisedcash acquired of an additional income tax benefit recorded for the sale of $8.4, partially offset by adjustments to liabilities retained in connection with the sale of $1.2.$2.5. During the second quarter of 2017,2022, we increasedagreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receiving $0.4 during the quarter. The post acquisition operating results of Cincinnati Fan are reflected within our HVAC reportable segment.

Acquisition of ITL

On March 31, 2022, we completed the acquisition of International Tower Lighting, LLC (“ITL”), a leader in the design and manufacture of highly-engineered Aids-to-Navigation systems, including obstruction lighting for telecommunications towers, wind turbines and numerous other terrestrial obstructions. We purchased ITL for cash consideration of $41.8, net loss associated with the sale of Balcke Dürr by $0.4, with the increase resulting from adjustments to liabilities retained in connection with the sale.

cash acquired of $1.1. The purchase agreement provided that existing parent company guarantees of approximately €79.0 and bank and surety bonds of approximately €79.0 would remain in place through each instrument’s expiration date, with such expiration dates ranging from 2017 to 2022. Balcke Dürr and the Buyer have provided us a full indemnity in the event that any of these guarantees or bonds are called. Also, Balcke Dürr has provided cash collateral of €4.0 and mutares AG has provided a guarantee of €5.0 as a security for the above indemnifications. In connection with the sale, we recorded a liability for the estimated fair value of the guarantees and bonds and an asset for the estimated fair value of the cash collateral and indemnities provided. See Note 15 for further details regarding these estimated fair values.



The final sales price for Balcke Dürr is subject to adjustment based on the final calculation of working capital, cash, and working capital existingdebt as of the date of the acquisition. The post acquisition operating results of ITL are reflected within our Detection and Measurement reportable segment.

The assets acquired and liabilities assumed in the ECS, Cincinnati Fan, and ITL transactions have been recorded at the closing dateestimates of fair value as determined by management, based on information available and isassumptions as to future operations and are subject to agreement withchange, primarily for the Buyer. Final agreementfinal assessment and valuation of certain income tax amounts.

Change in Accounting Method

During the cash and working capital amounts withfourth quarter of 2021, as a means of harmonizing our accounting method for inventory across all of our businesses, we converted the Buyerinventory accounting for certain domestic businesses within our HVAC reportable segment from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. This change in accounting has yetbeen retrospectively applied to occur. Accordingly, it is possible that the sales price and resulting lossour condensed consolidated financial statements. See Note 8 for this divestiture may be materially adjusted in subsequent periods.additional information.


Other

Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from these estimates. The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016.2021. Interim results are not necessarily indicative of full year results. We have reclassified certain prior year amounts, including the results of discontinued operations, to conform to the current year presentation. Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only. See Note 3 for information on discontinued operations.

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 20172022 are April 1, July 1 and September 30, compared to the respective April 2, July 2, and October 1, 2016compared to the respective April 3, July 3 and October 2, 2021 dates. We had two fewer daysone less day in the first quarter of 20172022 and will have one more day in the fourth quarter of 20172022 than in the respective 20162021 periods. We doIt is not believepracticable to estimate the two fewer days duringimpact of the first quarter of 2017 had a material impactone less day on our consolidated operating results for the first ninesix months of 2017,ended July 2, 2022, when compared to the consolidated operating results for the 2021 respective 2016 period.

Reclassification of Prior-Year Amounts
Certain prior-year amounts have been reclassified to conform to the current-year presentation, including amounts related to the inclusion of DBT within discontinued operations and the change from the LIFO method of inventory accounting.
8


(2)NEW ACCOUNTING PRONOUNCEMENTS
The following is a summary of new accounting pronouncements that apply or may apply to our business.
The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on June 30, 2023. In May 2014,an effort to address the various challenges created by such discontinuance, the Financial Accounting Standards Board (“FASB”) issued two amendments to existing guidance, Accounting Standards Update (“ASU”) No. 2020-04 and No. 2021-01, Reference Rate Reform. The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, etc.) necessitated by the reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by the reference rate reform. Application of the guidance in the amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. In preparation of our adoption of these amendments, we entered into a new standardLIBOR transition amendment related to our global revolving credit facility, as described in our 2021 Annual Report on revenue recognition that outlinesForm 10-K. Upon adoption, we do not believe these amendments will have a single comprehensive modelmaterial impact to our condensed consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires acquiring entities to useapply Topic 606 to recognize and measure contract assets and contract liabilities in accounting for revenue arising from contracts with customers and supersedes most current revenue recognitiona business combination. This guidance including industry-specific guidance. The new standard contains a five-step approach that entities will apply to determine the measurement of revenue and timing of when it is recognized, including (i) identifying the contract(s) with a customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to separate performance obligations, and (v) recognizing revenue when (or as) each performance obligation is satisfied. The new standard 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. The disclosures include qualitative and quantitative information about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized from the costs to obtain or fulfill a contract. The standard is effective for interim and annual reporting periodspublic entities for fiscal years beginning after December 15, 2017 and we currently plan to adopt the standard using the modified retrospective transition method.2022, including interim periods within those fiscal years. The modified retrospective transition approach will recognize any changes from the beginningimpact of the year of initial application through retained earnings with no restatement of comparative periods. We are continuing to assess the potential effect that the standard is expected to haveadopting this guidance on our condensed consolidated financial statements. We believestatements will depend on business combinations occurring on or after the more significant effects on our existing accounting policies will be associated with our power transformer business. Under the new standard, revenue for our power transformers will be recognized over time, which is a change from our current accounting policy of recognizing revenue for power transformers at a point in time.effective date.

In February 2016,March 2022, the FASB issued an amendmentASU No. 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. This ASU allows multiple hedged layers to existingbe designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments. This guidance applies to all entities that requires lesseeselect to recognize assetsapply the portfolio layer method of hedge accounting in accordance with Topic 815 and liabilities for the rights and obligations created by long-term leases. In addition, this amendment requires new qualitative and quantitative disclosures about leasing arrangements. This standard is effective for annual periodspublic entities for fiscal years beginning on or after December 15, 2018 for public business entities,2022, and interim periods within those fiscal years. EarlyWe do not believe the adoption is permitted, and adoption must be applied on a modified retrospective basis. We are currently evaluating the effect this new standard will have on our condensed consolidated financial statements.

In March 2016, the FASB issued an amendment to existing guidance that simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. This standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods. We adopted this guidance on January 1, 2017, and, thus, excess income tax benefits recognized on stock-based compensation awards are now being reflected, on a prospective basis, in our condensed consolidated statement of operations as a component of the provision for income taxes (versus the previous requirement to reflect such amounts within “equity”). In accordance with this prospective adoption, we recognized income tax benefits of $0.1 and $1.3 in our condensed consolidated statements of operations for the three and nine


months ended September 30, 2017, respectively. In addition, we prospectively adopted the amendment to present excess income tax benefits on share-based compensation awards as an operating activity within our condensed consolidated statement of cash flows (versus the previous requirement to reflect such amounts as a financing activity), which resulted in the classification of $1.3 of such income tax benefits within operating activities of the condensed consolidated statement of cash flows for the nine months ended September 30, 2017. Cash paid on employees’ behalf related to shares withheld for income taxes payable continues to be classified as a financing activity. Lastly, we elected to continue estimating stock-based compensation award forfeitures in determining the amount of compensation expense to be recognized in each period.

In August 2016, the FASB issued an amendment to existing guidance to reduce diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. This amendment provides clarification on eight specific cash flow presentation issues. The issues include, but are not limited to, debt prepayment or extinguishment costs, settlement of zero-coupon debt, proceeds from the settlement of insurance claims, and cash receipts from payments on beneficial interests in securitization transactions. This amendment is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted. We are currently evaluating the effect this amendment will have on our condensed consolidated financial statements.

In January 2017, the FASB issued an amendment to simplify the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires that an entity recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. This amendment is effective for annual reporting periods beginning after December 31, 2019, including interim periods within those annual reporting periods. Early adoption is permitted. The impact of this amendment on our consolidated financial statements will depend on the results of future goodwill impairment tests.

In March 2017, the FASB issued an amendment to revise the presentation of net periodic pension and postretirement benefit cost. The amendment requires the service cost component to be presented separately from the other components of net periodic pension and postretirement benefit cost. Service cost will be presented with other employee compensation costs within operating income. The other components of net periodic pension and postretirement benefit cost, such as interest cost, expected return on plan assets, amortization of prior service cost/credits, and gains or losses, are required to be separately presented outside of operating income. This amendment is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. The amendment to the presentation in the income statement of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost shall be applied retrospectively. Early adoption is permitted. We will adopt the standard effective January 1, 2018. The adoption is not expected to have a material impact on our condensed consolidated financial statements. See Note 9 for details of our pension and postretirement expense.


In August 2017,March 2022, the FASB issued significant amendments to hedge accounting.ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326) - Troubled Debt Restructurings and Vintage Disclosures, which requires enhanced disclosure of certain loan refinancing and restructuring by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This guidance also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. The FASB’s new guidance will make more financialis effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and nonfinancial hedging strategies eligibleallows for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The amendments can be adopted immediatelyearly adoption in any interim or annual period (includingafter issuance. We do not believe the current period). The mandatory effective date for calendar year-end public companies is January 1, 2019. We are currently evaluating the effectadoption of this amendmentguidance will have a material impact on our condensed consolidated financial statements.


In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This guidance also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The guidance also requires the following disclosures for equity securities subject to contractual sale restrictions: 1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; 2) the nature and remaining duration of the restriction(s); and 3) the circumstances that could cause a lapse in the restriction(s). The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, and allows for early adoption in any interim period after issuance. We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements.
(3)


(3)    ACQUISITIONS AND DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS
As indicated in Note 1, on April 19, 2021, August 2, 2021, December 15, 2021, and March 31, 2022, we completed the acquisitions of Sealite, ECS, Cincinnati Fan, and ITL, respectively. The pro forma effects of these acquisitions are not material to our condensed consolidated results of Balcke Dürroperations.








9

Sale of Transformer Solutions Business

As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer Solutions. The results of Transformer Solutions are presented as a discontinued operation within the accompanying condensed consolidated financial statementsfor all periods presented. Major line items constituting pre-tax income and after-tax income of Transformer Solutions for the three and ninesix months ended OctoberJuly 3, 2021 are shown below:

Three months endedSix months ended
July 3, 2021July 3, 2021
Revenues$108.5 $219.1 
Costs and expenses:
Cost of product sold87.3 176.7 
Selling, general and administrative8.6 18.1 
Other income, net0.2 — 
Income before income tax12.8 24.3 
Income tax benefit (1)
29.9 27.0 
Income from discontinued operations, net of tax$42.7 $51.3 
___________________________

(1) During the three and six months ended July 3, 2021, we recorded tax benefits of $33.0 in “Income from discontinued operations, net of tax” including (i) $28.6 for the excess tax basis in the stock of Transformer Solutions and (ii) $4.4 for previously unrecognized state net operating losses, each as a result of the definitive agreement to sell the business.

Wind-Down of DBT Business

As discussed in Note 1, 2016. we completed the wind-down of our DBT business in the fourth quarter of 2021. As a result of completing the wind-down plan, we are reporting DBT as a discontinued operation for all periods presented.

Major classes of line items constituting pre-tax loss and after-tax loss of Balcke DürrDBT for the three and ninesix months ended October 1, 2016July 3, 2021 are shown below:



Three months endedSix months ended
July 3, 2021July 3, 2021
Revenues$0.1 $0.8 
Costs and expenses:
Cost of product sold(0.1)0.9 
Selling, general and administrative3.8 8.0 
Special charges0.1 0.6 
Other income, net0.7 0.5 
Interest income0.1 0.1 
Loss before income tax(2.9)(8.1)
Income tax benefit0.3 1.5 
Loss from discontinued operations, net of tax$(2.6)$(6.6)










10

 Three months ended Nine months ended
 October 1,
2016		 October 1,
2016
Revenues$40.2
 $110.4
Costs and expenses:

 

Cost of products sold37.0
 103.6
Selling, general and administrative7.8
 23.9
Special charges (credits), net(0.4) (1.0)
Other expense, net(0.3) (0.5)
Loss before taxes(4.5) (16.6)
Income tax benefit0.5
 4.0
Loss from discontinued operations, net of tax$(4.0) $(12.6)
The following table presents selected financial information for Balcke Dürr that isassets and liabilities of DBT have been included within discontinued operations in“Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated statementbalance sheets as of cash flowsJuly 2, 2022 and December 31, 2021. The major line items constituting DBT's assets and liabilities as of July 2, 2022 and December 31, 2021 are shown below:

July 2, 2022December 31, 2021
ASSETS
Cash and equivalents$5.4 $7.8 
Accounts receivable, net8.0 9.1 
Other current assets6.9 7.0 
Property, plant and equipment:
Buildings and leasehold improvements0.2 0.2 
Machinery and equipment1.3 1.5 
1.5 1.7 
Accumulated depreciation(1.4)(1.5)
Property, plant and equipment, net0.1 0.2 
Other assets25.8 27.6 
Total assets of DBT$46.2 $51.7 
LIABILITIES
Accounts payable$1.8 $2.3 
Contract liabilities3.7 5.6 
Accrued expenses23.9 22.4 
Other long-term liabilities4.8 4.9 
Total liabilities of DBT$34.2 $35.2 

Wind-Down of the Heat Transfer Business

We completed the wind-down of our SPX Heat Transfer (“Heat Transfer”) business in the fourth quarter of 2020. As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all periods presented.
The assets and liabilities of Heat Transfer have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of July 2, 2022 and December 31, 2021. The major line items constituting Heat Transfer's assets and liabilities as of July 2, 2022 and December 31, 2021 are shown below:

July 2, 2022December 31, 2021
ASSETS
Accounts receivable, net$— $0.1 
Other current assets0.2 0.2 
Other assets0.1 0.2 
Total assets of Heat Transfer$0.3 $0.5 
LIABILITIES
Accounts payable$0.1 $0.3 
Accrued expenses0.1 0.1 
Total liabilities of Heat Transfer$0.2 $0.4 

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



11

For the three and six months ended July 2, 2022 and July 3, 2021, results of operations from our businesses reported as discontinued operations were as follows:
Three months endedSix months ended
July 2, 2022July 3, 2021July 2, 2022July 3, 2021
Transformer Solutions (1)
Income (loss) from discontinued operations$0.1 $12.8 $(0.2)$24.3 
Income tax benefit— 29.9 0.1 27.0 
Income (loss) from discontinued operations, net0.1 42.7 (0.1)51.3 
DBT (2)
Loss from discontinued operations(6.9)(2.9)(8.5)(8.1)
Income tax benefit1.1 0.3 1.5 1.5 
Loss from discontinued operations, net(5.8)(2.6)(7.0)(6.6)
Heat Transfer
Loss from discontinued operations(0.2)(0.1)(0.2)(0.2)
Income tax (provision) benefit— — — — 
Loss from discontinued operations, net(0.2)(0.1)(0.2)(0.2)
All other (3)
Loss from discontinued operations(0.3)(0.2)(0.5)(1.1)
Income tax benefit0.1 4.4 0.1 4.6 
Income (loss) from discontinued operations, net(0.2)4.2 (0.4)3.5 
Total
Income (loss) from discontinued operations(7.3)9.6 (9.4)14.9 
Income tax benefit1.2 34.6 1.7 33.1 
Income (loss) from discontinued operations, net$(6.1)$44.2 $(7.7)$48.0 
___________________________

(1) Income (loss) for the ninethree and six months ended October 1, 2016:
Non-cash items included in loss from discontinued operations: 
Depreciation and amortization$1.5
Capital expenditures0.6
During the first quarter of 2017, we reduced the net loss associated with the sale of Balcke Dürr by $7.2. The reduction was comprised of an additional income tax benefit recorded for the sale of $8.4, partially offset by adjustmentsJuly 2, 2022 resulted primarily from revisions to liabilities retained in connection with the sale of $1.2.disposition. During the second quarterthree and six months ended July 3, 2021, we recorded tax benefits of 2017, we increased$33.0 in “Income from discontinued operations, net of tax” including (i) $28.6 for the excess tax basis in the stock of Transformer Solutions and (ii) $4.4 for previously unrecognized state net loss associatedoperating losses, each as a result of the definitive agreement to sell the business.

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

(3) Income (loss) for the sale of Balcke Dürr by $0.4, with the increase resultingthree and six months ended July 2, 2022 and July 3, 2021 resulted primarily from adjustmentsrevisions to liabilities, including income tax liabilities, retained in connection with prior dispositions.












12

(4)    REVENUES FROM CONTRACTS
Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the sale.timing of recognition for each of our reportable segments, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are affected by economic factors, with such disaggregation presented below for the three and six months ended July 2, 2022 and July 3, 2021:
Three months ended July 2, 2022
Reportable SegmentsHVACDetection and MeasurementTotal
Major product lines
Package and process cooling equipment and services, and engineered air quality solutions$130.5 $— $130.5 
Boilers, comfort heating, and ventilation88.2 — 88.2 
Underground locators, inspection and rehabilitation
 equipment, and robotic systems		— 65.4 65.4 
Communication technologies, obstruction lighting, and bus fare collection systems— 69.9 69.9 
$218.7 $135.3 $354.0 
Timing of Revenue Recognition
Revenues recognized at a point in time$202.8 $110.9 $313.7 
Revenues recognized over time15.9 24.4 40.3 
$218.7 $135.3 $354.0 

Six months ended July 2, 2022
Reportable SegmentsHVACDetection and MeasurementTotal
Major product lines
Package and process cooling equipment and services, and engineered air quality solutions$247.3 $— $247.3 
Boilers, comfort heating, and ventilation164.5 — 164.5 
Underground locators, inspection and rehabilitation
 equipment, and robotic systems		— 132.6 132.6 
Communication technologies, obstruction lighting, and bus fare collection systems— 116.7 116.7 
$411.8 $249.3 $661.1 
Timing of Revenue Recognition
Revenues recognized at a point in time$375.9 $214.1 $590.0 
Revenues recognized over time35.9 35.2 71.1 
$411.8 $249.3 $661.1 

13

Three months ended July 3, 2021
Reportable SegmentsHVACDetection and MeasurementTotal
Major product lines
Package and process cooling equipment and services$111.5 $— $111.5 
Boilers, comfort heating, and ventilation73.9 — 73.9 
Underground locators, inspection and rehabilitation
 equipment, and robotic systems		— 65.9 65.9 
Communication technologies, obstruction lighting, and bus fare collection systems— 45.3 45.3 
$185.4 $111.2 $296.6 
Timing of Revenue Recognition
Revenues recognized at a point in time$166.3 $101.5 $267.8 
Revenues recognized over time19.1 9.7 28.8 
$185.4 $111.2 $296.6 

Six months ended July 3, 2021
Reportable SegmentsHVACDetection and MeasurementTotal
Major product lines
Package and process cooling equipment and services$213.2 $— $213.2 
Boilers, comfort heating, and ventilation147.8 — 147.8 
Underground locators, inspection and rehabilitation
 equipment, and robotic systems		— 133.3 133.3 
Communication technologies, obstruction lighting, and bus fare collection systems— 89.5 89.5 
$361.0 $222.8 $583.8 
Timing of Revenue Recognition
Revenues recognized at a point in time$320.7 $198.0 $518.7 
Revenues recognized over time40.3 24.8 65.1 
$361.0 $222.8 $583.8 

Contract Balances

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

Contract BalancesJuly 2, 2022December 31, 2021Change
Contract Accounts Receivable(1)
$234.1 $215.3 $18.8 
Contract Assets33.9 28.9 5.0 
Contract Liabilities - current(45.4)(44.7)(0.7)
Contract Liabilities - non-current(2)
(5.9)(5.8)(0.1)
Net contract balance$216.7 $193.7 $23.0 
___________________________
(1) Included in “Accounts receivable, net” within the accompanying condensed consolidated balance sheets.

(2) Included in “Other long-term liabilities” within the accompanying condensed consolidated balance sheets.
The $23.0 increase in our net contract asset balance from December 31, 2021 to July 2, 2022 was due primarily to revenue recognized during the net lossperiod, partially offset by cash payments received from customers during the period.
14

During the three and six months ended July 2, 2022, we recognized revenues of $10.1 and $33.7, respectively, related to our contract liabilities at December 31, 2021.
Performance Obligations

As of July 2, 2022, the Balcke Dürr sale, weaggregate amount allocated to remaining performance obligations was $92.4. We expect to recognize revenue on approximately 65% and 87% of remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized net income (losses) of $0.3thereafter.


(5)    LEASES
There have been no material changes to our operating and $(0.1)finance leases during the three and ninesix months ended September 30, 2017, and $(0.7) and $(2.2) during the three and nine months ended October 1, 2016, respectively, resulting from revisions to liabilities retained from businesses discontinued prior to 2016.July 2, 2022.
For the three and nine months ended September 30, 2017 and October 1, 2016, the table below presents a reconciliation of discontinued operations activity to the related amounts in the condensed consolidated statements of operations:



 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Balcke Dürr       
Loss from discontinued operations$—

$(4.5)
$(2.6)
$(16.6)
Income tax benefit—

0.5

9.4

4.0
Income (loss) from discontinued operations, net—

(4.0)
6.8

(12.6)
 






All other






Loss from discontinued operations(0.1)
(0.5)
(1.0)
(2.3)
Income tax (provision) benefit0.4

(0.2)
0.9

0.1
Income (loss) from discontinued operations, net0.3

(0.7)
(0.1)
(2.2)
 






Total






Loss from discontinued operations(0.1)
(5.0)
(3.6)
(18.9)
Income tax benefit0.4

0.3

10.3

4.1
Income (loss) from discontinued operations, net$0.3

$(4.7)
$6.7

$(14.8)
(4)(6)    INFORMATION ON REPORTABLE SEGMENTS
We are a global supplier of highly specializedspecialized, engineered solutions with operations in over 15 countries and sales in over 100 countries around the world.
We have aggregated our operating segments into the following three2 reportable segments: HVAC and Detection and Measurement, and Engineered Solutions.Measurement. The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment. In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification.Accounting Standards Codification (“Codification”). Operating income or loss for each of our reportable segments is determined before considering, if applicable, impairment and


special charges, pension and postretirement expense/income, long-term incentive compensation, certain other operating income/expense, and other indirect corporate expenses. This is consistent with the way our chief operating decision makerChief Operating Decision Maker evaluates the results of each segment.
HVAC Reportable Segment
Our HVAC reportable segment engineers, designs, manufactures, installs and services package and process cooling products and engineered air movement solutions for the HVAC industrial and industrialpower generation markets, as well as boilers and comfort heating and ventilation products for the residential and commercial markets. The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers. The segment serves a customer base in North America, Europe, and Asia Pacific.Asia.
Detection and Measurement Reportable Segment
Our Detection and Measurement reportable segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and inspectionrehabilitation equipment, robotic systems, bus fare collection systems, communication technologies, and specialtyobstruction lighting. The primary distribution channels for the segment’s products are direct to customers and third-party distributors. The segment serves a global customer base, with a strong presence in North America, Europe, Africa and Asia Pacific.
Engineered Solutions Reportable Segment
Our Engineered Solutions reportable segment engineers, designs, manufactures, installs and services transformers for the power transmission and distribution market and process cooling equipment and heat exchangers for the industrial and power generation markets. The primary distribution channels for the segment’s products are direct to customers and third-party representatives. The segment has a strong presence in North America and South Africa.Asia.
Corporate Expense
Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters.
15

Financial data for our reportable segments for the three and ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016July 3, 2021 are presented below:
 Three months endedSix months ended
July 2,
2022		July 3,
2021		July 2,
2022		July 3,
2021
Revenues:  
HVAC reportable segment$218.7 $185.4 $411.8 $361.0 
Detection and Measurement reportable segment135.3 111.2 249.3 222.8 
Consolidated revenues$354.0 $296.6 $661.1 $583.8 
Income:  
HVAC reportable segment$25.6 $25.9 $40.8 $48.2 
Detection and Measurement reportable segment22.5 11.4 37.5 31.4 
Total income for reportable segments48.1 37.3 78.3 79.6 
Corporate expense16.4 13.6 33.0 28.0 
Long-term incentive compensation expense2.5 3.3 5.6 6.0 
Special charges, net0.1 0.6 0.1 0.8 
Other operating expense1.9 2.7 1.0 2.7 
Consolidated operating income$27.2 $17.1 $38.6 $42.1 


(7)    SPECIAL CHARGES, NET
 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Revenues: (1)
 
  
  
  
HVAC segment$119.4
 $116.9
 $349.8
 $350.4
Detection and Measurement segment66.9
 52.3
 185.0
 167.8
Engineered Solutions segment (2)
162.2
 175.8
 504.0
 558.8
Consolidated revenues$348.5
 $345.0
 $1,038.8
 $1,077.0
        
Income: 
  
  
  
HVAC segment$15.6
 $15.6
 $47.5
 $48.6
Detection and Measurement segment16.5
 7.8
 45.0
 30.9
Engineered Solutions segment (2) (3)
13.3
 2.6
 7.9
 8.5
Total income for segments45.4
 26.0
 100.4
 88.0
        
Corporate expense(11.0) (9.6) (33.7) (29.6)
Long-term incentive compensation expense(3.6) (4.1) (10.4) (10.2)
Pension and postretirement income (expense)1.4
 (0.8) (1.2) (4.6)
Special charges, net(1.0) (1.9) (2.0) (4.8)
Impairment of intangible assets—
 —
 —
 (4.0)
Gain on sale of dry cooling business—
 1.7
 —
 18.4
Consolidated operating income$31.2
 $11.3
 $53.1
 $53.2
___________________________
(1)
Under the percentage-of-completion method, we recognized revenues of $67.0 and $78.3 in the three months ended September 30, 2017 and October 1, 2016, respectively. For the nine months ended September 30, 2017 and October 1, 2016, revenues under the percentage-of-completion method were $211.6 and $262.7, respectively. Costs and estimated earnings in excess of billings on uncompleted contracts accounted for under the percentage-of-completion method were $41.0 and $33.9 as of September 30, 2017 and December 31, 2016, respectively, and are reported as a component of ‘‘Accounts receivable, net’’ in the condensed consolidated balance sheets. Billings in excess of costs and estimated earnings on uncompleted contracts accounted for under the percentage-of-completion method were $19.7 and $53.3 as of September 30, 2017 and December 31, 2016, respectively, and are reported as a component of ‘‘Accrued expenses’’ in the condensed consolidated balance sheets.


(2)
As further discussed in Note 13, during the second quarter of 2017, we made revisions to our expected revenues and profits on our large power projects in South Africa. As a result of these revisions, we reduced revenue and segment income by $13.5 and $22.9, respectively, for the nine months ended September 30, 2017.
(3)
During the third quarter of 2017, we settled a contract that had been suspended and then ultimately cancelled by a customer for cash proceeds of $9.0 and other consideration. In connection with the settlement, we recorded a gain of $10.2 during the quarter within our Engineered Solutions reportable segment.
(5)SPECIAL CHARGES, NET
Special charges, net, for the three and ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016July 3, 2021 are described in more detail below:
 Three months endedSix months ended
July 2,
2022		July 3,
2021		July 2,
2022		July 3,
2021
HVAC reportable segment$0.1 $0.2 $0.1 $0.2 
Detection and Measurement reportable segment— 0.4 — 0.6 
Total$0.1 $0.6 $0.1 $0.8 

 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
HVAC segment$—
 $—
 $0.4
 $—
Detection and Measurement segment—
 0.3
 0.3
 0.5
Engineered Solutions segment1.0
 1.8
 1.2
 4.5
Corporate—
 (0.2) 0.1
 (0.2)
Total$1.0
 $1.9
 $2.0
 $4.8
HVAC Segment — Charges for the ninethree and six months ended September 30, 2017 related primarily to severance costs associated with a restructuring action at the segment’s Cooling Americas business.
Detection and Measurement Segment — Charges for the nine months ended September 30, 2017July 2, 2022 related to severance costs associated with a restructuring action at one of the segment’s communication technologies business during the first quarter of 2017.segment's cooling businesses. Charges for the three and ninesix months ended October 1, 2016July 3, 2021 related to severance costs associated with a restructuring action at one of the segment’s bus fare collection systems business.segment's heating businesses.
Engineered Solutions SegmentDetection and Measurement — Charges for the three and ninesix months ended September 30, 2017July 3, 2021 related primarily to severance costs associated withfor restructuring actions at the segment’s process coolingsegment's location and South Africaninspection businesses. Charges for the three and nine months ended October 1, 2016 related primarily
No significant future charges are expected to costsbe incurred in connection with restructuringunder actions at our Heat Transfer business in order to reduce the cost baseapproved as of the business in response to reduced demand. The costs incurred for the Heat Transfer business restructuring actions included asset impairment charges associated with the discontinuance of a product line and outsourcing initiatives of $0.7 and $3.3 for the three and nine months ended October 1, 2016, respectively, as well as severance costs. 
Corporate — Charges for the nine months ended September 30, 2017 related to severance costs incurred in connection with the sale of Balcke Dürr. The benefits for the three and nine months ended October 1, 2016 related to a reduction of severance costs accrued in connection with the spin-off of SPX FLOW Inc. in the third quarter of 2015.July 2, 2022.
The following is an analysis of our restructuring liabilities for the ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016:July 3, 2021:
Six months ended
July 2,
2022		July 3,
2021
Balance at beginning of year$0.3 $0.8 
Special charges0.1 0.8 
Utilization — cash(0.3)(1.2)
Currency translation adjustment and other0.1 — 
Balance at end of period$0.2 $0.4 


16
 Nine months ended
 September 30,
2017		 October 1,
2016
Balance at beginning of year$0.9
 $1.6
Special charges (1)
2.0
 1.2
Utilization — cash(1.4) (1.8)
Currency translation adjustment and other—
 (0.2)
Balance at end of period$1.5
 $0.8

___________________________
(1)
The nine months ended September 30, 2017 and October 1, 2016 included $0.0 and $3.6 of non-cash charges, respectively, that did not impact the restructuring liability. 

(8)    INVENTORIES, NET

(6)INVENTORIES, NET
Inventories at September 30, 2017July 2, 2022 and December 31, 20162021 comprised the following:
July 2,
2022		December 31,
2021
Finished goods$63.6 $55.1 
Work in process28.6 21.1 
Raw materials and purchased parts143.6 113.6 
Total inventories$235.8 $189.8 
 September 30,
2017		 December 31,
2016
Finished goods$48.3
 $43.0
Work in process60.3
 50.0
Raw materials and purchased parts69.1
 64.9
Total FIFO cost177.7
 157.9
Excess of FIFO cost over LIFO inventory value(12.1) (12.2)
Total inventories, net$165.6
 $145.7


Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated net realizable values. Certain

As mentioned in Note 1, during the fourth quarter of 2021, we converted the inventory accounting for certain of our domestic inventories are valued usingbusinesses within our HVAC reportable segment from the last-in, first-out (“LIFO”)LIFO method to the FIFO method. These inventories were approximately 60%The effects of this accounting change have been retrospectively applied to all periods presented. The impact of this change on our condensed consolidated statements of operations and 51%condensed consolidated statements of total inventory at September 30, 2017comprehensive income for the three and December 31, 2016, respectively. Other inventories are valued using the first-in, first-out (“FIFO”) method.six months ended July 3, 2021 was as follows:


As Computed under LIFOEffect of ChangeAs Adjusted
Consolidated Statement of Operations for three months ended July 3, 2021:
Income from continuing operations before income taxes$19.6 $0.5 $20.1 
Income tax provision(2.3)(0.1)(2.4)
Income from continuing operations17.3 0.4 17.7 
Income from discontinued operations, net of tax44.2 — 44.2 
Net income$61.5 $0.4 $61.9 
Basic income per share of common stock:
Income from continuing operations, net of tax$0.38 $0.01 $0.39 
Income from discontinued operations, net of tax0.98 — 0.98 
Net income attributable to SPX common stockholders$1.36 $0.01 $1.37 
Diluted income per share of common stock:
Income from continuing operations, net of tax$0.37 $0.01 $0.38 
Income from discontinued operations, net of tax0.95 — 0.95 
Net income attributable to SPX common stockholders$1.32 $0.01 $1.33 
Total comprehensive income$60.9 $0.4 $61.3 
(7)GOODWILL AND OTHER INTANGIBLE ASSETS


17

As Computed under LIFOEffect of ChangeAs Adjusted
Consolidated Statement of Operations for six months ended July 3, 2021:
Income from continuing operations before income taxes$47.9 $0.5 $48.4 
Income tax provision(7.6)(0.1)(7.7)
Income from continuing operations40.3 0.4 40.7 
Income from discontinued operations, net of tax48.0 — 48.0 
Net income$88.3 $0.4 $88.7 
Basic income per share of common stock:
Income from continuing operations, net of tax$0.89 $0.01 $0.90 
Income from discontinued operations, net of tax1.06 — 1.06 
Net income attributable to SPX common stockholders$1.95 $0.01 $1.96 
Diluted income per share of common stock:
Income from continuing operations, net of tax$0.87 $0.01 $0.88 
Income from discontinued operations, net of tax1.03 — 1.03 
Net income attributable to SPX common stockholders$1.90 $0.01 $1.91 
Total comprehensive income$90.4 $0.4 $90.8 


(9)    GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The changes in the carrying amount of goodwill by reportable segment,for the six months ended July 2, 2022 were as follows:
December 31,
2021
Goodwill
Resulting from
Business
Combinations (1)
ImpairmentsForeign
Currency
Translation		July 2,
2022
HVAC reportable segment    
Gross goodwill$528.9 $0.1 $— $(9.7)$519.3 
Accumulated impairments(334.1)— — 6.8 (327.3)
Goodwill194.8 0.1 — (2.9)192.0 
Detection and Measurement reportable segment     
Gross goodwill424.9 12.2 — (9.9)427.2 
Accumulated impairments(162.4)— — 2.9 (159.5)
Goodwill262.5 12.2 — (7.0)267.7 
Total     
Gross goodwill953.8 12.3 — (19.6)946.5 
Accumulated impairments(496.5)— — 9.7 (486.8)
Goodwill$457.3 $12.3 $— $(9.9)$459.7 
___________________________
(1)Reflects (i) goodwill acquired with the ITL acquisition of $12.0, (ii) an increase in Sealite's goodwill of $0.2 resulting from revisions to the valuation of certain assets and liabilities, and (iii) an increase in Cincinnati Fan's goodwill of $0.1 resulting from revisions to the valuation of certain assets and liabilities. As indicated in Note 1, the acquired assets, including goodwill, and liabilities assumed in the Cincinnati Fan, ECS, and ITL acquisitions have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

18
 December 31,
2016		 Impairments 
Foreign
Currency
Translation
and Other
 September 30,
2017
HVAC segment 
  
  
  
Gross goodwill$258.5
 $—
 $4.7
 $263.2
Accumulated impairments(144.2) —
 (0.5) (144.7)
Goodwill114.3
 —
 4.2
 118.5
        
Detection and Measurement segment 
  
  
  
Gross goodwill214.4
 —
 2.2
 216.6
Accumulated impairments(134.2) —
 (1.8) (136.0)
Goodwill80.2
 —
 0.4
 80.6
        
Engineered Solutions segment 
  
  
  
Gross goodwill351.4
 —
 6.2
 357.6
Accumulated impairments(205.5) —
 (5.8) (211.3)
Goodwill145.9
 —
 0.4
 146.3
        
Total 
  
  
  
Gross goodwill824.3
 —
 13.1
 837.4
Accumulated impairments(483.9) —
 (8.1) (492.0)
Goodwill$340.4
 $—
 $5.0
 $345.4




Other Intangibles, Net
Identifiable intangible assets at September 30, 2017July 2, 2022 and December 31, 20162021 comprised the following:
July 2, 2022December 31, 2021
September 30, 2017 December 31, 2016Gross
Carrying
Value		Accumulated
Amortization		Net
Carrying
Value		Gross
Carrying
Value		Accumulated
Amortization		Net
Carrying
Value
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
Intangible assets with determinable lives: 
  
  
  
  
  
Intangible assets with determinable lives: (1)
Intangible assets with determinable lives: (1)
      
Customer relationships$1.4
 $(1.4) $—
 $1.4
 $(1.4) $—
Customer relationships$199.2 $(33.6)$165.6 $188.2 $(26.7)$161.5 
Technology2.1
 (0.5) 1.6
 2.1
 (0.4) 1.7
Technology81.7 (15.4)66.3 80.1 (11.9)68.2 
Patents4.5
 (4.5) —
 4.5
 (4.5) —
Patents4.5 (4.5)— 4.5 (4.5)— 
Other11.8
 (7.8) 4.0
 12.7
 (7.4) 5.3
Other36.9 (22.8)14.1 31.6 (18.0)13.6 
19.8
 (14.2) 5.6
 20.7
 (13.7) 7.0
 322.3 (76.3)246.0 304.4 (61.1)243.3 
Trademarks with indefinite lives112.1
 —
 112.1
 110.9
 —
 110.9
Trademarks with indefinite lives170.1 — 170.1 172.2 — 172.2 
Total (1)
$131.9
 $(14.2) $117.7
 $131.6
 $(13.7) $117.9
TotalTotal$492.4 $(76.3)$416.1 $476.6 $(61.1)$415.5 
___________________________
(1)
Changes in the gross carrying values of “Other Intangibles, Net” during the nine months ended September 30, 2017 related to foreign currency translation.
(1) The identifiable intangible assets associated with the ITL acquisition consist of customer relationships of $14.0, definite-lived trademarks of $3.0, technology of $2.9, and non-compete agreements of $2.6.

In connection with the acquisition of ITL, which has definite-lived intangibles as noted above, we updated our estimated annual amortization expense related to intangible assets to approximately $29.0 for the full year 2022 and $25.0 for 2023 and each of the four years thereafter.

At September 30, 2017,July 2, 2022, the net carrying valuevalue of intangible assets with determinable lives consisted of $4.0$98.2 in the HVAC reportable segment and $1.6$147.8 in the Engineered SolutionsDetection and Measurement reportable segment. At September 30, 2017,July 2, 2022, trademarks with indefinite lives consisted of $89.4$105.0 in the HVAC reportable segment $10.3and $65.1 in the Detection and Measurement segmentreportable segment.
We review goodwill and $12.4 in the Engineered Solutions segment.
We perform our annual goodwillindefinite-lived intangible assets for impairment testingannually during thethe fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of the end of the third quarter. In addition, we test goodwill for impairment on a more frequent basis if there are indications of potential impairment. In reviewing goodwill and indefinite-lived intangible assets for impairment, we initially perform a qualitative analysis. If there is an indication of impairment, we then perform a quantitative analysis. A significant amount of judgment is involved in determining if an indication of impairment has occurred between annual testing dates. Such indication may include: a significant decline in expected future cash flows; a significant adverse change in legal factors or the business climate; unanticipated competition; and a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit.
During the fourth quarter of 2021, based on quantitative analyses of the goodwill and indefinite-lived intangible assets of our ULC reporting unit, we determined that the fair value of the reporting unit approximated the carrying value of its net assets. The total goodwill of ULC was $12.0 as of July 2, 2022. A change in assumptions used in ULC's quantitative analysis (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in the reporting unit's estimated fair value being less than the carrying value of its net assets. In addition to ULC, the fair value of the Sealite, ECS, Cincinnati Fan and ITL, acquisitions in 2021 and thus far in 2022, approximate their carrying value. If ULC, Sealite, ECS, Cincinnati Fan or ITL are unable to achieve their respective current financial forecast, we may be required to record an impairment charge in a future period related to their respective goodwill.

We perform our annual trademarks impairment testing during the fourth quarter, or on a more frequent basis, if there are indications of potential impairment. The fair valuesvalue of our trademarks are determined byis based on applying estimated royalty rates to projected revenues, with the resulting cash flows discounted at a rate of return that reflects current market conditions (fair value based on unobservable inputs - Level 3, as defined in Note 15)17). The primary basis for these projected revenues is the annual operating plan for each of the related businesses, which is prepared in the fourth quarter of each year.
In the first quarter of 2016, we recorded an impairment charge of $4.0 related to trademarks of our Heat Transfer business. No impairment charges were recorded in the first nine months of 2017.
19
(8) WARRANTY

(10)     WARRANTY
The following is an analysis of our product warranty accrual for the periods presented:
10Six months ended
July 2,
2022		July 3,
2021
Balance at beginning of year$34.8 $35.3 
Acquisitions0.3 — 
Provisions5.5 5.5 
Usage(5.5)(5.2)
Currency translation adjustment(0.2)— 
Balance at end of period34.9 35.6 
Less: Current portion of warranty11.9 11.7 
Non-current portion of warranty$23.0 $23.9 

(11)    EMPLOYEE BENEFIT PLANS
 Nine months ended
 September 30,
2017		 October 1,
2016
Balance at beginning of year$35.8
 $36.3
Provisions9.7
 10.6
Usage(11.5) (11.6)
Currency translation adjustment0.2
 (0.4)
Balance at end of period34.2
 34.9
Less: Current portion of warranty14.2
 15.7
Non-current portion of warranty$20.0
 $19.2



(9)EMPLOYEE BENEFIT PLANS
On February 17, 2022, we transferred our existing liability under the SPX Postretirement Benefit Plans (the “Plans”) for a group of participants with retiree life insurance benefits to an insurance carrier for consideration payable to the insurance carrier of approximately $10.0. Of this consideration, $9.0 was paid during the quarter ended April 2, 2022, with the remainder paid in the second quarter of 2022. This transaction resulted in a settlement charge of $0.7 recorded to “Other income (expense), net” during the first quarter of 2022. In addition, and in connection with this transfer, we remeasured the spin-offassets and liabilities of SPX Flow, Inc. (“SPX Flow”) on September 26, 2015, participantsthe Plans as of the transfer date, which resulted in an actuarial gain of $0.4 recorded to “Other income (expense), net” for the three months ended April 2, 2022. Lastly, as a result of the transfer, we have eliminated the third-party cost and internal resource requirements associated with administering these benefits.

Participants in the SPX U.S. Pension Plan (the “U.S. Plan”) that were transferred to SPX FLOW becameare eligible to elect a lump-sum payment option in lieu of a future pension benefit under the U.S. Plan.benefit. During the second quarterfirst half of 2016, approximately 9%, or $25.2, of the projected benefit obligation of the U.S. Plan2022, $10.0 was settled as a result ofpaid to participants who elected lump-sum payments. This triggered a plan settlement which resulted in a charge to "Other income (expense), net" of $2.3 during the quarter ended July 2, 2022. In connection with these lump-sum payments,addition, we remeasured the assets and liabilities of the U.S. Plan as of May 31, 2016,at July 2, 2022, which resulted in a chargean actuarial loss of $1.5 to net periodic pension benefit expense of $1.0"Other income (expense), net" during the quarter.
During the second quarter of 2016, we made lump-sum payments to certain participants of the Supplemental Individual Account Retirement Plan (“SIARP”), settling approximately 22%, or $2.7, of the SIARP’s projected benefit obligation. In connection with these lump-sum payments,the remeasurement we remeasuredupdated our actuarial assumptions, the liabilitiesonly change of significance being the SIARP as of June 30, 2016,discount rate, which resulted in a chargeincreased from 2.83% to net periodic pension benefit expense of $0.8 during the quarter.4.86%.
In July 2014, we discontinued our sponsorship of post-65 age healthcare plans, effective January 1, 2015, which resulted in eligible retirees being transitioned to coverage in the individual healthcare insurance market that we subsidize through health reimbursement accounts. In November 2014, a lawsuit was filed challenging certain aspects of this action. In September 2017, we received a favorable ruling related to the lawsuit. During the third quarter of 2017, in connection with the favorable ruling, we reduced our unfunded liability related to postretirement benefits by $26.8. The offset for the reduction of the unfunded liability was recorded to accumulated other comprehensive income and represents unrecognized prior service credits. These unrecognized prior service credits will be recorded to net periodic postretirement benefit (income) expense over a period of approximately eight years, beginning in the fourth quarter of 2017. In addition, we remeasured our unfunded liability related to postretirement benefits, which resulted in a gain within net periodic postretirement benefit expense and a reduction of the unfunded liability of $2.6 during the third quarter of 2017.
Net periodic benefit (income) expense (income) for our pension and postretirement plans includedinclude the following components:

Domestic Pension Plans
Three months endedSix months ended
July 2,
2022		July 3,
2021		July 2,
2022		July 3,
2021
Service cost$— $— $— $— 
Interest cost2.3 2.1 4.6 4.2 
Expected return on plan assets(2.1)(2.2)(4.2)(4.4)
Settlement and actuarial losses (1)
3.8 — 3.8 — 
Net periodic pension benefit (income) expense$4.0 $(0.1)$4.2 $(0.2)
 _________________
 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Service cost$0.1
 $0.1
 $0.3
 $0.3
Interest cost3.4
 3.3
 10.0
 10.4
Expected return on plan assets(2.5) (3.2) (7.5) (9.6)
Recognized net actuarial loss—
 —
 —
 1.8
Amortization of unrecognized prior service credits(0.1) (0.1) (0.1) (0.1)
Total net periodic pension benefit expense$0.9
 $0.1
 $2.7
 $2.8
(1)     Consists of an actuarial loss of $1.5 and a settlement loss of $2.3.



Foreign Pension Plans
Three months endedSix months ended
July 2,
2022		July 3,
2021		July 2,
2022		July 3,
2021
Service cost$— $— $— $— 
Interest cost1.0 0.8 2.0 1.6 
Expected return on plan assets(1.5)(1.4)(3.0)(2.8)
Net periodic pension benefit income$(0.5)$(0.6)$(1.0)$(1.2)

20

 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Service cost$—
 $—
 $—
 $—
Interest cost1.2
 1.4
 3.6
 4.3
Expected return on plan assets(1.6) (1.5) (4.7) (5.0)
Net periodic pension benefit income$(0.4) $(0.1) $(1.1) $(0.7)
Less: Net periodic pension benefit expense of discontinued operations—
 0.1
 —
 0.1
Net periodic pension benefit income of continuing operations$(0.4) $(0.2) $(1.1) $(0.8)


Postretirement Plans
Three months endedSix months ended
July 2,
2022		July 3,
2021		July 2,
2022		July 3,
2021
Service cost$— $— $— $— 
Interest cost0.3 0.3 0.6 0.6 
Amortization of unrecognized prior service credits(1.1)(1.2)(2.2)(2.4)
Settlement loss, net (1)
— — 0.3 — 
Net periodic postretirement benefit income$(0.8)$(0.9)$(1.3)$(1.8)
 _________________
 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Service cost$—
 $—
 $—
 $—
Interest cost0.9
 1.1
 2.8
 3.2
Recognized net actuarial gain(2.6) —
 (2.6) —
Amortization of unrecognized prior service credits(0.2) (0.2) (0.6) (0.6)
Net periodic postretirement benefit (income) expense$(1.9) $0.9
 $(0.4) $2.6
(1)The six months ended July 2, 2022 includes the impact of the transfer of the retiree life insurance benefits obligation.

(10)INDEBTEDNESS
(12)    INDEBTEDNESS
The following summarizes our debt activity (both current and non-current) for the ninesix months ended September 30, 2017:

December 31,
2016		 Borrowings Repayments 
Other(4)
 September 30,
2017
Revolving loans$—
 $46.4
 $(46.4) $—
 $—
Term loan (1)
339.6
 —
 (13.1) 0.3
 326.8
Trade receivables financing arrangement (2)
—
 70.0
 (39.0) —
 31.0
Other indebtedness (3)
16.6
 25.6
 (33.4) 1.4
 10.2
Total debt356.2
 $142.0
 $(131.9) $1.7
 368.0
Less: short-term debt14.8
       39.0
Less: current maturities of long-term debt17.9
       18.0
Total long-term debt$323.5
       $311.0
July 2, 2022:
December 31,
2021		BorrowingsRepaymentsOtherJuly 2,
2022
Revolving loans$— $— $— $— $— 
Term loan(1)
242.7 — (6.3)0.1 236.5 
Trade receivables financing arrangement(2)
— — — — — 
Other indebtedness(3)
3.3 0.1 (0.3)— 3.1 
Total debt246.0 $0.1 $(6.6)$0.1 239.6 
Less: short-term debt2.2 2.1 
Less: current maturities of long-term debt13.0 13.0 
Total long-term debt$230.8 $224.5 
___________________________
(1)
(1)The term loan is repayable in quarterly installments equal to 1.25% of the initial term loan balance of $250.0, in each of the four quarters of 2022 and 2023, and 1.25% during the first three quarters of 2024. The remaining balance is payable in full on December 17, 2024. Balances are net of unamortized debt issuance costs of $0.9 and $1.0 at July 2, 2022 and December 31, 2021, respectively.
(2)Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses.
(3)Primarily includes balances under a purchase card program of $2.1 and $2.2 and finance lease obligations of $1.0 and $1.1 at July 2, 2022 and December 31, 2021, respectively. The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt. 
The term loan is repayable in quarterly installments of 1.25% of the original loan balance of $350.0. The remaining balance is repayable in full on September 24, 2020. Balances are net of unamortized debt issuance costs of $1.3 and $1.6 at September 30, 2017 and December 31, 2016, respectively.
(2)
Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. At September 30, 2017, we had $18.3 of available borrowing capacity under this facility.
(3)
Primarily includes balances under a purchase card program of $3.6 and $3.9, capital lease obligations of $2.2 and $1.7, and borrowings under lines of credit in South Africa and China totaling $4.1 and $10.2 at September 30, 2017 and December 31, 2016, respectively. The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt. 
(4)
“Other” primarily includes debt assumed, foreign currency translation on any debt instruments denominated in currencies other than the U.S. dollar, and the impact of amortization of debt issuance costs associated with the term loan.
Senior Credit Facilities
On March 20, 2017, we entered into an amendment to our senior credit facilities. Among other things, the amendment extended the period during which we may reinvest the net proceeds from the disposition of our dry cooling business. A detailed description of our senior credit facilities is included in our 20162021 Annual Report on Form 10-K.
At September 30, 2017,July 2, 2022, we had $35.9 and $178.6$439.0 of outstanding letters of credit issuedavailable borrowing capacity under our revolving credit andfacilities, after giving effect to $11.0 reserved for outstanding letters of credit. In addition, at July 2, 2022, we had $43.3 of available issuance capacity under our foreign credit instrument facilities after giving effect to $11.7 reserved for outstanding letters of our senior credit agreement, respectively.credit.
The weighted-average interest rate of outstanding borrowings under our senior credit agreement was approximately 3.0% at September 30, 2017.July 2, 2022.
At September 30, 2017, July 2, 2022, we were in compliance with all covenants of our senior credit agreement.



(11)DERIVATIVE FINANCIAL INSTRUMENTS
(13)    DERIVATIVE FINANCIAL INSTRUMENTS
Interest Rate Swaps
During the second quarter of 2016, we entered intoWe previously maintained interest rate swap agreements (“Swaps”) to hedge the interest rate risk on our variable rate term loan. These Swaps, which we designate and account for as cash flow hedges, have effective dates


beginningthat matured in January 2017 and maturities through September 2020March 2021 and effectively convert 50% of the borrowingconverted borrowings under the variable rate term loanour senior credit facilities to a fixed rate of 1.2895%2.535%, plus the applicable margin. These



21

In February 2020, and as a result of a December 2019 amendment that extended the maturity date of our senior credit facilities to December 17, 2024, we entered into additional interest swap agreements (“Swaps”). The Swaps have a remaining notional amount of $237.5, cover the period from March 2021 to November 2024, and effectively convert borrowings under our senior credit facilities to a fixed rate of 1.061%, plus the applicable margin.

We have designated and are amortizing Swaps; therefore, the outstanding notional value is scheduled to decline commensurate with the scheduled maturities of the term loan.accounting for our interest rate swap agreements as cash flow hedges. As of September 30, 2017, the aggregate notional amounts of the Swaps was $164.8July 2, 2022 and December 31, 2021, the unrealized gain, net of tax, recorded in accumulated other comprehensive income (“AOCI”(“AOCI”) was $1.2.$8.6 and $0.5, respectively. In addition, we have recorded a long-term assetas of $2.3 to recognizeJuly 2, 2022, the fair value of these Swaps. These changesour interest rate swap agreements totaled $11.5 (with $1.5 recorded as a current asset and $10.0 as a non-current asset), and $0.6 at December 31, 2021 (with $2.5 recorded as a non-current asset and $1.9 as a current liability). Changes in fair value of our interest rate swap agreements are reclassified into earnings, as a component of interest expense, when the forecasted transaction impacts earnings.

Currency Forward Contracts
We manufacture and Currency Forward Embedded Derivativessell our products in a number of countries and, as a result, are exposed to movements in foreign currency exchange rates. Our objective is to preserve the economic value of non-functional currency-denominated cash flows and to minimize the impact of changes as a result of currency fluctuations. Our principal currency exposures relate to the South African Rand, British Pound Sterling (“GBP”), and Euro.

From time to time, we enter into forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries (“FX forward contracts”). In addition, some of our contracts contain currency forward embedded derivatives (“FX embedded derivatives”), because the currency of exchange is not “clearly and closely” related to the functional currency of either party to the transaction. Certain of our FX forward contracts are designated as cash flow hedges. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value are not included in current earnings, but are included in accumulated other comprehensive income (“AOCI”). These changes in fair value are reclassified into earnings as a component of revenues or cost of products sold, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable, the cumulative change in the derivatives’ fair value is recorded as a component of “Other income (expense), net” in the period in which the transaction is no longer considered probable of occurring. To the extent a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded in earnings in the period in which it occurs.

We had FX forward contracts with an aggregate notional amount of $6.9$27.8 and $8.8$8.7 outstanding as of September 30, 2017July 2, 2022 and December 31, 2016,2021, respectively, with all of the $6.9$27.8 scheduled to mature within one year. We also had FX embedded derivatives with an aggregate notional amount of $0.4 and $0.9 at September 30, 2017 and December 31, 2016, respectively, with all of the $0.4 scheduled to mature within one year. There were no unrealized gains or losses recorded in AOCI related to FX forward contracts as of September 30, 2017 and December 31, 2016.
The fair value of our FX forward contracts and FX embedded derivative instruments were not material in relation to our condensed consolidated balance sheets as of September 30, 2017was less than $0.1 at July 2, 2022 and December 31, 2016.2021.

Beginning in the second quarter of 2022, we have designated and accounted for certain of our FX forward contracts, with a notional amount of $3.5, as cash flow hedges. As of July 2, 2022, the unrealized gain/loss recorded in AOCI related to these cash flow hedges was less than $0.1.

Commodity Contracts
From time to time,For our Transformer Solutions business, we enterhistorically entered into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials. At September 30, 2017 and December 31, 2016,As discussed in Note 1, on October 1, 2021, we completed the outstanding notional amountsale of Transformer Solutions, which has been presented within discontinued operations. Immediately prior to the sale, we extinguished the existing commodity contracts was 3.7 and 4.1 poundsreclassified from AOCI a net loss of copper, respectively. We designate$0.6 to “Gain (loss) on disposition of discontinued operations, net of tax” within our condensed consolidated statements of operations for the three and accountnine months ended October 2, 2021. Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and, to the extent thesethe commodity contracts arewere effective in offsetting the variability of the forecasted purchases, the change in fair value iswas included in AOCI. We reclassify AOCIreclassified amounts associated with our commodity contracts to costout of products soldAOCI when the forecasted transaction impactsimpacted earnings. As of September 30, 2017 and December 31, 2016, the fair value of these contracts was $0.6 (current asset) and $1.1 (current asset), respectively. The unrealized gains, net of tax, recorded in AOCI were $0.6 and $0.8 as of September 30, 2017 and December 31, 2016, respectively. We anticipate reclassifying the unrealized gains as of September 30, 2017 to income over the next 12 months.

(12)SHAREHOLDERS’ EQUITY AND LONG-TERM INCENTIVE COMPENSATION

(14)    STOCKHOLDERS' EQUITY AND LONG-TERM INCENTIVE COMPENSATION
Income Per Share
The following table sets forth the number of weighted-average shares outstanding used in the computation of basic and diluted income per share:
 Three months endedSix months ended
July 2,
2022		July 3,
2021		July 2,
2022		July 3,
2021
Weighted-average number of common shares used in basic income per share45.444 45.271 45.500 45.201 
Dilutive securities — Employee stock options and restricted stock units0.845 1.274 0.870 1.207 
Weighted-average number of common shares and dilutive securities used in diluted income per share46.289 46.545 46.370 46.408 



22

 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Weighted-average number of common shares used in basic income per share42.540
 41.721
 42.347
 41.537
Dilutive securities — Employee stock options, restricted stock shares and restricted stock units1.524
 0.754
 1.381
 0.347
Weighted-average number of common shares and dilutive securities used in diluted income per share44.064
 42.475
 43.728
 41.884


The weighted-average number of restricted stock shares/units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period was 0.452were 0.350 and 0.961,0.791, respectively, for the three months ended July 2, 2022, and 0.292 and 0.739, respectively, for the threesix months ended September 30, 2017, and 0.534 and 1.009, respectively, for the nine months ended September 30, 2017.July 2, 2022.

The weighted-average number of restricted stock shares/units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period was 0.992were 0.307 and 1.542,0.652, respectively, for the three months ended October 1, 2016July 3, 2021, and 1.1340.269 and 1.346,0.632, respectively, for the ninesix months ended October 1, 2016.ended July 3, 2021.

Long-Term Incentive Compensation

Long-term incentive compensation awards may be granted to certain eligible employees or non-employee directors. A detailed description of the awards granted prior to 20172022 is included in our 20162021 Annual Report on Form 10-K.
Awards granted on March 1 2017, 2022 to executive officers and other members of senior management were comprised of performance stock units (“PSU’s”), stock options, and time-based restricted stock units (“RSU’s”), and long-term cash awards, while other eligible employees were granted RSU’sPSU’s and long-term cash awards.RSU’s. The PSU’s are eligible to vest at the end of a three-year performance period, with performance based on the total return of our stock over the three-year performance period against a peer group within the S&P 600 Capital Goods Index. Stock options and RSU’s vest ratably over the three-year period subsequent to the date of grant. Long-term cash awards are eligible to vest at the end of a three-year performance measurement period, with performance based on our achieving a target segment income amount over the three-year measurement period.

Effective May 8, 2017,10, 2022, we granted 0.024 RSU’s0.023 RSU's to our Non-employeenon-employee directors, which vest in their entirety immediately prior to the annual meeting of stockholders in May 2018.2023. A detailed description of the awards granted prior to 2022 is included in our 2021 Annual Report on Form 10-K.


CompensationCompensation expense within income from continuing operations related to long-term incentive awards totaled $3.6$2.5 and $4.1$3.3 for the three months ended September 30, 2017July 2, 2022 and October 1, 2016,July 3, 2021, respectively, and $10.4 and $10.2 $5.6 and $6.0 for the ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016,July 3, 2021, respectively. The related tax benefit was $1.4 $0.4 and $1.6$0.5 for the three months ended September 30, 2017July 2, 2022 and October 1, 2016,July 3, 2021, respectively, and $4.0$0.9 and $3.9$1.0 for the ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016,July 3, 2021, respectively.

Repurchases of Common Stock

On May 10, 2022, our Board of Directors re-authorized management, in its sole discretion, to repurchase, in any fiscal year, up to $100.0 of our common stock, subject to maintaining compliance with all covenants of our Senior Credit Facilities. Pursuant to this re-authorization, during the three months ended July 2, 2022, we repurchased approximately 0.7 shares of our common stock for aggregate cash payments of $33.7. As of July 2, 2022, the remaining maximum approximate amount of our common stock that may be purchased under this authorization is $66.3.

Accumulated Other Comprehensive Income (Loss)

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended September 30, 2017July 2, 2022 were as follows:
 Foreign
Currency
Translation
Adjustment
Net Unrealized Gains
on Qualifying Cash
Flow Hedges(1)
Pension and
Postretirement
Liability
Adjustment(2)
Total
Balance at beginning of period$250.1 $7.0 $9.8 $266.9 
Other comprehensive income (loss) before reclassifications(13.8)1.5 0.1 (12.2)
Amounts reclassified from accumulated other comprehensive income— 0.1 (0.8)(0.7)
Current-period other comprehensive income (loss)(13.8)1.6 (0.7)(12.9)
Balance at end of period$236.3 $8.6 $9.1 $254.0 
__________________________
(1)Net of tax provision of $2.9 and $2.3 as of July 2, 2022 and April 2, 2022, respectively.
(2)Net of tax provision of $3.2 and $3.5 as of July 2, 2022 and April 2, 2022, respectively. The balances as of July 2, 2022 and April 2, 2022 include unamortized prior service credits.



 
Foreign
Currency
Translation
Adjustment
 
Net Unrealized Gains
on Qualifying Cash
Flow Hedges(1)
 
Pension and
Postretirement
Liability Adjustment(2) (3)
 Total
Balance at beginning of period$229.3
 $1.3
 $3.6
 $234.2
Other comprehensive income before reclassifications2.4
 0.6
 16.3
 19.3
Amounts reclassified from accumulated other comprehensive income—
 (0.1) (0.1) (0.2)
Current-period other comprehensive income2.4
 0.5
 16.2
 19.1
Balance at end of period$231.7
 $1.8
 $19.8
 $253.3
23
__________________________
(1)

Net of tax provision of $1.1 and $0.8 as of September 30, 2017 and July 1, 2017, respectively.
(2)
As indicated in Note 9, we reduced our unfunded liability related to postretirement benefits and increased accumulated other comprehensive income (before tax effects) by $26.8.
(3)
Net of tax provision of $12.9 and $2.6 as of September 30, 2017 and July 1, 2017, respectively. The balances as of September 30, 2017 and July 1, 2017 represent net unamortized prior service credits.


The changes in the components of accumulated other comprehensive income, net of tax, for the ninesix months ended September 30, 2017July 2, 2022 were as follows:
 Foreign
Currency
Translation
Adjustment
Net Unrealized Gains
on Qualifying Cash
Flow Hedges(1)
Pension and
Postretirement
Liability
Adjustment(2)
Total
Balance at beginning of period$252.7 $0.5 $10.7 $263.9 
Other comprehensive income (loss) before reclassifications(16.4)7.6 0.1 (8.7)
Amounts reclassified from accumulated other comprehensive income— 0.5 (1.7)(1.2)
Current-period other comprehensive income (loss)(16.4)8.1 (1.6)(9.9)
Balance at end of period$236.3 $8.6 $9.1 $254.0 
__________________________
 Foreign
Currency
Translation
Adjustment		 
Net Unrealized Gains
on Qualifying Cash
Flow Hedges(1)
 
Pension and
Postretirement
Liability Adjustment(2) (3)
 Total
Balance at beginning of period$229.7
 $1.5
 $3.9
 $235.1
Other comprehensive income before reclassifications2.0
 1.1
 16.3
 19.4
Amounts reclassified from accumulated other comprehensive income—
 (0.8) (0.4) (1.2)
Current-period other comprehensive income2.0
 0.3
 15.9
 18.2
Balance at end of period$231.7
 $1.8
 $19.8
 $253.3
(1)Net of tax provision of $2.9 and $0.1 as of July 2, 2022 and December 31, 2021, respectively.
_________________________(2)Net of tax provision of $3.2 and $3.7 as of July 2, 2022 and December 31, 2021, respectively. The balances as of July 2, 2022 and December 31, 2021 include unamortized prior service credits.
(1)
Net of tax provision of $1.1 and $0.9 as of September 30, 2017 and December 31, 2016, respectively.
(2)
As indicated in Note 9, we reduced our unfunded liability related to postretirement benefits and increased accumulated other comprehensive income (before tax effects) by $26.8.
(3)
Net of tax provision of $12.9 and $2.7 as of September 30, 2017 and December 31, 2016. The balances as of September 30, 2017 and December 31, 2016 represent net unamortized prior service credits.
The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended October 1, 2016July 3, 2021 were as follows:
 Foreign
Currency
Translation
Adjustment
Net Unrealized
 Losses
on Qualifying Cash
Flow Hedges(1)
Pension and
Postretirement
Liability
Adjustment(2)
Total
Balance at beginning of period$239.2 $(1.4)$13.4 $251.2 
Other comprehensive income before reclassifications0.9 0.2 — 1.1 
Amounts reclassified from accumulated other comprehensive income (loss)— (0.8)(0.9)(1.7)
Current-period other comprehensive income (loss)0.9 (0.6)(0.9)(0.6)
Balance at end of period$240.1 $(2.0)$12.5 $250.6 
 
Foreign
Currency
Translation
Adjustment
 
Net Unrealized Losses
on Qualifying Cash Flow Hedges(1)
 
Pension and Postretirement
Liability Adjustment(2)
 Total
Balance at beginning of period$239.6
 $(1.6) $4.2
 $242.2
Other comprehensive income (loss) before reclassifications(7.2) 0.3
 —
 (6.9)
Amounts reclassified from accumulated other comprehensive income (loss)—
 0.2
 (0.1) 0.1
Current-period other comprehensive income (loss)(7.2) 0.5
 (0.1) (6.8)
Balance at end of period$232.4
 $(1.1) $4.1
 $235.4
__________________________
___________________________
(1)Net of tax benefit of $0.7 and $0.4 as of July 3, 2021 and April 3, 2021, respectively.
(1)
(2)Net of tax provision of $4.3 and $4.6 as of July 3, 2021 and April 3, 2021, respectively. The balances as of July 3, 2021 and April 3, 2021 include unamortized prior service credits.
Net of tax benefit of $0.7 and $1.0 as of October 1, 2016 and July 2, 2016, respectively.
(2)
Net of tax provision of $2.8 and $3.0 as of October 1, 2016 and July 2, 2016, respectively. The balances as of October 1, 2016 and July 2, 2016 include net unamortized prior service credits.
The changes in the components of accumulated other comprehensive income, net of tax, for the ninesix months ended October 1, 2016July 3, 2021 were as follows:
 Foreign
Currency
Translation
Adjustment		 
Net Unrealized Losses
on Qualifying Cash Flow Hedges(2)
 
Pension and
Postretirement
Liability Adjustment(3)
 Total
Balance at beginning of period$280.6
 $(1.8) $4.5
 $283.3
Other comprehensive loss before reclassifications(7.8) (1.4) —
 (9.2)
Amounts reclassified from accumulated other comprehensive income (loss) (1)
(40.4) 2.1
 (0.4) (38.7)
Current-period other comprehensive income (loss)(48.2) 0.7
 (0.4) (47.9)
Balance at end of period$232.4
 $(1.1) $4.1
 $235.4
__________________________
(1)
In connection with the sale of our dry cooling business, we reclassified $40.4 of other comprehensive income related to foreign currency translation to “Gain on sale of dry cooling business.”
(2)
Net of tax benefit of $0.7 and $0.8 as of October 1, 2016 and December 31, 2015, respectively.
(3)
Net of tax provision of $2.8 and $3.1 as of October 1, 2016 and December 31, 2015, respectively. The balances as of October 1, 2016 and December 31, 2015 include net unamortized prior service credits.

 Foreign
Currency
Translation
Adjustment
Net Unrealized
 Losses
on Qualifying Cash
Flow Hedges(1)
Pension and
Postretirement
Liability
Adjustment(2)
Total
Balance at beginning of period$238.6 $(4.4)$14.3 $248.5 
Other comprehensive income before reclassifications1.5 3.5 — 5.0 
Amounts reclassified from accumulated other comprehensive income (loss)— (1.1)(1.8)(2.9)
Current-period other comprehensive income (loss)1.5 2.4 (1.8)2.1 
Balance at end of period$240.1 $(2.0)$12.5 $250.6 

__________________________
(1)Net of tax benefit of $0.7 and $1.4 as of July 3, 2021 and December 31, 2020, respectively.
(2)Net of tax provision of $4.3 and $4.9 as of July 3, 2021 and December 31, 2020, respectively. The balances as of July 3, 2021 and December 31, 2020 include unamortized prior service credits.



24

The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the three months ended September 30, 2017July 2, 2022 and October 1, 2016:July 3, 2021:
Amount Reclassified from AOCI 
Three months ended
July 2, 2022July 3, 2021Affected Line Item in the Condensed
Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:   
Commodity contracts$— $(1.7)Income from discontinued operations, net of tax
Swaps0.2 0.6 Interest expense
Pre-tax0.2 (1.1) 
Income taxes(0.1)0.3  
 $0.1 $(0.8) 
Gains on pension and postretirement items:   
Amortization of unrecognized prior service credits - Pre-tax$(1.1)$(1.2)Other income (expense), net
Income taxes0.3 0.3  
 $(0.8)$(0.9) 
 Amount Reclassified from AOCI  
 Three months ended  
 September 30, 2017 October 1, 2016 
Affected Line Item in the Condensed
Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges: 
  
  
FX forward contracts$—
 $—
 Revenues
Commodity contracts(0.2) 0.3
 Cost of products sold
Swaps—
 —
 Interest expense
Pre-tax(0.2) 0.3
  
Income taxes0.1
 (0.1)  
 $(0.1) $0.2
  
      
Gains on pension and postretirement items: 
  
  
Amortization of unrecognized prior service credits$(0.3) $(0.3) Selling, general and administrative
Pre-tax(0.3) (0.3)  
Income taxes0.2
 0.2
  
 $(0.1) $(0.1)  

The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016:July 3, 2021:
Amount Reclassified from AOCI 
Six months ended
July 2, 2022July 3, 2021Affected Line Item in the Condensed
Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:   
Commodity contracts$— $(3.5)Income from discontinued operations, net of tax
Swaps0.7 2.0 Interest expense
Pre-tax0.7 (1.5) 
Income taxes(0.2)0.4  
 $0.5 $(1.1) 
Gains on pension and postretirement items:   
Amortization of unrecognized prior service credits - Pre-tax$(2.2)$(2.4)Other income (expense), net
Income taxes0.5 0.6  
 $(1.7)$(1.8) 
(15)    CONTINGENT LIABILITIES AND OTHER MATTERS
 Amount Reclassified from AOCI  
 Nine months ended  
 September 30, 2017 October 1, 2016 Affected Line Item in the Condensed
Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges: 
  
  
FX forward contracts$—
 $1.0
 Revenues
Commodity contracts(1.6) 1.9
 Cost of products sold
Swaps0.3
 —
 Interest expense
Pre-tax(1.3) 2.9
  
Income taxes0.5
 (0.8)  
 $(0.8) $2.1
  
      
Gains on pension and postretirement items: 
  
  
Amortization of unrecognized prior service credits$(0.7) $(0.7) Selling, general and administrative
Pre-tax(0.7) (0.7)  
Income taxes0.3
 0.3
  
 $(0.4) $(0.4)  
   

  
Gain on sale of dry cooling business:  

  
 Recognition of foreign currency translation adjustment
associated with the sale of our dry cooling business		$—
 $(40.4) Gain on sale of dry cooling business
Common Stock in Treasury
During the nine months ended September 30, 2017 and October 1, 2016, “Common stock in treasury” was decreased by the settlement of restricted stock units issued from treasury stock of $16.7 and $18.6, respectively.


Changes in Equity
A summary of the changes in equity for the three months ended September 30, 2017 and October 1, 2016 is provided below:
 September 30, 2017 October 1, 2016
 
SPX
Corporation
Shareholders’
Equity
 
Noncontrolling
Interests
 
Total
Equity
 
SPX
Corporation
Shareholders’
Equity
 
Noncontrolling
Interests
 
Total
Equity
Equity, beginning of period$208.7
 $—
 $208.7
 $272.6
 $—
 $272.6
Net income22.3
 —
 22.3
 1.9
 —
 1.9
Net unrealized gains on qualifying cash flow hedges, net of tax provision of $0.3 for the three months ended September 30, 2017 and October 1, 20160.5
 —
 0.5
 0.5
 —
 0.5
Pension and postretirement liability adjustment, net of tax (provision) benefit of $(10.3) and $0.2 for the three months ended September 30, 2017 and October 1, 2016, respectively16.2
 —
 16.2
 (0.1) —
 (0.1)
Foreign currency translation adjustments2.4
 —
 2.4
 (7.2) —
 (7.2)
Total comprehensive income (loss), net41.4
 —
 41.4
 (4.9) —
 (4.9)
Incentive plan activity2.0
 —
 2.0
 2.2
 —
 2.2
Long-term incentive compensation expense3.0
 —
 3.0
 3.5
 —
 3.5
Restricted stock and restricted stock unit vesting, net of tax withholdings, and related tax benefit of $0.0 for the three months ended September 30, 2017 and October 1, 2016(0.1) —
 (0.1) —
 —
 —
Equity, end of period$255.0
 $—
 $255.0
 $273.4
 $—
 $273.4

A summary of the changes in equity for the nine months ended September 30, 2017 and October 1, 2016 is provided below:
 September 30, 2017 October 1, 2016
 SPX
Corporation
Shareholders’
Equity		 Noncontrolling
Interests		 Total
Equity		 SPX
Corporation
Shareholders’
Equity		 Noncontrolling
Interests		 Total
Equity
Equity, beginning of period$191.6
 $—
 $191.6
 $345.4
 $(37.1) $308.3
Net income (loss)30.7
 —
 30.7
 18.9
 (0.4) 18.5
Net unrealized gains on qualifying cash flow hedges, net of tax provision of $0.2 and $0.1 for the nine months ended September 30, 2017 and October 1, 2016, respectively0.3
 —
 0.3
 0.7
 —
 0.7
Pension and postretirement liability adjustment, net of tax (provision) benefit of $(10.2) and $0.3 for the nine months ended September 30, 2017 and October 1, 2016, respectively15.9
 —
 15.9
 (0.4) —
 (0.4)
Foreign currency translation adjustments2.0
 —
 2.0
 (48.2) (1.2) (49.4)
Total comprehensive income (loss), net48.9
 —
 48.9
 (29.0) (1.6) (30.6)
Incentive plan activity9.4
 —
 9.4
 6.8
 —
 6.8
Long-term incentive compensation expense8.8
 —
 8.8
 9.4
 —
 9.4
Restricted stock and restricted stock unit vesting, net of tax withholdings, and related tax provision of $0.0 and $1.5 for the nine months ended September 30, 2017 and October 1, 2016, respectively(3.7) —
 (3.7) (3.2) —
 (3.2)
Adjustment related to redeemable noncontrolling interest (see Note 13)—
 —
 —
 (56.0) 38.7
 (17.3)
Equity, end of period$255.0
 $—
 $255.0
 $273.4
 $—
 $273.4


(13)CONTINGENT LIABILITIES AND OTHER MATTERS
General
Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims), environmental matters, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate. While we (and our subsidiaries) maintain property, cargo, auto, product, general liability, environmental, and directors’ and officers’ liability insurance and have acquired rights under similar policies in connection with acquisitions that we believe cover a significant portion of these claims, this insurance may be insufficient or unavailable (e.g., in the case of insurer insolvency) to protect us against potential loss exposures. Also, while we believe we are entitled to indemnification from third parties for some of these claims, these rights may be insufficient or unavailable to protect us against potential loss exposures.
25

Our recorded liabilitiesliabilities related to these matters totaled $646.7 (including $602.0 for asbestos product liability matters)$632.4 and $653.5 (including $605.6 for asbestos product liability matters)$658.8 at September 30, 2017July 2, 2022 and December 31, 2016,2021, respectively. Of these amounts, $613.8$556.7 and $621.0$584.3 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at September 30, 2017July 2, 2022 and December 31, 2016,2021, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these claimsmatters are based on a number of assumptions, including historical claims and payment experience and, with respect to asbestos claims, actuarial estimates of the future period during which additional claims are reasonably foreseeable.experience. While we base our assumptions on facts currently known to us, they entail inherently subjective judgments and uncertainties. As a result, our current assumptions for estimating these liabilities may not prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations.
Our asbestos-related claims are with respect to products that we no longer manufacture or sell and are typical in certain of the industries in which we operate or pertain to legacy businesses we no longer operate. It is not unusual in these cases for fifty50 or more corporate entities to be named as defendants. We vigorously defend these claims, many of which are dismissed without payment, and the significant majority of costs related to these claims have historically been paid pursuant to our insurance arrangements. Our recorded assets and liabilities related to asbestos-related claims were as follows at July 2, 2022 and December 31, 2021:
July 2, 2022December 31, 2021
Insurance recovery assets (1)
$510.6 $526.2 
Liabilities for claims (2)
592.5616.5 
__________________________
(1)Of these amounts, $456.6 and $473.6 are included in “Other assets” at July 2, 2022 and December 31, 2021, respectively, while the remainder is included in “Other current assets.”
(2)Of these amounts, $536.9 and $561.4 are included in “Other long-term liabilities” at July 2, 2022 and December 31, 2021, respectively, while the remainder is included in “Accrued expenses.”
The liabilities we record for asbestos-related claims are based on a number of assumptions. In estimating our liabilities for asbestos-related claims, we consider, among other things, the following:
• The number of pending claims by disease type and jurisdiction.
• Historical information by disease type and jurisdiction with regard to:
◦ Average number of claims settled with payment (versus dismissed without payment); and
◦ Average claim settlement amounts.
• The period over which we can reasonably project asbestos-related claims (currently projecting through 2057).

The following table presents information regarding activity for the asbestos-related claims for the six months ended July 2, 2022 and July 3, 2021:
Six months ended
July 2, 2022July 3, 2021
Pending claims, beginning of period10,0659,782
Claims filed1,5471,253
Claims resolved(1,216)(1,104)
Pending claims, end of period10,3969,931

The assets we record for asbestos-related claims represent amounts that we believe we are or will be entitled to recover under agreements we have with insurance companies. The amount of these assets are based on a number of assumptions, including the continued solvency of the insurers and our legal interpretation of our rights for recovery under the agreements we have with the insurers. Our current assumptions for estimating these assets may not prove accurate, and we may be required to adjust these assets in the future. These variances relative to current expectations could have a material impact on our financial position and results of operations.
During the threesix months ended September 30, 2017July 2, 2022 and October 1, 2016,July 3, 2021, our payments for asbestos-related matters,claims, net of respective insurance recoveries,recoveries of $17.0 and $15.3, were $4.7$11.2 and $0.0, respectively. During the nine months ended September 30, 2017, our insurance recoveries for asbestos-related matters, net of payments, were $3.1, which included cash proceeds received during the first quarter of 2017 of $8.5 related to a settlement reached with an insurance carrier. During the nine months ended October 1, 2016, our payments for asbestos-related matters, net of insurance recoveries, were $3.0.$8.1, respectively. A significant increase in claims, costs and/or issues with existing insurance coverage (e.g., dispute with or insolvency of insurer(s)) could have a material adverse impact on our share of future payments related to these matters, and, as such,a result, have a material impact on our financial position, results of operations and cash flows.
We have
26


During the three and six months ended July 2, 2022, we recorded insurance recoverycharges of $2.3 to continuing operations and $0.2 to discontinued operations related to revisions of recorded liabilities for asbestos-related claims. During the three and six months ended July 3, 2021, we recorded a charge of $2.7 to continuing operations related to revisions of recorded assets for asbestos-related claims. There were no other changes in estimates associated with the assets and liabilities related to our asbestos product liability matters with such amounts totaling $554.0during the three and $564.4 at September 30, 2017 and December 31, 2016, respectively, and included in “Other assets” within our condensed consolidated balance sheets. These assets represent amounts that we believe we are or will be entitled to recover under agreements we have with insurance companies. The assets we record for these insurance recoveries are based on a number of assumptions, including the continued solvency of the insurers, and are subject to a variety of uncertainties. Our current assumptions for estimating these assets may not prove accurate, and we may be required to adjust these assets in the future, which could result in additional charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations.
During the ninesix months ended September 30, 2017, we recorded a charge to “Other income (expense), net” of $3.0 associated with the settlement of a group of asbestos-related claims, while there were no such charges during the nine months ended October 1, 2016.July 2, 2022 and July 3, 2021.

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

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

Claims by DBT - DBT has asserted claims against MHI of approximately South African Rand 1,000.0 (or $61.5). As DBT prepares these claims for dispute resolution processes, the amounts, along with the characterization, of the claims could change. Of these claims, South African Rand 720.1 (or $44.3), which is inclusive of the amounts awarded in the adjudications referred to below, are currently are involved in a number of claim disputes relatingproceeding through contractual dispute resolution processes and DBT is likely to these challenges. We areinitiate additional dispute resolution processes. DBT is also pursuing various commercial alternatives for addressing these challenges, in an attemptseveral claims to mitigate our overall financial exposure.
Over the last two years, weforce MHI to abide by its contractual obligations and provide DBT with certain benefits that MHI may have implemented various controls and initiatives that have reduced the risk associated with our large power projects in South Africa, including more recent steps to accelerate the timeline for completing certain portions of


received from its customer on the projects. In addition we have experienced higher than expected costs as we completeto existing asserted claims, DBT believes it has additional claims and rights to recovery based on its performance under the contracts with, and actions taken by, MHI. DBT is continuing to evaluate the claims and the amounts owed to it under the contracts based on MHI's failure to comply with its contractual obligations. The amounts DBT may recover for current and potential future claims against MHI are not currently known given (i) the extent of current and potential future claims by MHI against DBT (see below for further discussion) and (ii) the unpredictable nature of any dispute resolution processes that may occur in connection with these current and potential future claims. No revenue has been recorded in the accompanying condensed consolidated financial statements with respect to current or potential future claims against MHI.

On July 23, 2020, a dispute adjudication panel issued a ruling in favor of DBT on certain scopes of work. Lastly, duringmatters related to the second quarter of 2017, we became aware of financial challenges facing one of our sub-contractors, which will negatively impact the ultimate costKusile and Medupi projects. The panel (i) ruled that DBT had achieved takeover on 9 of the related project scope. As a resultunits; (ii) ordered MHI to return $2.3 of these effortsbonds (which have been subsequently returned by MHI); (iii) ruled that DBT is entitled to acceleratethe return of an additional $4.3 of bonds upon the completion of certain timelines,administrative milestones (which have been completed); (iv) ordered MHI to pay South African Rand 18.4 (or $1.1 at the higher than expected costs on certain scopes of work, and the aforementioned sub-contractor financial challenges, we determined during the second quarter of 2017 that additional cost would be required in order to complete certain remaining portionstime of the projects.ruling) in incentive payments for work performed by DBT (which MHI has subsequently paid); and (v) ruled that MHI waived its rights to assert delay damages against DBT on 1 of the units of the Kusile project. The ruling is subject to MHI’s rights to seek further arbitration in the matter, as provided in the contracts. As such, we revised our estimates of revenues, costs and profits associated with the projects. These revisions resultedincentive payments noted above have not been recorded in a charge to “Income (loss) from continuing operations before income taxes” of $22.9 during the nine months ended September 30, 2017, which is comprised of a reduction in revenue of $13.5 and an increase in cost of products sold of $9.4.
We recognize revenue associated with unapproved change orders and claims to the extent the related costs have been incurred and the amount of expected recovery is probable and reasonably estimable. At September 30, 2017, the projected revenues related to our large power projects in South Africa included approximately $29.5 related to claims and unapproved change orders. We believe these amounts are recoverable under the provisions of the related contracts and reflect our best estimate of recoverable amounts.
Although we believe that our current estimates of revenues, costs and profits relating to these projects are reasonable, it is possible that future revisions of such estimates could have a material effect on our condensed consolidated financial statements.statements of operations.
Noncontrolling Interest
On February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on 2 units of the Kusile project. In connection with the ruling, MHI paid DBT South African SubsidiaryRand 126.6 (or $8.6 at the time of payment). This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our condensed consolidated statements of operations. On July 5, 2021, DBT received notice from MHI of its intent to seek final and binding arbitration in this matter.
Our
On April 28, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on 2 units of the Medupi project. In connection with the ruling, MHI paid DBT South African subsidiary,Rand 82.0 (or $6.0 at the time of payment). This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our condensed consolidated statements of operations.

Claims by MHI - On February 26, 2019, DBT Technologies (PTY) LTD (“DBT”)received notification of an interim claim consisting of both direct and consequential damages from MHI alleging, among other things, that DBT (i) provided defective product and (ii) failed to meet certain project milestones. In September 2020, MHI made a demand on certain bonds issued in its favor by DBT, based solely
27

on these alleged defects, but without further substantiation or other justification (see further discussion below). On December 30, 2020, MHI notified DBT of its intent to take these claims to binding arbitration even though the vast majority of these claims had not been brought appropriately before a dispute adjudication board as required under the relevant subcontracts. On June 4, 2021, in connection with the arbitration, DBT received a revised version of the claim. Similar to the interim claim, we believe the vast majority of the damages summarized in the revised claim are unsubstantiated and, thus, any loss for the majority of these claims is considered remote. For the remainder of the claims in both the interim notification and the revised version, which largely appear to be direct in nature (approximately South African Rand 790.0 or $48.6), DBT has numerous defenses and, thus, we do not believe that DBT has a Black Economic Empowerment shareholder (the “BEE Partner”)probable loss associated with these claims. In addition, we do not believe MHI has followed the appropriate dispute resolution processes under DBT's contracts and therefore most, if not all, of its claims against DBT are not valid. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims. DBT intends to vigorously defend itself against these claims. Although it is reasonably possible that holdssome loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims; (ii) complexity of contractual relationships between the end customer, MHI, and DBT; (iii) legal interpretation of the contract provisions and application of South African law to the contracts; and (iv) unpredictable nature of any dispute resolution processes that may occur in connection with these claims.

In April and July 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 407.2 (or $25.0) from MHI alleging that DBT failed to meet certain project milestones related to the construction of the filters for both the Kusile and Medupi projects. DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a 25.1% noncontrolling interestprobable loss associated with these claims. As such, no loss has been recorded in DBT. Underthe condensed consolidated financial statements with respect to these claims. Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss.

MHI has made other claims against DBT totaling South African Rand 176.2 (or $10.8) and has also alleged that it has incurred additional remedial costs related to portions of DBT's scope of work. DBT has numerous defenses against these claims, as well as claims, if any, that may result from the above unsubstantiated allegations, and, thus, we do not believe that DBT has a probable loss associated with these claims and allegations. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims and allegations.

Bonds Issued in Favor of MHI - DBT is obligated with respect to bonds issued by banks in favor of MHI. In September of 2020, MHI made a demand, and received payment of South African Rand 239.6 (or $14.3 at the time of payment), on certain of these bonds. In May 2021, MHI made an additional demand, and received payment of South African Rand 178.7 (or $12.5 at the time of payment), on certain of the remaining bonds at such time. In both cases, we funded the payment as required under the terms of the shareholder agreement between the BEE Partnerbonds and SPX Technologies (PTY) LTD (“SPX Technologies”), the BEE Partner had the optionour senior credit agreement. In its demands, MHI purported that DBT failed to putcarry out its ownership interest inobligations to rectify certain alleged product defects and that DBT failed to SPX Technologies, the majority shareholder ofmeet certain project milestones. DBT at a redemption amount determined in accordance with the termsdenies liability for such allegations and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the shareholder agreement (the “Put Option”). The BEE Partner notified SPX Technologies of its intention to exercise the Put Option and, on July 6, 2016, an Arbitration Tribunal declared that the BEE Partner was entitled to South African Rand 287.3 in connection with418.3 (or $25.7) that has been paid. However, given the exerciseextent and complexities of the Put Option, having not considered an amount due fromclaims between DBT and MHI, reimbursement of the BEE Partner under a promissory note of South African Rand 30.3 held by SPX Technologies.418.3 (or $25.7) is unlikely to occur over the next twelve months. As a result,such, we have reflected the net redemption amount of South African Rand 257.0418.3 (or $19.0 and $18.5 at September 30, 2017 and December 31, 2016, respectively)$25.7) as a non-current asset within “Accrued expenses” on our condensed consolidated balance sheets as of September 30, 2017July 2, 2022 and December 31, 2016, with2021.

The remaining bond of South Africa Rand 29.2 (or $1.8) issued to MHI as a performance guarantee could be exercised by MHI for an alleged breach of DBT's obligation. In the related offset recordedevent that MHI were to “Paid-in-capital” and “Accumulated other comprehensive income.” receive payment on a portion, or all, of the remaining bond, we would be required to reimburse the issuing bank.

In addition duringto the second quarter of 2016, we reclassified $38.7 from “Noncontrolling Interests” to “Paid-in capital.” Lastly, under the two-class method of calculating earnings per share, we reflected an adjustment of $18.1 to “Net income (loss) attributable toremaining bond, SPX Corporation common shareholders” forhas guaranteed DBT’s performance on these projects to the excess redemptionprime contractors, including MHI.

Claim against Surety - On February 5, 2021, DBT received payment of $6.7 on bonds issued in support of performance by one of DBT's sub-contractors. The sub-contractor maintains a right to seek recovery of such amount ofand, thus, the Put Option (i.e., the increase in the redemption amount during the second quarter of 2016 in excess of fair value)received by DBT has not been reflected in our calculationscondensed consolidated statements of basic and diluted earnings per share for the nine months ended October 1, 2016.operations.
SPX Technologies disagrees with the arbitration determination and will continue to pursue all available legal recourse in this matter.
Patent Infringement Lawsuit
Our subsidiary, SPX Cooling Technologies, Inc. (“SPXCT”), is a defendant in a legal action brought by Baltimore Aircoil Company (“BAC”) alleging that a SPXCT product infringes United States Patent No. 7,107,782, entitled “Evaporative Heat Exchanger and Method.” BAC filed suit on July 16, 2013 in the United States District Court for the District of Maryland (the “District Court”) seeking monetary damages and injunctive relief.
On November 4, 2016, the jury for the trial in the District Court found in favor of SPXCT. The verdict by the District Court is currently under appeal by BAC. We believe that we will ultimately be successful in any future judicial processes; however, to the extent we are not successful, the outcome could have a material adverse effect on our financial position, results of operations, and cash flows.
Litigation Matters
We are subject to other legal matters that arise in the normal course of business. We believe these matters are either without merit or of a kind that should not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows; however, we cannot assure you that these proceedings or claims will not have a material effect on our financial position, results of operations or cash flows.

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Environmental Matters
Our operations and properties are subject to federal, state, local and foreign regulatory requirements relating to environmental protection. It is our policy to comply fully with all applicable requirements. As part of our effort to comply, we have a comprehensive environmental compliance program that includes environmental audits conducted by internal and external independent professionals, as well as regular communications with our operating units regarding environmental compliance requirements and anticipated regulations. Based on current information, we believe that our operations are in substantial compliance with applicable environmental laws and regulations, and we are not aware of any violations that could have a material effect, individually or in the aggregate, on our business, financial condition, and results of operations or cash flows. As of September 30, 2017, weWe had liabilities for site investigation and/or remediation at 27 18sites (30 sites at December 31, 2016) that we own or control.control, or formerly owned and controlled, as of July 2, 2022 and December 31, 2021. In addition, while we believe that we maintain adequate accruals to cover the costs of site investigation and/or remediation, we cannot provide assurance that new matters, developments, laws and regulations, or stricter interpretations of existing laws and regulations will not materially affect our business or operations in the future.
Our environmental accruals cover anticipated costs, including investigation, remediation, and operation and maintenance of clean-up sites. Our estimates are based primarily on investigations and remediation plans established by independent consultants, regulatory agencies and potentially responsible third parties. Accordingly, our estimates may change based on future developments, including new or changes in existing environmental laws or policies, differences in costs required to complete anticipated actions from estimates provided, future findings of investigation or remediation actions, or alteration to the expected remediation plans. It is our policy to revise an estimate once the revision becomes probable and the amount of change can be reasonably estimated. We generally do not discount our environmental accruals and do not reduce them by anticipated insurance recoveries. We take into account third-party indemnification from financially viable parties in determining our accruals where there is no dispute regarding the right to indemnification.
In the case of contamination at offsite, third-party disposal sites, as of September 30, 2017,July 2, 2022 and December 31, 2021, we have been notified that we are potentially responsible and have received other notices of potential liability pursuant to various environmental laws at 149 sites, at which the liability has not been settled and all of which 8 sites have been active in the past few years. These laws may impose liability on certain persons that are considered jointly and severally liable for the costs of investigation and remediation of hazardous substances present at these sites, regardless of fault or legality of the original disposal. These persons include the present or former owners or operators of the site and companies that generated, disposed of or arranged for the disposal of hazardous substances at the site. We are considered a “de minimis” potentially responsible party at most of the sites, and we estimate that our aggregate liability, if any, related to these sites is not material to our condensed consolidated financial statements. We conduct extensive environmental due diligence with respect to potential acquisitions, including environmental site assessments and such further testing as we may deem warranted. If an environmental matter is identified, we estimate the cost and either establish a liability, purchase insurance or obtain an indemnity from a financially sound seller; however, in connection with our acquisitions or dispositions, we may assume or retain significant environmental liabilities, some of which we may be unaware. The potential costs related to these environmental matters and the possible impact on future operations are uncertain due in part to the complexity of government laws and regulations and their interpretations, the varying costs and effectiveness of various clean-up technologies, the uncertain level of insurance or other types of recovery, and the questionable level of our responsibility. We record a liability when it is both probable and the amount can be reasonably estimated.
In our opinion, after considering accruals established for such purposes, the cost of remedial actions for compliance with the present laws and regulations governing the protection of the environment are not expected to have a material impact, individually or in the aggregate, on our financial position, results of operations or cash flows.
Self-insured Risk Management Matters
We are self-insured for certain of our workers’ compensation, automobile, product and general liability, disability and health costs, and we believe that we maintain adequate accruals to cover our retained liability. Our accruals for risk management matters are determined by us, are based on claims filed and estimates of claims incurred but not yet reported, and generally are not discounted. We consider a number of factors, including third-party actuarial valuations, when making these determinations. We maintain third-party stop-loss insurance policies to cover certain liability costs in excess of predetermined retained amounts. The insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against loss exposure.

(14)INCOME TAXES


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(16)INCOME AND OTHER TAXES
Uncertain Tax Benefits
As of September 30, 2017,July 2, 2022, we had gross unrecognized tax benefitsbenefits of $32.6$6.3 (net unrecognized tax benefits of $21.2)$5.6). OfAll of these net unrecognized tax benefits $16.3 would impact our effective tax rate from continuing operations if recognized.


We classify interest and penalties related to unrecognized tax benefits as a component of our income tax provision. As of September 30, 2017,July 2, 2022, gross accrued interest totaled $4.2$2.8 (net accrued interest of $2.8)$2.3). As of September 30, 2017,July 2, 2022, we had no accrual for penalties included in our unrecognized tax benefits.
Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $4.0.$5.0. The previously unrecognized tax benefits relate to a variety of tax matters relating to deemed income inclusions,including transfer pricing and various state matters.
Other Tax Matters
For the three months ended September 30, 2017,July 2, 2022, we recorded an income tax provision of $4.8$4.4 on $26.8$23.5 of pre-tax income from continuing operations, resulting in an effective tax rate of 17.9%18.7%. This compares to an income tax provision for the three months ended October 1, 2016July 3, 2021 of $0.5$2.4 on $7.1$20.1 of pre-tax income from continuing operations, resulting in an effective tax rate of 7.0%11.9%. The most significant item impacting the income tax provision for the second quarters of 2022 and 2021 was $0.7 and $2.2 of tax benefits, respectively, related to revisions to liabilities for uncertain tax positions. In addition, the tax provision for the second quarter of 2021 included interest associated with various refund claims.

For the six months ended July 2, 2022, we recorded an income tax provision of $7.0 on $39.1 of pre-tax income from continuing operations, resulting in an effective rate of 17.9%. This compares to an income tax provision for the six months ended July 3, 2021 of $7.7 on $48.4 of pre-tax income from continuing operations, resulting in an effective rate of 15.9%. The most significant items impacting the income tax provision forduring the thirdfirst half of 2022 and 2021 were (i) $0.7 and $1.0, respectively, of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the periods and (ii) the $0.7 and $2.2, respectively, of the tax benefits noted above that were recorded in the second quarter of 2017 were (i) $5.0 of foreign losses generated during the period for which no tax benefit was recognized, as future realization of any such tax benefit is considered unlikely,2022 and (ii) $4.1 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions. The most significant items impacting the income tax provision for the third quarter of 2016 were the $1.7 of additional gain that was recorded during the quarter on the sale of the dry cooling business, for which no income taxes were provided, and $0.7 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions.2021.
For the nine months ended September 30, 2017, we recorded an income tax provision of $14.0 on $38.0 of pre-tax income from continuing operations, resulting in an effective tax rate of 36.8%. This compares to an income tax provision for the nine months ended October 1, 2016 of $10.1 on $43.4 of pre-tax income from continuing operations, resulting in an effective tax rate of 23.3%. The most significant items impacting the income tax provision for the first nine months of 2017 were (i) $34.6 of foreign losses generated during the period for which no benefit was recognized, as future realization of any such tax benefit is considered unlikely, and (ii) $4.1 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions. The most significant items impacting the income tax provision for the first nine months of 2016 were (i) $0.3 of income taxes that were provided in connection with the $18.4 gain that was recorded on the sale of the dry cooling business and (ii) $10.5 of foreign losses generated during the period for which no tax benefit was recognized, as future realization of any such tax benefit is considered unlikely.
We perform reviews of our income tax positions on a continuous basis and accrue for potential uncertain positions when we determine that an uncertain position meets the criteria of the Income Taxes Topic of the Codification. Accruals for these uncertain tax positions are recorded in “Income taxes payable” and “Deferred and other income taxes” in the accompanying condensed consolidated balance sheets based on the expectation as to the timing of when the matters will be resolved. As events change and resolutions occur, these accruals are adjusted, such as in the case of audit settlements with taxing authorities.
We have filed
During the second quarter of 2021, the Internal Revenue Service (“IRS”) concluded its audit of our 2013, 2014, 2015, 2016 and 2017 federal income tax returns forreturns. We believe contingencies related to the 2014, 2015 and 2016 tax years and thosesubsequent returns are subject to examination. With regard to all open tax years, we believe any contingencies are adequately provided for.
State income tax returns generally are subject to examination for a period of three to five years after filing the respective tax returns. The impact on such tax returns of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. We have various state income tax returns in the process of examination. We believe any uncertain tax positions related to these examinations have been adequately provided for.
We have various foreign income tax returns under examination. The most significant of these areis in Germany for the 2010 through 2014 tax years. We believe that any uncertain tax positions related to these examinations have been adequately provided for.
An unfavorable resolution of one or more of the above matters could have a material adverse effectimpact on our results of operations or cash flows in the quarter and year in which an adjustment is recorded or the tax is due or paid. As audits and examinations are still in process, the timing of the ultimate resolution and any payments that may be required for the above matters cannot be determined at this time.


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



On March 27, 2020, the CARES Act was enacted into law and provides changes to various tax laws that impact businesses. We do not believe these changes impact our current and deferred income tax balances; therefore, no resulting adjustments have been recorded to such balances as of July 2, 2022 and December 31, 2021.
(15)
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As provided within the CARES Act, we deferred payments of our social security payroll taxes for the period March 27, 2020 to December 31, 2020, with such deferral totaling $3.7 as of July 2, 2022. This amount is required to be paid by the end of 2022.


(17)    FAIR VALUE
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy:
•Level 1 — Quoted prices for identical instruments in active markets.
•Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
•Level 3 — Significant inputs to the valuation model are unobservable.
There were no changes during the periods presented to the valuation techniques we use to measure asset and liability fair values on a recurring or nonrecurring basis. There were no transfers between the three levels of the fair value hierarchy for the periods presented.
Valuation MethodologiesMethods Used to Measure Fair Value on a Non-Recurring Basis
Parent Guarantees and Bonds Associated with Balcke Dürr —As indicated in Note 1, inIn connection with the 2016 sale of Balcke Dürr, existing parent company guarantees of approximately €79.0 and bank and surety bonds, ofwhich totaled approximately €79.0 existingEuro 79.0 and Euro 79.0, respectively, remained in place at the time of the sale will remain in place through each instrument’s expiration date, with such expiration dates ranging from 2017 to 2022. sale. These guarantees and bonds provideprovided protections for Balcke Dürr customers in regard to advance payments, performance, and warranties on projects in existence at the time of sale. In addition, certain bonds relaterelated to lease obligations and foreign tax matters in existence at the time of sale. Balcke Dürr and the Buyer haveacquirer of Balcke Dürr provided us a fullan indemnity in the event that any of these guaranteesthe bonds were called or bonds are called.payments were made under the guarantees. Also, at the time of sale, Balcke Dürr has provided cash collateral of €4.0Euro 4.0 and mutares AG hasthe parent company of the buyer provided a guarantee of €5.0Euro 5.0 as a security for the above indemnifications. Summarized below areindemnifications (Euro 0.0 and Euro 0.0, respectively, at July 2, 2022). In connection with the sale, we recorded a liability (related tofor the parent companyestimated fair value of the guarantees and bankbonds and surety bonds) andan asset (related tofor the estimated fair value of the cash collateral and guarantee provided by mutares AG) recorded atindemnities provided. Since the timesale of sale, along withBalcke Dürr, the guarantees have expired and bonds have been returned. Summarized below are the change in the liability and the asset during the ninesix months ended September 30, 2017.July 3, 2021.

  Nine months ended September 30, 2017
  Guarantees and Bonds Liability Indemnification Assets
Balance as of December 31, 2016 (1) (2)
 $9.9
 $4.8
Reduction/Amortization for the period (3)
 (1.6) (2.0)
Impact of changes in foreign currency rates 1.2
 0.6
Balance as of September 30, 2017 (2)
 $9.5
 $3.4
___________________________
Six months ended
July 3, 2021
Guarantees and Bonds Liability (1)
Indemnification Assets (1)
Balance at beginning of year
$1.8 $— 
Reduction/Amortization for the period (2)
(1.7)— 
Impact of changes in foreign currency rates(0.1)— 
Balance at end of period$— $— 
___________________________
(1)In connection with the sale, we estimated the fair value of the existing parent company guarantees and bank and surety bonds considering the probability of default by Balcke Dürr and an estimate of the amount we would be obligated to pay in the event of a default. Additionally, we estimated the fair value of the cash collateral provided by Balcke Dürr and guarantee provided by mutares AG based on the terms and conditions and relative risk associated with each of these securities (unobservable inputs - Level 3).
(2)
Balance associated with the guarantees and bonds is reflected within “Other long-term liabilities,” while the balance associated with the indemnification assets is reflected within “Other assets.”
(3)
We reduce the liability generally at the earlier of the completion of the related underlying project milestones or the expiration of the guarantees or bonds. We amortize the asset based on the expiration terms of each of the securities. We record the reduction of the liability and the amortization of the asset to “Other income (expense), net.”
As of September 30, 2017, the outstanding parent company guarantees and bank and surety bonds totaled €76.1considering the probability of default by Balcke Dürr and €56.1, respectively. In addition,an estimate of the amount we would be obligated to pay in the event of a default. Additionally, we estimated the fair value of the cash collateral of €4.0provided by Balcke Dürr and the guarantee provided by mutares AG based on the terms and conditions and relative risk associated with each of €5.0 continuethese securities (unobservable inputs - Level 3).
(2)We reduced the liability generally at the earlier of the completion of the related underlying project milestones or the expiration of the guarantees or bonds. We amortized the asset based on the expiration terms of each of the securities. We recorded the reduction of the liability and the amortization of the asset to serve“Other income (expense), net.”    


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

In connection with the acquisition of ECS, the respective seller is eligible for additional cash consideration of up to $16.4, with payment of such contingent consideration dependent upon the achievement of certain milestones. The estimated fair value of such contingent consideration was $8.2 as securityof the date of acquisition. During the fourth quarter of 2021, we concluded that the probability of achieving the financial performance milestone had lessened due to a delay in the execution of certain large orders, resulting in a reduction of the contingent fair value/liability of $6.7. During the first and second quarters of 2022, we further reduced the fair value/liability by $0.9 and $0.4, respectively, with such amounts recorded to "Other operating expense, net." The estimated fair value of such contingent consideration was $0.0 and $1.5 at July 2, 2022 and December 31, 2021, respectively, with such amounts reflected as a liability within the respective condensed consolidated balance sheets. We estimated the fair value of the contingent consideration for this acquisition based on the indemnifications noted above.     probability of ECS achieving the applicable milestones.
Goodwill, Indefinite-Lived Intangible and Other Long-Lived Assets —Certain of our non-financial assets are subject to impairment analysis, including long-lived assets, indefinite-lived intangible assets and goodwill. We review the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually for indefinite-lived intangible assets and goodwill. Any resulting asset impairment would require that the instrument be recorded at its fair value.


Valuation MethodologiesMethods Used to Measure Fair Value on a Recurring Basis
Derivative Financial Instruments — Our financial derivative assets and liabilities include commodity contracts (until the sale of Transformer Solutions), interest rate swaps, and FX forward contracts, FX embedded derivatives and commodity contracts, valued using valuation models based on observable market inputs such as forward rates, interestinterest 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 September 30, 2017,July 2, 2022, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities. Similarly, there has been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risks.
Equity Security — We estimate the fair value of an equity security that we hold utilizing a practical expedient under existing guidance, with such estimated fair value based on our ownership percentage applied to the net asset value of the investee as presented in the investee’s most recent audited financial statements. During the three and six months ended July 2, 2022 and July 3, 2021, we recorded gains of $0.0 and $2.2, respectively and $4.4 and $7.4 to “Other income (expense), net” to reflect an increase in the estimated fair value of the equity security. As of July 2, 2022 and December 31, 2021, the equity security had an estimated fair value of $43.2 and $38.8, respectively.

Indebtedness and Other — The estimated fair value of our debt instruments as of September 30, 2017July 2, 2022 and December 31, 20162021 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments. SeeSee Note 1012 for further details.

(18)    SUBSEQUENT EVENT

On August 4, 2022, we announced the intent to implement a reorganization of our corporate legal structure by executing a tax-free merger of SPX Corporation with and into SPX Merger, LLC, a newly-formed Delaware limited liability company that is a subsidiary of a newly-formed Delaware corporation, SPX Technologies, Inc. (“SPX Technologies”). As a result of the transaction, SPX Technologies will become the holding company for further details.the SPX group of companies, and will be the publicly traded entity.




Immediately after consummation of the transaction, SPX Technologies will have, on a consolidated basis, the same assets, businesses, operations, executive officers, officers and directors as SPX Corporation had immediately prior to the consummation of the transaction. As a result of the new structure, the operating assets of SPX will be separated from certain legacy liabilities and associated insurance assets. Upon completion of the new structure, which we are targeting to occur on or about August 15, 2022, the SPX Corporation common stock will continue trading on the New York Stock Exchange on an uninterrupted basis with no change to the ticker symbol “SPXC.” The stock will trade under a new CUSIP (78473E 103). The transaction will be accomplished pursuant to Section 251(g) of the Delaware General Corporation Law and no action will be required by SPX Corporation stockholders.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(in millions)
 

FORWARD-LOOKING STATEMENTS
Some of the statements in this document and any documents incorporated by reference, including any statements as to operational and financial projections, constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our businesses’ or our industries’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Such statements may address our plans, our strategies, our prospects, changes and trends in our business and the markets in which we operate under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) or in other sections of this document. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential” or “continue” or the negative of those terms or other comparable terminology. In addition, statements with respect to our intention to implement a reorganization of our corporate legal structure described in Note 18 (the "Transaction"), the timing thereof and its anticipated impacts are forward-looking statements. Particular risks and uncertainties facing us include economic, businessthe impact of the COVID-19 pandemic and governmental and other risks stemmingactions taken in response; the uncertainty of claims resolution with respect to the large power projects in South Africa, as well as claims with respect to asbestos, environmental and other contingent liabilities; cyclical changes and specific industry events in our markets; economic impacts from our internal operations, legalcontinued or escalating geopolitical tensions; changes in anticipated capital investment and regulatory risks, costsmaintenance expenditures by customers; availability, limitations or cost increases of raw materials pricing pressures, pension funding requirements, integrationand/or commodities that cannot be recovered in product pricing; the impact of competition on profit margins and our ability to maintain or increase market share; inadequate performance by third-party suppliers and subcontractors for outsourced products, components and services and other supply-chain risks; cyber-security risks; risks with respect to the protection of intellectual property, including with respect to our digitalization initiatives; the impact of overruns, inflation and the incurrence of delays with respect to long-term fixed-price contracts; defects or errors in current or planned products; domestic economic, political, legal, accounting and business developments adversely affecting our business, including regulatory changes; changes in worldwide economic conditions; uncertainties with respect to our ability to identify acceptable acquisition targets; uncertainties surrounding timing and successful completion of any announced acquisition or disposition transactions, including with respect to integrating acquisitions and changes inachieving cost savings or other benefits from acquisitions; uncertainties with respect to the economy.completion of the Transaction, which may be delayed or not completed as anticipated, as well as the expected benefits of the Transaction (if it is completed); the impact of retained liabilities of disposed businesses; potential labor disputes; and extreme weather conditions and natural and other disasters. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors, and forward-looking statements should not be relied upon as a prediction of actual results. In addition, management’s estimates of future operating results are based on our current complement of businesses, which is subject to change as management selects strategic markets. 


All the forward-looking statements are qualified in their entirety by reference to the factors discussed under the heading “Risk Factors” in our 20162021 Annual Report on Form 10-K, in any subsequent filing with the SEC,U.S. Securities and Exchange Commission, as well as in any documents incorporated by reference that describe risks, uncertainties and other factors that could cause results to differ materially from those projected in these forward-looking statements. We caution you that these risk factors may not be exhaustive. We operate in a continually changing business environment and frequently enter into new businesses and product lines. We cannot predict these new risk factors, and we cannot assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, you should not rely on forward-looking statements as a prediction of actual results. We disclaim any responsibility to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.


COVID-19 PANDEMIC, SUPPLY CHAIN DISRUPTIONS, LABOR SHORTAGES, AND COST INCREASES

The impact of the COVID-19 pandemic on our operating results was relatively minimal throughout 2021. However, during January 2022, there was an increase in COVID-19 cases at certain of our manufacturing facilities, which resulted in a high-level of absenteeism at such facilities during the month. In addition, since the second half of 2021, certain of our businesses have experienced supply chain disruptions, as well as labor shortages, while all of our businesses have experienced increases in raw material, component, and transportation costs. The combination of these matters negatively impacted our operating results during the first half of 2022, particularly during the first quarter of 2022, as we experienced lower absorption of manufacturing costs and, in some cases, the negative impact of cost increases on fixed-price customer contracts. We are actively managing these matters and we expect the potential impacts will continue to diminish as we progress through 2022.




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POTENTIAL IMPACTS OF RUSSIA/UKRAINE CONFLICT

The Russia/Ukraine conflict, and governmental actions implemented in response to the conflict, have not had a significant adverse impact on our operating results during the first half of 2022. We are monitoring the availability of certain raw materials that are supplied by businesses in these countries. However, at this time, we do not expect the potential impact to be material to our operating results.


OTHER SIGNIFICANT MATTERS

•Acquisitions

◦Sealite Pty Ltd and Affiliated Entities (“Sealite”)
▪Acquired on April 19, 2021 for cash consideration of $81.6, net of cash acquired of $2.3.
▪During the third quarter of 2021, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receipt of $1.3 of cash during the quarter.
▪Post-acquisition operating results of Sealite are included within our Detection and Measurement reportable segment.

◦Enterprise Control Systems Ltd (“ECS”)
▪Acquired on August 2, 2021 for cash consideration of $39.4, net of cash acquired of $5.1.
▪The seller is eligible for additional cash consideration of up to $16.4, upon achievement of certain financial performance milestones.
•The estimated fair value of such contingent consideration was $8.2 as of the date of the acquisition.
•During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of certain large orders, resulting in a reduction of the estimated fair value/liability of $6.7.
•During the first and second quarters of 2022, we further reduced the estimated fair value/liability by $0.9 and $0.4, respectively, with such amounts recorded to “Other operating expense, net.”
•As of July 2, 2022, the estimated fair value/liability related to the contingent consideration was $0.0.
▪Post-acquisition operating results of ECS are included within our Detection and Measurement reportable segment.

◦Cincinnati Fan & Ventilator Co., Inc. (“Cincinnati Fan”)
▪Acquired on December 15, 2021 for cash consideration of $145.2, net of cash acquired of $2.5.
▪During the second quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receipt of $0.4 of cash during the quarter.
▪Post-acquisition operating results of Cincinnati Fan are included within our HVAC reportable segment.

◦International Tower Lighting, LLC (“ITL”)
▪Acquired on March 31, 2022 for cash consideration of $41.8, net of cash acquired of $1.1.
▪Post-acquisition operating results of ITL are included within our Detection and Measurement reportable segment.

•Disposition of SPX Transformer Solutions, Inc. (“Transformer Solutions”)
◦On October 1, 2021, we completed the sale for net cash proceeds of $620.6 and recorded a gain of $382.2 to “Gain (loss) on disposition of discontinued operations, net of tax.”
◦During the first quarter of 2022, we paid $13.9 to the buyer of Transformer Solutions related primarily to the settlement of the final working capital balances of the business.

•Transfer of Postretirement Life Insurance Benefit Obligation
◦On February 17, 2022, we transferred our obligation for life insurance benefits under our postretirement benefit plans to an insurance carrier for total cash consideration of $10.0.
◦We paid $9.0 at the time of the transfer and an additional $1.0 during the second quarter of 2022.
◦In connection with the transfer, we:
▪Recorded a net charge of $0.3 within our first quarter 2022 operating results; and
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▪Have eliminated the (i) third-party cost and (ii) internal resource requirements associated with administering these benefits.
◦See Note 11 to our condensed consolidated financial statements for additional details.

•Settlement and Actuarial Losses - U.S. Pension Plan (“U.S. Plan”)
◦In connection with the sale of Transformer Solutions, a significant number of participants of the U.S. Plan who were employees of Transformer Solutions elected to receive lump-sum payments from the U.S. Plan.
◦The extent of these lump-sum payments, combined with other lump-sum payments during the first half of 2022, required us to record settlement and actuarial losses totaling $3.8 associated with the U.S. Plan during the second quarter of 2022.
◦See Note 11 to our condensed consolidated financial statements for additional details.

•Repurchases of Common Stock — During the second quarter of 2022, we repurchased approximately 0.7 shares of our common stock for $33.7.
OVERVIEW OF OPERATING RESULTS
Revenues for the three and six months ended September 30, 2017 increased by $3.5 (or 1.0%) whenJuly 2, 2022 totaled $354.0 and $661.1, respectively, compared to $296.6 and $583.8 during the same periodrespective periods in 2016, while revenues for the nine months ended September 30, 2017 decreased $38.2 (or 3.5%), when compared to the same period in 2016.2021. The increase in revenues during the three and six months ended July 2, 2022, compared to the respective prior-year periods, was due primarily to the impact of the Cincinnati Fan, Sealite, ECS and ITL acquisitions, as well as an increase in organic revenue. The increase in organic revenue was due primarily to an increase in sales of heating products, associated with both price and volume increases, and an increase in sales for the majority of the product lines within the Detection and Measurement reportable segment.

During the three and six months ended July 2, 2022, we generated operating income of $27.2 and $38.6, respectively, compared to $17.1 and $42.1 for the respective periods in 2021. The increase in operating income during the three months ended September 30, 2017July 2, 2022, compared to the respective period in 2021, was due primarily to (i) the impact of a weaker U.S. dollar during the period and (ii) an increase in organic revenueincome within our Detection and Measurement reportable segment associated with the increase in revenue noted above. The decrease in operating income during the six months ended July 2, 2022, compared to the respective period in 2021, was due primarily to an increase in corporate expense associated with increased investments in various strategic and totransformational initiatives and a lesser extent,decrease in income within our HVAC reportable segment partially offset by an organic revenue decline within our Engineered Solutions reportable segment. The decrease in revenues for the nine months ended September 30, 2017 was due primarily to a decline in organic revenue within our Engineered Solutions reportable segment, partially offset by increases in organic revenue within our Detection and Measurement and HVAC reportable segments. In addition, the decrease in revenues for the nine months ended September 30, 2017 was also driven by a reduction in revenue of $13.5 during the second quarter of 2017 resulting from a revision toadditional amortization expense associated with the expected revenuesCincinnati Fan acquisition and profits on the large power projectslower absorption of manufacturing costs associated with (i) supply chain delays and (ii) labor shortages. These decreases in South Africa (see Note 13 to our condensed consolidated financial statements for additional details) and the impact of the sale of the dry cooling business at the end of the first quarter of 2016.
During the three and nine months ended September 30, 2017, we generated operating income of $31.2 and $53.1, respectively, compared to $11.3 and $53.2 forwere offset partially by the same periodsincrease in 2016. Operating income for the three and nine months ended September 30, 2017 included a gain on settlement of a customer contract within our Engineered Solutions reportable segment of $10.2. Operating income for the nine months ended September 30, 2017 also included a charge of $22.9 related to our large power projects in South Africa. In addition, operating income for the three and nine months ended September 30, 2017 was impacted favorably by (i) the impact of organic revenue growth within our Detection and Measurement reportable segment as the product lines in the Detection and Measurement reportable segment historically have had higher profit margins than the product lines within our other reportable segments, and (ii) cost reductions over the past year within our Detection and Measurement and Engineered Solutions reportable segments. Operating income for the nine months ended October 1, 2016 included a gain on the sale of the dry cooling business of $18.4, an impairment charge of $4.0 associated with the trademarks of our Heat Transfer business, and operating losses for the dry cooling business prior to its sale at the end of the first quarter of 2016.noted above.

Cash flows used in operating activities associated with continuing operations totaled $2.4$83.5 for the six months ended July 2, 2022, compared to cash flows from operating activities of $39.6 during the first ninesix months of 2017, compared to $11.3 during the first nine months of 2016.ended July 3, 2021. The decrease in cash flows used in continuing operationsfrom operating activities was due primarily to additional operating cash flows across our businesses resulting from (i) efforts to reduce working capital and (ii) the impactincome tax payments of the sale of dry cooling


business, as the dry cooling business used cash in operating activities$48.8 during the first quarterhalf of 2016. In addition, we reached2022, with a settlement with an insurance carrier which resulted insignificant portion of these payments related to the receiptgain on sale of $8.5Transformer Solutions, (ii) decreases in cash proceedsflows at certain of our project-related businesses during the first quarterhalf of 2017. These additional operating2022, as cash receipts for these project-related businesses are often subject to contract milestones that can impact the timing of cash flows from period to period, (iii) elevated purchases of inventory components during the first nine monthshalf of 2017 were offset partially by a year-over-year increase2022 in income taxorder to manage the potential risk associated with the current supply chain environment, and (iv) cash payments ($22.4 inof $10.0 during the first nine monthshalf of 2017, compared2022 in connection with the transfer of our postretirement life insurance benefit obligation to $5.1 in the first nine months of 2016) and an increase in cash outflows associated with our large power projects in South Africa ($43.9 in the first nine months of 2017, compared to $20.6 in the first nine months of 2016).insurance carrier.

RESULTS OF CONTINUING OPERATIONS
The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our 20162021 Annual Report on Form 10-K. Interim results are not necessarily indicative of results for the full year. We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length. Our fourth quarter ends on December 31. The interim closing dates for the first, second and third quarters of 20172022 are April 1, July 1 and September 30, compared to the respective April 2, July 2 and October 1, 2016compared to the respective April 3, July 3, and October 2, 2021 dates. We had two fewer daysone less day in the first quarter of 20172022 and will have one more day in the fourth quarter of 20172022 than in the respective 20162021 periods. We doIt is not believepracticable to estimate the two fewer days duringimpact of the first quarter of 2017 had a material impactone less day on our consolidated operating results for the first ninesix months of 2017,ended July 2, 2022, when compared to the consolidated operating results for the 2021 respective 2016 period.
Cyclicality of End Markets, Seasonality and Competition — The financial results of our businesses closely follow changes in the industries in which they operate and end markets in which they serve. In addition, certain of our businesses have seasonal fluctuations. For example, our boiler and heating and ventilation businesses tend to be stronger in the third and fourth quarters, as customer
35

buying habits are driven largely by seasonal weather patterns. In aggregate, our businesses tend to be stronger in the second half of the year.
Although our businesses operate in highly competitive markets, our competitive position cannot be determined accurately in the aggregate or by segment since none of our competitors offer all the same product lines or serve all the same markets as we do. In addition, specific reliable comparative figures are not available for many of our competitors. In most product groups, competition comes from numerous concerns, both large and small. The principal methods of competition are service, product performance, technical innovation and price. These methods vary with the type of product sold. We believe we compete effectively on the basis of each of these factors.
Non-GAAP Measures — Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations acquisitions/divestitures, and the impact of the revenue reduction that resulted from the second quarter 2017 revision to the expected revenues and profits on our large power projects in South Africa, which resulted in a reduction in revenues of $13.5 for the nine months ended September 30, 2017.acquisitions/divestitures. We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented as, when readconsidered in conjunction with our revenues, it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors we use in internal evaluations of the overall performance of our business. This metric, however, is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”), should not be considered a substitute for net revenue growth (decline) as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.


The following table provides selected financial information for the three and ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016, respectively,July 3, 2021, including the reconciliation of organic revenue growth (decline)increase to the net revenue increase (decrease):increase:
 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 % Change September 30,
2017		 October 1,
2016		 % Change
Revenues$348.5
 $345.0
 1.0
 $1,038.8
 $1,077.0
 (3.5)
Gross profit85.1
 80.8
 5.3
 249.3
 261.8
 (4.8)
% of revenues24.4% 23.4%  
 24.0% 24.3%  
Selling, general and administrative expense62.9
 68.5
 (8.2) 203.9
 215.6
 (5.4)
% of revenues18.0% 19.9%  
 19.6% 20.0%  
Intangible amortization0.2
 0.8
 (75.0) 0.5
 2.6
 (80.8)
Special charges, net1.0
 1.9
 (47.4) 2.0
 4.8
 (58.3)
Impairment of intangible assets—
 —
 *
 —
 4.0
 *
Gain on contract settlement10.2
 —
 *
 10.2
 —
 *
Gain on sale of dry cooling business—
 1.7
 *
 —
 18.4
 *
Other income (expense), net(0.3) 0.9
 *
 (3.1) 2.2
 *
Interest expense, net(4.1) (3.8) 7.9
 (12.0) (10.7) 12.1
Loss on early extinguishment of debt—
 (1.3) *
 —
 (1.3) *
Income from continuing operations before income taxes26.8
 7.1
 *
 38.0
 43.4
 *
Income tax provision(4.8) (0.5) *
 (14.0) (10.1) *
Income from continuing operations22.0
 6.6
 *
 24.0
 33.3
 *
            
Components of consolidated revenue increase (decrease): 
  
  
  
  
  
Organic growth (decline) 
  
 0.2
  
  
 (2.2)
Foreign currency 
  
 0.8
  
  
 0.6
Sale of dry cooling business    —
     (0.6)
South Africa revenue revision    —
     (1.3)
Net revenue increase (decrease) 
  
 1.0
  
  
 (3.5)
___________________________
 Three months endedSix months ended
July 2,
2022		July 3,
2021		% ChangeJuly 2,
2022		July 3,
2021		% Change
Revenues$354.0 $296.6 19.4 $661.1 $583.8 13.2 
Gross profit124.6 102.3 21.8 228.6 206.7 10.6 
% of revenues35.2 %34.5 % 34.6 %35.4 %
Selling, general and administrative expense88.3 75.4 17.1 172.5 150.6 14.5 
% of revenues24.9 %25.4 % 26.1 %25.8 %
Intangible amortization7.1 6.5 9.2 16.4 10.5 56.2 
Special charges, net0.1 0.6 *0.1 0.8 *
Other operating expense, net1.9 2.7 *1.0 2.7 *
Other income (expense), net(1.7)6.4 (126.6)4.8 13.8 (65.2)
Interest expense, net(2.0)(3.4)(41.2)(4.3)(7.5)(42.7)
Income from continuing operations before income taxes23.5 20.1 16.9 39.1 48.4 (19.2)
Income tax provision(4.4)(2.4)83.3 (7.0)(7.7)(9.1)
Income from continuing operations19.1 17.7 7.9 32.1 40.7 (21.1)
Components of revenue increase:   
Organic  10.2 4.0 
Foreign currency  (1.6)(1.1)
Acquisitions10.8 10.3 
Net revenue increase  19.4 13.2 
_________________________________
*    Not meaningful for comparison purposes.

Revenues — For the three and six months ended September 30, 2017,July 2, 2022, the increase in revenues, compared to the respective periodperiods in 2016,2021, was due primarily to (i) the impact of a weaker U.S. dollar during the periodacquisitions of Cincinnati Fan, Sealite, ECS and (ii)ITL, as well as an increase in organic revenue. The increase in organic revenue was due primarily to an increase in sales of heating products, associated with both price and volume increases, and an increase in sales for the majority of the product lines within ourthe Detection and Measurement reportable segment and, to a lesser extent, our HVAC reportable segment, partially offset by an organic revenue decline within our Engineered Solutions reportable segment. See “Results of Reportable Segments” for additional details.
For the nine months ended September 30, 2017, the decrease in revenues, compared to the respective period in 2016, was due primarily to a decline in organic revenue within our Engineered Solutions reportable segment, partially offset by increases in organic revenue within our Detection and Measurement and HVAC reportable segments. In addition, revenues for the nine months ended September 30, 2017 were lower, compared to the respective period in 2016, as a result of the reduction in revenue of $13.5 during the second quarter of 2017 resulting from a revision to the expected revenues and profits on the large power projects in South Africa and the sale of the dry cooling business at the end of the first quarter of 2016. These declines in revenues were partially offset by the impact of a weaker U.S. dollar during the first nine months of 2017.
See “Results of Reportable Segments” for additional details.


36

Gross Profit — TheFor the three and six months ended July 2, 2022, the increase in gross profit, andcompared to the respective periods in 2021, was due primarily to the increase in revenues noted above. For the three months ended July 2, 2022, the increase in gross profit as a percentage of revenues, for the three months ended September 30, 2017, compared to the respective period in 2016,2021, was due primarily to a more favorable sales mix in the organic revenuesecond quarter of 2022, as the year-over-year increase in revenues was weighted towards high-margin products within our Detection and Measurement reportable segment, assegment. For the product lines insix months ended July 2, 2022, the Detection and Measurement reportable segment historically have had higher profit margins than the product lines within our other reportable segments. The decrease in gross profit and gross profit as a percentage of revenues, for the nine months ended September 30, 2017, compared to the respective period in 2016,2021, was due primarily to a reduction in gross profitlower absorption of $22.9 during the second quarter of 2017 resulting from a revision to the expected revenues and profits ofmanufacturing costs within our large power projects in South Africa, partially offset by the impact of the organic revenue growth in our Detection and MeasurementHVAC reportable segment noted above.associated with (i) supply chain delays and (ii) labor shortages.
Selling,
Selling, General and Administrative (“SG&A”) Expense — For the three and ninesix months ended September 30, 2017,July 2, 2022, the decreaseincrease in SG&A expense, compared to the respective periods in 2016,2021, was due primarily to (i) the remeasurement of our unfunded liability relatedincremental SG&A resulting from the acquisitions noted above and, to postretirement benefits, which resulteda lesser extent, an increase in a gain within net periodic postretirement benefitcorporate expense of $2.6 (see Note 9 to our condensed consolidated financial statements for further details), (ii) the impact of the sale of the dryassociated with increased investments in various strategic and transformational initiatives.



cooling business at the end of the first quarter of 2016, and (iii) cost reductions within our Detection and Measurement and Engineered Solutions reportable segments over the past year.
Intangible AmortizationAmortization— For the three and ninesix months ended September 30, 2017, the declineJuly 2, 2022, the increase in intangibleintangible amortization, was primarily duecompared to the impact ofrespective periods in 2021, was due to amortization related to the $23.9 impairment charge recorded in the fourth quarter of 2016 associated with our Heat Transfer business’s definite-lived intangible assets.Cincinnati Fan acquisition.

Special Charges, net — Special charges, net, relatedrelate primarily to restructuring initiatives to consolidate manufacturing, distribution, sales and administrative facilities, reduce workforce and rationalize certain product lines. See Note 57 to our condensed consolidated financial statements for the details of actions taken in 2017the first six months of 2022 and 2016.2021.
Impairment of Intangible AssetsOther Operating Expense, net— ForOther operating expense, net, for the ninethree and six months ended October 1, 2016, we recorded an impairment chargeJuly 2, 2022 related to asbestos-related charges of $4.0$2.3, partially offset by a reduction in the fair value/liability associated with the contingent consideration related to the trademarks of our Heat Transfer business. See Note 7 to our condensed consolidated financial statements for additional details.
Gain on Contract Settlement—During the third quarter of 2017, we settled a contract that had been suspendedECS acquisition ($0.4 and then ultimately cancelled by a customer for cash proceeds of $9.0 and other consideration. In connection with the settlement, we recorded a gain of $10.2$1.3 during the quarter.three and six months ended July 2, 2022, respectively). Other operating expense for the three and six months ended July 3, 2021 related to a revision to recorded assets for asbestos-related claims.


Gain on Sale of Dry Cooling Business— On March 30, 2016, we completed the sale of our dry cooling business for cash proceeds of $45.9 (net of cash transferred with the business of $3.0), resulting in a gain during the first quarter of 2016 of $17.9. During the second quarter of 2016, we recorded a charge of $1.2 in connection with an adjustment to certain liabilities that we retained from the sale. During the third quarter of 2016, we reached an agreement with the buyer regarding the final working capital of the dry cooling business, resulting in additional cash proceeds and an increase to the gain on sale of $1.7.
Other Income (Expense), net — Other expense, net, for the three months ended September 30, 2017July 2, 2022 was composedcomprised primarily of foreign currency transactionpension and postretirement expense of $2.7 (inclusive of settlement and actuarial losses of $0.3$2.3 and net charges of $0.2 for the parent guarantees, bonds, and related indemnification assets associated with Balcke Dürr (see Note 15 to our condensed consolidated financial statements for additional details)$1.5, respectively), partially offset by equity earnings in joint venturesincome of $0.2.$0.9 associated with a transition services agreement.

Other income, net, for the three months ended October 1, 2016July 3, 2021 was composed primarily of foreign currency transaction gains of $2.5, income derived from company-owned life insurance policies of $0.5,$2.7, a gain of $2.2 related to changes in the estimated fair value of an equity earnings in joint venturesowned security we hold, and pension and postretirement income of $0.3, and income associated with transition services provided in connection with a business disposition of $0.1, partially offset by losses on FX forward contracts of $2.8.$1.6.

Other expense,income, net, for the ninesix months ended September 30, 2017July 2, 2022 was composed primarily of a chargegain of $3.0$4.4 related to a change in the estimated fair value of an equity security that we hold, income associated with a transition services agreement of $1.8, and income derived from company owned life insurance policies of $0.7, partially offset by pension and postretirement expense (inclusive of the settlementlosses mentioned above) of a group of asbestos-related claims, foreign currency transaction losses of $1.5, losses on currency forward embedded derivatives (“FX embedded derivatives”) of $0.5, and$1.9.

Other income, net, charges of $0.4 for the parent guarantees, bonds,six months ended July 3, 2021 was composed primarily of gains of $7.4 related to changes in the estimated fair value of an equity security we hold, pension and related indemnification assets associated with Balcke Dürr, partially offset bypostretirement income of $3.2, income derived from company-owned life insurance policies of $1.2,$2.7, and income associated with transition services providedof $1.7 related to a reduction of the parent company guarantees and bank surety bonds liability that were outstanding in connection with business dispositionsthe 2016 sale of $0.6, and equity earnings in joint ventures of $0.5.
Other income, net, for the nine months ended October 1, 2016 was composed ofBalcke Dürr, partially offset by foreign currency transaction gains of $4.0, income derived from company-owned life insurance policies of $2.1, equity earnings in joint ventures of $1.1, and income associated with transition services provided in connection with a business disposition of $0.6, partially offset by losses on FX forward contracts of $4.6 and losses on FX embedded derivatives of $1.2.losses.

Interest Expense, net — Interest expense, net, includes both interest expenseexpense and interest income. The increasedecrease in interest expense, net, during the three and ninesix months ended September 30, 2017,July 2, 2022, compared to the samerespective periods in 2016,2021, was primarily athe result of a higher weighted-averagelower average effective interest rate and higherlower average debt balances during the first nine months of 2017, compared to the same period in 2016.2022 periods.    
Loss on Early Extinguishment of Debt —During the three months ended October 1, 2016, we reduced the issuance capacity under our foreign credit facilities by $200.0. In connection with such reduction, we recorded a charge of $1.3 associated with the write-off of the deferred financing costs related to the $200.0 of previously available issuance capacity.
Income Tax Provision — For the three months ended September 30, 2017,July 2, 2022, we recorded an income tax provision of $4.8$4.4 on $26.8$23.5 of pre-tax income from continuing operations, resulting in an effective rate of 18.7%. This compares to an income tax provision for the three months ended July 3, 2021 of $2.4 on $20.1 of pre-tax income from continuing operations, resulting in an effective rate of 11.9%. The most significant item impacting the income tax provision for the second quarters of 2022 and 2021 was $0.7 and $2.2 of tax benefits, respectively, related to revisions to liabilities for uncertain tax positions. In addition, the tax provision for the second quarter of 2021 included interest associated with various refund claims.

37

For the six months ended July 2, 2022, we recorded an income tax provision of $7.0 on $39.1 of pre-tax income from continuing operations, resulting in effective rate of 17.9%. This compares to an income tax provision for the threesix months ended October 1, 2016July 3, 2021 of $0.5$7.7 on $7.1$48.4 of pre-tax income from continuing operations, resulting in an effective tax rate of 7.0%. The most significant items impacting the income tax provision for the third quarter of 2017 were (i) $5.0 of foreign losses generated during the period for which no tax benefit was recognized, as future realization of any such tax benefit is considered unlikely, and (ii) $4.1 of tax benefits related to various audit settlements, statute expirations, and other


adjustments to liabilities for uncertain tax positions. The most significant items impacting the income tax provision for the third quarter of 2016 were the $1.7 of additional gain that was recorded during the quarter on the sale of the dry cooling business, for which no income taxes were provided, and $0.7 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions.
For the nine months ended September 30, 2017, we recorded an income tax provision of $14.0 on $38.0 of pre-tax income from continuing operations, resulting in an effective tax rate of 36.8%. This compares to an income tax provision for the nine months ended October 1, 2016 of $10.1 on $43.4 of pre-tax income from continuing operations, resulting in an effective tax rate of 23.3%15.9%. The most significant items impacting the income tax provision for the first nine monthshalf of 20172022 and 2021 were (i) $34.6$0.7 and $1.0, respectively, of foreign losses generatedexcess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period for which no benefit was recognized, as future realization of any such tax benefit is considered unlikely,periods and (ii) $4.1the $0.7 and $2.2, respectively, of the tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions. The most significant items impacting the income tax provision for the first nine months of 2016 were (i) $0.3 of income taxesnoted above that were providedrecorded in connection with the $18.4 gain that was recorded on the sale of the dry cooling business and (ii) $10.5 of foreign losses generated during the period for which no tax benefit was recognized, as future realization of any such tax benefit is considered unlikely.
RESULTS OF DISCONTINUED OPERATIONS
As indicated in Note 1 to our condensed consolidated financial statements, we completed the sale of Balcke Dürr on December 30, 2016 and the results of Balcke Dürr are presented as a discontinued operation for all periods presented. Major classes of line items constituting pre-tax loss and after-tax loss of Balcke Dürr for the three and nine months ended October 1, 2016 are shown below:
 Three months ended Nine months ended
 October 1,
2016		 October 1,
2016
Revenues$40.2
 $110.4
Costs and expenses:   
Cost of products sold37.0
 103.6
Selling, general and administrative7.8
 23.9
Special charges (credits), net(0.4) (1.0)
Other expense, net(0.3) (0.5)
Loss before taxes(4.5) (16.6)
Income tax benefit0.5
 4.0
Loss from discontinued operations, net of tax$(4.0) $(12.6)
The following table presents selected financial information for Balcke Dürr that is included within discontinued operations in the condensed consolidated statement of cash flows for the nine months ended October 1, 2016:
Non-cash items included in loss from discontinued operations: 
Depreciation and amortization$1.5
Capital expenditures0.6
During the first quarter of 2017, we reduced the net loss associated with the sale of Balcke Dürr by $7.2. The reduction was comprised of an additional income tax benefit recorded for the sale of $8.4, partially offset by adjustments to liabilities retained in connection with the sale of $1.2. During the second quarter of 2017, we increased the net loss associated with the sale of Balcke Dürr by $0.4, with the increase resulting from adjustments to liabilities retained in connection with the sale. In addition to the adjustments to the net loss related to the Balcke Dürr sale, we recognized net gains (losses) of $0.32022 and $(0.1) during the three and nine months ended September 30, 2017, and $(0.7) and $(2.2) during the three and nine months ended October 1, 2016, respectively, resulting from revisions to liabilities retained from businesses discontinued prior to 2016.2021.



For the three and nine months ended September 30, 2017 and October 1, 2016, the table below presents a reconciliation of discontinued operations activity to the related amounts in the condensed consolidated statements of operations:
 Three months ended Nine months ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Balcke Dürr       
Loss from discontinued operations$—
 $(4.5) $(2.6) $(16.6)
Income tax benefit—
 0.5
 9.4
 4.0
Income (loss) from discontinued operations, net—
 (4.0) 6.8
 (12.6)
        
All other       
Loss from discontinued operations(0.1) (0.5) (1.0) (2.3)
Income tax (provision) benefit0.4
 (0.2) 0.9
 0.1
Income (loss) from discontinued operations, net0.3
 (0.7) (0.1) (2.2)
        
Total       
Loss from discontinued operations(0.1) (5.0) (3.6) (18.9)
Income tax benefit0.4
 0.3
 10.3
 4.1
Income (loss) from discontinued operations, net$0.3
 $(4.7) $6.7
 $(14.8)
RESULTS OF REPORTABLE SEGMENTS
The following information should be read in conjunction with our condensed consolidated financial statements and related notes. These results exclude the operating results of discontinued operations for all periods presented. See Note 46 to theour condensed consolidated financial statements for a description of each of our reportable segments.
Non-GAAP Measures — Throughout the following discussion of segment results, we use “organic revenue” growth (decline) to facilitate explanation of the operating performance of our segments. Organic revenue growth (decline) is a non-GAAP financial measure and is not a substitute for revenue growth (decline). Refer to the explanation of this measure and purpose of use by management under “Results of Continuing Operations—Non-GAAP Measures.”
HVAC Reportable Segment
 Three months endedSix months ended
July 2, 2022July 3, 2021% ChangeJuly 2, 2022July 3, 2021% Change
Revenues$218.7 $185.4 18.0 $411.8 $361.0 14.1 
Income25.6 25.9 (1.2)$40.8 48.2 (15.4)
% of revenues11.7 %14.0 % 9.9 %13.4 %
Components of revenue increase:   
Organic  8.9 4.8 
Foreign currency  (0.7)(0.4)
Acquisition9.8 9.7 
Net revenue increase  18.0 14.1 
 Three months ended Nine months ended
 September 30, 2017 October 1, 2016 % Change September 30, 2017 October 1, 2016 % Change
Revenues$119.4
 $116.9
 2.1 $349.8
 $350.4
 (0.2)
Income15.6
 15.6
 — 47.5
 48.6
 (2.3)
% of revenues13.1% 13.3%   13.6% 13.9%  
Components of revenue increase (decrease): 
  
    
  
  
Organic growth 
  
 2.0  
  
 0.2
Foreign currency 
  
 0.1  
  
 (0.4)
Net revenue increase (decrease) 
  
 2.1  
  
 (0.2)
Revenues — For the three and six months ended September 30, 2017,July 2, 2022, the increase in revenues, compared to the respective periodperiods in 2016,2021, was due to an increase in organic revenue. The increase in organic revenue was primarily the result of an increase in sales of cooling products in the Americas, partially offset by a decline in sales of cooling products in Asia Pacific. During the three months ended September 30, 2017, sales of boilers and heating and ventilation products generally were comparable to the respective amounts for the three months ended October 1, 2016.
For the nine months ended September 30, 2017, the decrease in revenues, compared to the respective period in 2016, was due to the impact of a stronger U.S. dollar during the period, partially offset byacquisition of Cincinnati Fan and an increase in organic revenue. The increase in organic revenue was due primarily to an increase in sales of heating products associated with both price and ventilation products, partially offset by a decline in sales of boilers.volume increases.


Income — For the three and six months ended September 30, 2017, the decrease in margin, compared to the respective period in 2016, was due primarily to a less profitable sales mix associated with heating and ventilation products during the third quarter of 2017.


For the nine months ended September 30, 2017,July 2, 2022, the decrease in income and margin, compared to the respective periodperiods in 2016,2021, was due primarily to a less profitable sales mixamortization expense of $2.1 and $6.8, respectively, resulting from the Cincinnati Fan acquisition. In addition, income and margin for the three and six months ended July 2, 2022 was negatively impacted by lower absorption of manufacturing costs associated with cooling(i) supply chain delays and heating and ventilation products.(ii) labor shortages.


Backlog — The segment had backlog of $43.5$321.6 and $34.3$190.7 as of September 30, 2017July 2, 2022 and October 1, 2016,July 3, 2021, respectively. Backlog associated with Cincinnati Fan totaled $34.9 as of July 2, 2022.

Detection and Measurement Reportable Segment
 Three months endedSix months ended
July 2, 2022July 3, 2021% ChangeJuly 2, 2022July 3, 2021% Change
Revenues$135.3 $111.2 21.7 $249.3 $222.8 11.9 
Income22.5 11.4 97.4 37.5 31.4 19.4 
% of revenues16.6 %10.3 % 15.0 %14.1 %
Components of revenue increase:   
Organic  12.4 2.6 
Foreign currency  (3.2)(2.1)
Acquisitions12.5 11.4 
Net revenue increase  21.7 11.9 
 Three months ended Nine months ended
 September 30, 2017 October 1, 2016 % Change September 30, 2017 October 1, 2016 % Change
Revenues$66.9
 $52.3
 27.9 $185.0
 $167.8
 10.3
Income16.5
 7.8
 111.5 45.0
 30.9
 45.6
% of revenues24.7% 14.9%   24.3% 18.4%  
Components of revenue increase: 
  
    
  
  
Organic growth 
  
 27.3  
  
 11.6
Foreign currency 
  
 0.6  
  
 (1.3)
Net revenue increase 
  
 27.9  
  
 10.3
Revenues — For the three and ninesix months ended September 30, 2017,July 2, 2022, the increase in revenues, compared to the respective periods in 2016,2021, was due primarily to the impact of the acquisitions of Sealite, ECS, and ITL, as well as an increase in organic revenue. The increase inDuring the three months ended July 2, 2022, the segment experienced organic revenue was the result of an increase in sales forgrowth across all of the primaryits product lines, withinwhile the segment.organic revenue growth during the six months ended July 2, 2022 was due to increased sales of obstruction lighting, bus fare collection, and location and inspection products.
38


Income — For the three and ninesix months ended September 30, 2017,July 2, 2022, the increase in income and margin, compared to the respective periods in 2016,2021, was due primarily to the revenue increase in revenues noted above and lower SG&A expense resulting from cost reductions within our bus fare collection systems’ and communication technologies’ businesses.above.

Backlog — The segment had backlogbacklog of $73.7 $195.6 and $52.6$141.9 as of September 30, 2017July 2, 2022 and October 1, 2016,July 3, 2021, respectively.
Engineered Solutions Reportable Segment
 Three months ended Nine months ended
 September 30, 2017 October 1, 2016 % Change September 30, 2017 October 1, 2016 % Change
Revenues$162.2
 $175.8
 (7.7) $504.0
 $558.8
 (9.8)
Income13.3
 2.6
 411.5
 7.9
 8.5
 (7.1)
% of revenues8.2% 1.5%  
 1.6% 1.5%  
Components of revenue decrease: 
  
  
  
  
  
Organic decline 
  
 (9.1)  
  
 (8.0)
Foreign currency 
  
 1.4
  
  
 1.8
Sale of dry cooling business    —
     (1.2)
South Africa revenue revision    —
     (2.4)
Net revenue decrease 
  
 (7.7)  
  
 (9.8)
Revenues — For the three and nine months ended September 30, 2017, the decrease in revenues, compared to the respective period in 2016, was due primarily to a decline in organic revenue, partially offset by the impact of a weaker U.S. dollar versus the South African Rand during the periods. The decline in organic revenue was the result of lower sales related to the segment’s large power projects in South Africa, as these projects generally are in the latter stages of completion, as well as lower sales of power transformers and process cooling products. The decrease in power transformer sales was due primarily to the timing of shipments. In addition, our process cooling business has been impacted by a shift in its sales model, whereby it is now focused more on high-margin components and services and less on lower-margin large projects. In addition, the decrease in revenues for the nine months ended September 30, 2017, compared to the same period in 2016, resulted from a reduction in revenue of $13.5 during the second quarter of 2017 related to a revision to the expected revenues and profits on the segment’s large power projects in South Africa and the impact of the sale of the dry cooling business at the end of the first quarter of 2016.
Income— For the three months ended September 30, 2017, the increase in income and margin, compared to the respective period in 2016, was due primarily to a $10.2 gain recorded during the third quarter of 2017, resulting from the settlement of a contract that had been suspended and then ultimately cancelled by a customer. In addition, income and margin for the three months ended September 30, 2017 were favorably impacted by cost reductions at the segment’s Heat Transfer business resulting from restructuring actions that were implemented in 2016 and unfavorably by the organic revenue declines noted above.
For the nine months ended September 30, 2017, the decrease in income, compared to the respective period in 2016, was due to a reduction in profit of $22.9 Backlog associated with a revision during the second quarter of 2017 of the expected revenuesECS and


profits of the segment’s large power projects in South Africa and the organic revenue declines noted above, partially offset by (i) the $10.2 gain on the customer contract settlement noted above, (ii) the cost reductions at the segment’s Heat Transfer business noted above, and (iii) improved operating efficiency within the segment’s power transformer business.
Backlog — The segment had backlog of $368.1 and $435.6 ITL totaled $18.7 as of September 30, 2017 and October 1, 2016, respectively. Portions of the segment’s backlog are long-term in nature, with the related revenues expected to be recorded through 2017 and beyond.July 2, 2022.


CORPORATE AND OTHER EXPENSES
 Three months endedSix months ended
July 2, 2022July 3, 2021% ChangeJuly 2, 2022July 3, 2021% Change
Total consolidated revenues$354.0 $296.6 19.4 $661.1 $583.8 13.2 
Corporate expense16.4 13.6 20.6 33.0 28.0 17.9 
% of revenues4.6 %4.6 % 5.0 %4.8 %
Long-term incentive compensation expense2.5 3.3 (24.2)5.6 6.0 (6.7)

 Three months ended Nine months ended
 September 30, 2017 October 1, 2016 % Change September 30, 2017 October 1, 2016 % Change
Total consolidated revenues$348.5
 $345.0
 1.0
 $1,038.8
 $1,077.0
 (3.5)
Corporate expense11.0
 9.6
 14.6
 33.7
 29.6
 13.9
% of revenues3.2% 2.8%  
 3.2% 2.7%  
Long-term incentive compensation expense3.6
 4.1
 (12.2) 10.4
 10.2
 2.0
Pension and postretirement (income) expense(1.4) 0.8
 (275.0) 1.2
 4.6
 (73.9)
Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters. The increase in corporate expense forduring the three and ninesix months ended September 30, 2017,July 2, 2022, compared to the respective periods in 2016,2021, was due primarily to higher incentive compensation expense resulting from a year-over-year increaseincreased investments in profitability, as well as higher professional fees.various strategic and transformational initiatives.

Long-Term Incentive Compensation Expense — Long-term incentive compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes. TheFor the three and six months ended July 2, 2022, the decrease in long-term incentive compensation expense, during the three months ended September 30, 2017, compared to the respective periodperiods in 2016,2021, was due primarily to the impact of award forfeitures during the quarter. The increase in long-term incentive compensation expense during the nine months ended September 30, 2017, compared to the respective period in 2016, was due primarily to the timing and extent of compensation expense associated with awards granted to the members of our senior management team following the spin-off of SPX FLOW Inc. in the third quarter of 2015, partially offset by the impact of the third quarter 2017 award forfeitures noted above.
Pension and Postretirement (Income) Expense — Pension and postretirement (income) expense represents our consolidated expense, which we do not allocate for segment reporting purposes. The decrease in pension and postretirement expense during the three months ended September 30, 2017, compared to the respective period in 2016, was due primarily to the remeasurement of our unfunded liability related to postretirement benefits, which resulted in a gain within net periodic postretirement benefit expense of $2.6 during the third quarter of 2017, partially offset by lower expected returns on assets associated with the SPX U.S. Pension Plan (the “U.S. Plan”) due to revisions to the investment strategy for the U.S. Plan during the latter half of 2016 (i.e., a higher percentage of fixed income investments). The decrease in pension and postretirement expense during the nine months ended September 30, 2017, compared to the respective period in 2016, was due primarily to the remeasurement of our unfunded liability related to postretirement benefits discussed above, the impact of charges of $1.8resulting from various participant resignations during the second quarter of 2016 associated with lump-sum benefit payments during the period to certain participants of the U.S. Plan and the Supplemental Individual Account Retirement Plan, partially offset by the impact of the lower expected returns on the assets of the U.S. Plan. See Note 9 to our condensed consolidated financial statements for additional information on pension and postretirement expense.2022.

LIQUIDITY AND FINANCIAL CONDITION
Listed below are the cash flows from (used in) operating, investing, and financing activities and discontinued operations, as well as the net change in cash and equivalents for the ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016.July 3, 2021.
 Six months ended
July 2, 2022July 3, 2021
Continuing operations:  
Cash flows from (used in) operating activities$(83.5)$39.6 
Cash flows used in investing activities(45.8)(82.2)
Cash flows from (used in) financing activities(46.7)1.3 
Cash flows from (used in) discontinued operations(26.6)37.7 
Change in cash and equivalents due to changes in foreign currency exchange rates1.8 4.4 
Net change in cash and equivalents$(200.8)$0.8 
 Nine months ended
 September 30, 2017 October 1, 2016
Continuing operations: 
  
Cash flows used in operating activities$(2.4) $(11.3)
Cash flows from (used in) investing activities(8.4) 39.9
Cash flows from (used in) financing activities9.0
 (13.1)
Cash flows used in discontinued operations(6.1) (36.6)
Change in cash and equivalents due to changes in foreign currency exchange rates(4.5) 3.1
Net change in cash and equivalents$(12.4) $(18.0)



Operating Activities — The The decrease in cash flows used infrom operating activities during the ninesix months ended September 30, 2017,July 2, 2022, compared to the samerespective period in 2016,2021, was due primarilyprimarily to additional operating cash flows across our businesses resulting from (i) efforts to reduce working capital and (ii) the impactincome tax payments of the sale of dry cooling business, as the dry cooling business used cash in operating activities$48.8 during the first quarterhalf of 2016. In addition, we reached2022, with a settlement with an insurance carrier which resulted insignificant portion of these payments related to the receiptgain on sale of $8.5Transformer Solutions, (ii) decreases in cash proceedsflows at certain of our project-related businesses during the first quarterhalf of 2017. These additional operating2022, as cash receipts for these project-related businesses are often subject to contract milestones that can impact the timing of cash flows from period to period, (iii) elevated purchases of inventory components during the first ninehalf of 2022 in order to manage the potential risk associated with the current supply chain environment, and (iv) cash payments of $10.0 during the first half of 2022 in connection with the transfer of our postretirement life insurance benefit obligation to an insurance carrier.

Investing Activities — Cash flows used in investing activities for the six months ended July 2, 2022 were comprised of 2017 were offset partially by a year-over-year increase in income tax payments ($22.4cash utilized in the first nine monthsacquisition of 2017, compared to $5.1 inITL of $41.8 and capital expenditures of $6.0, partially offset by proceeds from company-owned life insurance policies of $1.6 and $0.4 received upon agreement with the first nine months of 2016) and an increase in cash outflowsseller on acquired working capital balances associated with our large power projects in South Africa ($43.9 in the first nine months of 2017, compared to $20.6 in the first nine months of 2016).
Investing Activities —Cincinnati Fan. Cash flows used in investing activities for the ninesix months ended September 30, 2017July 3, 2021 were comprised of cash utilized in the acquisition of Sealite of $81.6 and capital expenditures of $8.4. $4.2, partially offset by proceeds from company-owned life insurance policies of $3.9.

Financing Activities — Cash flows from investingused in financing activities for the ninesix months ended October 1, 2016July 2, 2022 were comprised of repurchases of common stock of $33.7, net repayments under our various debt instruments of $6.5, minimum withholdings
39

paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $5.2, and contingent consideration paid of $1.3 related to proceeds from asset sales of $47.7 (including proceeds from the sale of the dry cooling business of $47.6), partially offset by capital expenditures of $7.8.a prior acquisition.
Financing Activities —
Cash flows from financing activities for the ninesix months ended September 30, 2017 related toJuly 3, 2021 were comprised of net borrowings under our various debt instruments of $10.1,$5.1, partially offset by netminimum withholdings paid on behalf of employees foron long-term incentive awards, net share settlements of $1.1. Cash flows used in financing activities for the nine months ended October 1, 2016 related to net repayments under our various debt instrumentsproceeds from options exercised, of $11.5 and net withholdings paid on behalf of employees for net share settlements of $1.6.$3.8.

Discontinued Operations — Cash flowsflows used in discontinued operationsoperations for the ninesix months ended September 30, 2017 relatedJuly 2, 2022 relate primarily to (i) disbursements for liabilities retainedprofessional fees incurred in connection with dispositions. Cash flows used in discontinued operations for the nine months ended October 1, 2016claims activities related to the operations of Balcke Dürr and, to a lesser extent,large power projects in South Africa (see Note 15 for additional details), (ii) disbursements for liabilities retained in connection with dispositions, priorand (iii) a payment of $13.9 to 2016.the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business.

Cash flows from discontinued operations for the six months ended July 3, 2021 related primarily to cash flows from operations generated by Transformers Solutions, partially offset by cash disbursements related to liabilities retained in connection with dispositions.

Change in Cash and Equivalents due to Changes in Foreign Currency Exchange RatesRates — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during the first ninesix months of 20172022 and 2016.2021.
Borrowings and Availability
Borrowings —The — The following summarizes our debt activity (both current and non-current) for the ninesix months ended September 30, 2017.July 2, 2022.
December 31,
2021		BorrowingsRepaymentsOtherJuly 2,
2022
Revolving loans$— $— $— $— $— 
Term loan(1)
242.7 — (6.3)0.1 236.5 
Trade receivables financing arrangement(2)
— — — — — 
Other indebtedness(3)
3.3 0.1 (0.3)— 3.1 
Total debt246.0 $0.1 $(6.6)$0.1 239.6 
Less: short-term debt2.2 2.1 
Less: current maturities of long-term debt13.0 13.0 
Total long-term debt$230.8 $224.5 
___________________________

December 31,
2016		 Borrowings Repayments 
Other(4)
 September 30,
2017
Revolving loans$—
 $46.4
 $(46.4) $—
 $—
Term loan (1)
339.6
 —
 (13.1) 0.3
 326.8
Trade receivables financing arrangement (2)
—
 70.0
 (39.0) —
 31.0
Other indebtedness (3)
16.6
 25.6
 (33.4) 1.4
 10.2
Total debt356.2
 $142.0
 $(131.9) $1.7
 368.0
Less: short-term debt14.8
       39.0
Less: current maturities of long-term debt17.9
       18.0
Total long-term debt$323.5
       $311.0

___________________________
(1)The term loan is repayable in quarterly installments equal to 1.25% of the initial term loan balance of $250.0, in each of the four quarters of 2022 and 2023, and 1.25% during the first three quarters of 2024. The remaining balance is payable in full on December 17, 2024. Balances are net of unamortized debt issuance costs of $0.9 and $1.0 at July 2, 2022 and December 31, 2021, respectively.
(1)
(2)Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses.
(3)Primarily includes balances under a purchase card program of $2.1 and $2.2 and finance lease obligations of $1.0 and $1.1 at July 2, 2022 and December 31, 2021, respectively. The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.
The term loan is repayable in quarterly installments of 1.25% of the original loan balance of $350.0. The remaining balance is repayable in full on September 24, 2020. Balances are net of unamortized debt issuance costs of $1.3 and $1.6 at September 30, 2017 and December 31, 2016, respectively.

(2)
Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. At September 30, 2017, we had $18.3 of available borrowing capacity under this facility.
(3)
Primarily includes balances under a purchase card program of $3.6 and $3.9, capital lease obligations of $2.2 and $1.7, and borrowings under lines of credit in South Africa and China of $4.1 and $10.2 at September 30, 2017 and December 31, 2016, respectively. The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt. 
(4)
“Other” primarily includes debt assumed, foreign currency translation on any debt instruments denominated in currencies other than the U.S. dollar, and the impact of amortization of debt issuance costs associated with the term loan.
At September 30, 2017,July 2, 2022, we were in compliance with all covenant provisionscovenants of our senior credit agreement.


Availability — At September 30, 2017,July 2, 2022, we had $314.1$439.0 of available borrowing capacity under our revolving credit facilities, after giving effect to $35.9$11.0 reserved for outstanding letters of credit. In addition, at September 30, 2017,July 2, 2022, we had $121.4$43.3 of available issuance capacity under our foreign credit instrument facilities after giving effect to $178.6$11.7 reserved for outstanding letters of credit.
Financing instruments may be used from time to time including, but not limited to, public and private debt and equity offerings, operating leases, capitalfinance leases and securitizations. We expect that we will continue to access these markets as appropriate to maintain liquidity and to provide sources of funds for general corporate purposes, acquisitions or to refinance existing debt.
Concentrations of Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, insurance recovery assets associated with asbestos product liability matters, and interest
40

rate swap and foreign currency forward, and commodityforwards contracts. These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions and insurance companies throughout the world. We periodically evaluate the credit standing of these financial institutions.institutions and insurance companies.
We maintain cash levels in bank accounts that, at times, may exceed federally-insured limits. We have not experienced, and believe we are not exposed to, significant risk of loss in these accounts.
We have credit loss exposure in the event of nonperformance by counterparties to the above financial instruments, but have no other off-balance-sheet credit risk of accounting loss. We anticipate, however, that counterparties will be able to fully satisfy their obligations under the contracts. We do not obtain collateral or other security to support financial instruments subject to credit risk, but we do monitor the credit standing of counterparties.risk.
Concentrations of credit risk arising from trade accounts receivable are due to selling to customers in a particular industry. Credit risks are mitigated by performing ongoing credit evaluations of our customers’ financial conditions and obtaining collateral, advance payments, or other security when appropriate. No one customer, or group of customers that to our knowledge are under common control, accounted for more than 10%10% of our revenues for any period presented.
Other Matters
Contractual Obligations — There have been no material changes in the amounts of our contractual obligations from those disclosed in our 20162021 Annual Report on Form 10-K. Our total net liabilities for unrecognized tax benefits including interest were $23.1$9.1 as of September 30, 2017.July 2, 2022. Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $4.0.$5.0.
Contingencies and Other Matters — Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., class actions and contracts, intellectual property, and competitive claims), including claims with respect to the large power projects in South Africa, environmental matters, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate. We accrue for these contingencies when we believe a liability is probable and can be reasonably estimated. As events change and resolutions occur, these accruals may be adjusted and could differ materially from amounts originally estimated. See Note 1315 to the condensed consolidated financial statements for a further discussion of contingencies and other matters.
Our Certificate of Incorporation provides that we shall indemnify our officers and directors to the fullest extent permitted by the Delaware General Corporation Law for any personal liability in connection with their employment or service with us. While we maintain insurance for this type of liability, the liability could exceed the amount of the insurance coverage.
In addition, you should read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Other Matters” and “Risk Factors” in our 20162021 Annual Report on Form 10-K, as well as similar sections in any future filings for an understanding of the risks, uncertainties, and trends facing our businesses.
Critical Accounting Policies and Use of Estimates
General — The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. The accounting policies that we believe are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties are discussed in our 20162021 Annual Report on Form 10-K.10-K, the discussion within which is incorporated herein by reference. We have affected no material change in either our critical accounting policies or use of estimates since the filing of our 20162021 Annual Report on Form 10-K.



41

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
 
Management does not believe our exposure to market risk has significantly changed since December 31, 20162021 and does not believe that such risks will result in significant adverse impacts to our financial condition, results of operations or cash flows.

ITEM 4. Controls and Procedures
 
SPX management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures, pursuant to Exchange Act Rule 13a-15(b), as of September 30, 2017.July 2, 2022. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2017.July 2, 2022 due to the material weakness discussed below related to the accounting for asbestos-related insurance recovery assets.

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

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

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

•Reconciling data used in our accounting assessments to the records of external legal counsel and third-party administrators to verify the completeness of recorded insurance recovery assets associated with alleged exposure to asbestos-containing materials.
•Monitoring changes in available insurance and, if applicable, confirming any changes with external legal counsel and third-party administrators to verify that such changes are properly reflected in the insurance availability reports.

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

Changes in Internal Control Over Financial Reporting
In connection with the evaluation by SPX management, including the Chief Executive Officer and the Chief Financial Officer, of our internal control over financial reporting, pursuant to Exchange Act Rule 13a-15(d), no changes during the quarter ended September 30, 2017July 2, 2022 were identified that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

42


PART II—OTHER INFORMATION
 
ITEM 1. Legal Proceedings
 
The information required by this Item is incorporated by reference from the footnotes to the condensed consolidated financial statements, specificallyNote 13, 15, included under Part I of this Form 10-Q.

 
ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 20162021 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results.

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

None.The following table summarizes the repurchases of common stock made by the Company during the three months ended July 2, 2022.

PeriodTotal number of shares purchasedAverage price per shareTotal number of shares purchased as part of publicly announced plan or program (1)Maximum approximate dollar value that may yet be purchased under the plan or program (1)
April 3, 2022 - May 7, 2022———$100,000,000
May 8, 2022 - June 4, 2022631,474$47.44631,474$70,044,117
June 5, 2022 - July 2, 202275,353$49.8575,353$66,287,581
Total706,827706,827
ITEM 4. Mine Safety Disclosures
___________________________
None.



(1)On May 10, 2022, our Board of Directors re-authorized management, in its sole discretion, to repurchase, in any fiscal year, up to $100.0 million of our common stock, subject to maintaining compliance with all covenants of our Senior Credit Facilities. Pursuant to this re-authorization, we repurchased approximately 0.7 million shares of our common stock for an aggregate purchase price of $33.7 million during the three months ended July 2, 2022. As of July 2, 2022, the maximum approximate dollar value of our common stock that may be purchased under this authorization during the current fiscal year is $66.3 million.

ITEM 6. Exhibits
43

3.1
31.13.2
31.1
31.2
32.1
101.1101.INS*SPX Corporation financial information fromInline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its Form 10-Q forXBRL tags are embedded within the quarterly period ended September 30, 2017, formattedInline XBRL)
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in XBRL, including: (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and October 1, 2016; (ii) Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016; (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and October 1, 2016; and (iv) Notes to Condensed Consolidated Financial Statements.Interactive Data Files submitted as Exhibit 101.*)




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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SPX CORPORATION
(Registrant)
Date: November 2, 2017August 4, 2022By/s/ Eugene J. Lowe, III
President and Chief Executive Officer
Date: November 2, 2017August 4, 2022By/s/ Scott W. SprouleJames E. Harris
Vice President, Chief Financial Officer and Treasurer


INDEX TO EXHIBITS
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1SPX Corporation financial information from its Form 10-Q for the quarterly period ended September 30, 2017, formatted in XBRL, including: (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and October 1, 2016; (ii) Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016; (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and October 1, 2016; and (iv) Notes to Condensed Consolidated Financial Statements.




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