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 ended ~~June~~March 30, ~~2018~~2019



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

For the transition period from to

Commission ~~file number~~File Number 1-6948

SPX CORPORATION

(Exact Name of ~~Registrant~~registrant as ~~Specified~~specified in ~~Its Charter)~~its charter)



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

13320-A Ballantyne Corporate Place, 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)

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 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 ~~used~~use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

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

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



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

Common shares outstanding ~~July 27, 2018, 43,051,057~~May 2, 2019, 43,867,025

SPX CORPORATION AND SUBSIDIARIES

FORM 10-Q INDEX




PART 1 – FINANCIAL INFORMATION
Item 1 – Financial Statements
Condensed Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~		3
Condensed Consolidated Balance Sheets		4
Condensed Consolidated Statements of Cash Flows		5
Notes to Condensed Consolidated Financial Statements		6
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations		3332
Item 3 – Quantitative and Qualitative Disclosures About Market Risk		4341
Item 4 – Controls and Procedures		4341

PART 2 – OTHER INFORMATION
Item 1 – Legal Proceedings		4442
Item 1A – Risk Factors		4442
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		44
~~Item 4 – Mine Safety Disclosures~~		4442
Item 6 – Exhibits		4542

SIGNATURES		4643

~~INDEX TO EXHIBITS~~		X

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 ended						Six Months Ended						Three months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Revenues	$	379.2		$	349.7		$	731.1		$	690.3		$	343.6		$	351.9
Costs and expenses:
Cost of products sold	281.5			273.6			543.3			526.1			260.4			261.8
Selling, general and administrative	72.6			70.3			141.2			138.6			76.7			68.6
Intangible amortization	0.8			0.1			1.0			0.3			1.6			0.2
Special charges, net	1.6			0.5			3.6			1.0			0.1			2.0
Other operating expenses													1.8			—
Operating income	22.7			5.2			42.0			24.3			3.0			19.3

Other income (expense), net	2.2			(3.2		)	3.2			(5.2		)
Other income, net													7.2			1.0
Interest expense	(5.1		)	(4.6		)	(9.4		)	(8.6		)	(5.3		)	(4.3		)
Interest income	0.3			0.3			0.8			0.7			0.3			0.5
Income (loss) from continuing operations before income taxes	20.1			(2.3		)	36.6			11.2
Income from continuing operations before income taxes													5.2			16.5
Income tax provision	(0.4		)	(6.0		)	(4.5		)	(9.2		)	(4.6		)	(4.1		)
Income (loss) from continuing operations	19.7			(8.3		)	32.1			2.0
Income from continuing operations													0.6			12.4

Income (loss) from discontinued operations, net of tax	—			—			—			—			—			—
Gain (loss) on disposition of discontinued operations, net of tax	3.3			(0.7		)	3.3			6.4
Income (loss) from discontinued operations, net of tax	3.3			(0.7		)	3.3			6.4
Loss on disposition of discontinued operations, net of tax													(1.4		)	—
Loss from discontinued operations, net of tax													(1.4		)	—

Net income (loss)	$	23.0		$	(9.0	)	$	35.4		$	8.4		$	(0.8	)	$	12.4

Basic income (loss) per share of common stock:
Income (loss) from continuing operations	$	0.46		$	(0.19	)	$	0.75		$	0.05
Income (loss) from discontinued operations	0.08			(0.02		)	0.08			0.15
Income from continuing operations													$	0.01		$	0.29
Loss from discontinued operations													(0.03		)	—
Net income (loss) per share	$	0.54		$	(0.21	)	$	0.83		$	0.20		$	(0.02	)	$	0.29

Weighted-average number of common shares outstanding — basic	42.988			42.388			42.881			42.249			43.618			42.772

Diluted income (loss) per share of common stock:
Income (loss) from continuing operations	$	0.44		$	(0.19	)	$	0.72		$	0.04
Income (loss) from discontinued operations	0.07			(0.02		)	0.07			0.15
Income from continuing operations													$	0.01		$	0.28
Loss from discontinued operations													(0.03		)	—
Net income (loss) per share	$	0.51		$	(0.21	)	$	0.79		$	0.19		$	(0.02	)	$	0.28

Weighted-average number of common shares outstanding — diluted	44.723			42.388			44.545			43.622			44.880			44.353

Comprehensive income (loss)	$	20.0		$	(8.9	)	$	36.8		$	7.5
Comprehensive income													$	0.9		$	16.8

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share data)


	June 30, 2018			December 31, 2017			March 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and equivalents	$	66.7		$	124.3		$	39.0		$	68.8
Accounts receivable, net	247.1			267.5			250.3			269.1
Contract assets	92.4			—			68.9			91.2
Inventories, net	141.9			143.0			151.5			128.8
Other current assets (includes income taxes receivable of $49.0 and $62.4 at June 30, 2018 and December 31, 2017, respectively)	74.3			97.7
Other current assets (includes income taxes receivable of $18.9 and $18.9 at March 30, 2019 and December 31, 2018, respectively)							44.0			40.5
Total current assets	622.4			632.5			553.7			598.4
Property, plant and equipment:
Land	19.3			15.8			18.7			19.4
Buildings and leasehold improvements	124.9			120.5			118.7			125.2
Machinery and equipment	332.7			330.4			330.2			334.1
	476.9			466.7			467.6			478.7
Accumulated depreciation	(288.7		)	(280.1		)	(289.3		)	(294.5		)
Property, plant and equipment, net	188.2			186.6			178.3			184.2
Goodwill	393.3			345.9			430.0			394.4
Intangibles, net	201.9			117.6			231.9			198.4
Other assets	688.5			706.9			685.4			657.7
Deferred income taxes	29.5			50.9			22.1			24.4
TOTAL ASSETS	$	2,123.8		$	2,040.4		$	2,101.4		$	2,057.5
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	150.7		$	159.7		$	142.2		$	153.6
Contract liabilities	78.3			—			84.0			79.5
Accrued expenses	179.8			292.6			176.5			183.7
Income taxes payable	1.8			1.2			3.1			3.5
Short-term debt	124.1			7.0			75.0			31.9
Current maturities of long-term debt	9.2			0.5			14.2			18.0
Total current liabilities	543.9			461.0			495.0			470.2
Long-term debt	340.6			349.3			332.3			331.9
Deferred and other income taxes	31.6			29.6			30.6			23.2
Other long-term liabilities	849.1			885.8			828.2			817.3
Total long-term liabilities	1,221.3			1,264.7			1,191.1			1,172.4
Commitments and contingent liabilities (Note 14)
Commitments and contingent liabilities (Note 15)
Equity:
Common stock (51,359,014 and 43,033,785 issued and outstanding at June 30, 2018, respectively, and 51,186,064 and 42,650,599 issued and outstanding at December 31, 2017, respectively)	0.5			0.5
Common stock (51,673,391 and 43,844,474 issued and outstanding at March 30, 2019, respectively, and 51,528,778 and 43,450,305 issued and outstanding at December 31, 2018, respectively)							0.5			0.5
Paid-in capital	1,305.8			1,309.8			1,279.9			1,295.4
Retained deficit	(707.9		)	(742.3		)	(650.9		)	(650.1		)
Accumulated other comprehensive income	251.5			250.1			246.6			244.9
Common stock in treasury (8,325,229 and 8,535,465 shares at June 30, 2018 and December 31, 2017, respectively)	(491.3		)	(503.4		)
Common stock in treasury (7,828,917 and 8,078,473 shares at March 30, 2019 and December 31, 2018, respectively)							(460.8		)	(475.8		)
Total equity	358.6			314.7			415.3			414.9
TOTAL LIABILITIES AND EQUITY	$	2,123.8		$	2,040.4		$	2,101.4		$	2,057.5

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	Six months ended						Three months ended
	June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Cash flows from (used in) operating activities:
Net income	$	35.4		$	8.4
Less: Income from discontinued operations, net of tax	3.3			6.4
Cash flows from operating activities:
Net income (loss)							$	(0.8	)	$	12.4
Less: Loss from discontinued operations, net of tax							(1.4		)	—
Income from continuing operations	32.1			2.0			0.6			12.4
Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:
Special charges, net	3.6			1.0			0.1			2.0
Gain on change in fair value of equity security							(6.3		)	—
Deferred and other income taxes	6.1			(3.8		)	2.5			(1.3		)
Depreciation and amortization	13.4			12.6			8.1			6.6
Pension and other employee benefits	3.8			7.5			2.8			2.3
Long-term incentive compensation	8.1			6.8			3.5			3.9
Other, net	0.7			1.7			0.3			0.3
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable and other assets	11.1			5.8			47.5			23.6
Inventories	(4.8		)	(20.3		)	(14.4		)	(3.6		)
Accounts payable, accrued expenses and other	(67.4		)	(22.3		)	(32.2		)	(43.1		)
Cash spending on restructuring actions	(0.9		)	(1.0		)	(1.0		)	(0.4		)
Net cash from (used in) continuing operations	5.8			(10.0		)
Net cash from continuing operations							11.5			2.7
Net cash used in discontinued operations	(1.1		)	(5.7		)	(0.9		)	(0.4		)
Net cash from (used in) operating activities	4.7			(15.7		)
Net cash from operating activities							10.6			2.3
Cash flows used in investing activities:
Proceeds from company-owned life insurance policies, net	0.2			0.3			0.5			0.2
Business acquisitions, net of cash acquired	(182.6		)	—			(77.0		)	(16.3		)
Proceeds from sales of assets	10.1			—
Net proceeds from sale of assets							5.5			—
Capital expenditures	(5.4		)	(4.8		)	(3.7		)	(3.2		)
Net cash used in continuing operations	(177.7		)	(4.5		)	(74.7		)	(19.3		)
Net cash from discontinued operations	2.4			—
Net cash from (used in) discontinued operations							—			—
Net cash used in investing activities	(175.3		)	(4.5		)	(74.7		)	(19.3		)
Cash flows from financing activities:
Cash flows from (used in) financing activities:
Borrowings under senior credit facilities	129.0			16.0			89.3			—
Repayments under senior credit facilities	(33.0		)	(24.7		)	(64.5		)	—
Borrowings under trade receivables financing arrangement	32.0			40.0			40.0			—
Repayments under trade receivables financing arrangement	(10.0		)	(19.0		)	(29.0		)	—
Net repayments under other financing arrangements	(1.1		)	(2.7		)
Net borrowings (repayments) under other financing arrangements							2.8			(0.4		)
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options and other	(3.0		)	(1.8		)	(5.9		)	(3.2		)
Net cash from continuing operations	113.9			7.8
Net cash used in discontinued operations	—			—
Net cash from financing activities	113.9			7.8
Net cash from (used in) continuing operations							32.7			(3.6		)
Net cash from (used in) discontinued operations							—			—
Net cash from (used in) financing activities							32.7			(3.6		)
Change in cash and equivalents due to changes in foreign currency exchange rates	(0.9		)	(3.7		)	1.6			—
Net change in cash and equivalents	(57.6		)	(16.1		)	(29.8		)	(20.6		)
Consolidated cash and equivalents, beginning of period	124.3			99.6			68.8			124.3
Consolidated cash and equivalents, end of period	$	66.7		$	83.5		$	39.0		$	103.7

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; in millions, except per share data)


(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.

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 we are not the primary beneficiary, as a result of the ~~sale of Balcke Dürr. See below and in Notes 3 and 16 for further discussion of the~~2016 sale of Balcke Dürr. All other VIEs are considered immaterial, individually and in aggregate, to our condensed consolidated financial statements.

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

During the second quarter of 2018, as a continuation of our strategic shift away from power generation end markets, we initiated a plan to wind-down the SPX Heat Transfer business (“Heat Transfer”) ~~business within our Engineered Solutions reportable segment.~~. In connection with the planned wind-down, we ~~recorded charges~~sold the business’s manufacturing facility during the first quarter of $2.0 in our second quarter 2018 operating results, with $0.9 related to the write-down of inventories (included in “Cost of products sold”), $0.6 related to the impairment of machinery and equipment, and $0.5 related to severance costs (both included in “Special charges, net”). In addition, and as part of the wind-down, we sold certain intangible assets of the Heat Transfer business2019 for net cash proceeds of ~~$5.5, which resulted in~~$5.5. As a result of the sale, we recorded a gain of ~~less than $0.1 within our second quarter 2018 operating results.~~$0.3, which is included in “Other income, net.” We anticipate completing the wind-down by the end of the ~~first~~second quarter of 2019.

Change in Segment Reporting Structure

During the fourth quarter of 2018, due, in part, to the certain wind-down activities, and the related decline in volumes, at our South African subsidiary, DBT Technologies (PTY) LTD (“DBT”), and Heat Transfer, we concluded that these operating segments were no longer economically similar to the other operating segments within our Engineered Solutions reportable segment. As such, DBT and Heat Transfer are now being reported, for all periods presented, within an “All Other” category outside of our reportable segments. See Notes 4 and 6 for additional details.

Acquisition of Sabik Marine

On February 1, 2019, we completed the acquisition of Sabik Marine (“Sabik”), a manufacturer of obstruction lighting products, from Carmanah Technologies Corporation for a purchase price of $77.0, net of cash acquired of $0.6. The assets acquired and liabilities assumed have been recorded at estimates of fair value as determined by management, based on information available and on assumptions as to future operations and are subject to change upon completion of acquisition accounting. The post-acquisition operating results of Sabik are reflected within our Detection and Measurement reportable segment. See Notes 3 and 9 for additional details on the Sabik acquisition.

Acquisition of Cues

On June 7, 2018, we completed the acquisition of Cues, Inc. (“Cues”), a manufacturer of pipeline inspection and rehabilitation equipment, which significantly increases our presence in the pipeline inspection market. The acquisition was completed through the purchase of all of the issued and outstanding shares of Cues’ parent company for a purchase price of ~~$166.2,~~$164.4, net of cash acquired of $20.6. ~~Cues had revenues of approximately $84.0 for the twelve months prior to the acquisition.~~ The assets acquired and liabilities assumed have been recorded at ~~preliminary~~ estimates of fair value as determined by management, based on information ~~currently~~ available and on ~~current~~ assumptions as to future operations and are subject to change upon completion of acquisition accounting. The post-acquisition operating results of Cues are reflected within our Detection and Measurement reportable segment. See Note 3 for additional details on the Cues acquisition.

Acquisition of Schonstedt

On March 1, 2018, we completed the acquisition of Schonstedt Instrument Company (“Schonstedt”), a manufacturer and distributor of magnetic locator products used for locating underground utilities and other buried objects, for a purchase price of $16.4, net of cash acquired of $0.3. Schonstedt had revenues of approximately $9.0 for the twelve months prior to the acquisition. The assets acquired and liabilities assumed have been recorded at preliminary estimates of fair value as determined by management, based on information currently available and on current assumptions as to future operations, and are subject to change upon completion of acquisition accounting. The post-acquisition operating results of Schonstedt are reflected within our Detection and Measurement reportable segment.

~~Sale of Balcke Dürr~~

On December 30, 2016, we completed the sale of Balcke Dürr to a subsidiary of mutares AG (the “Buyer”). During the first quarter of 2017, we reduced the net loss associated with the sale of Balcke Dürr by $7.2, with such amount recorded to “Gain on disposition of discontinued operations, net of tax.” 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, net of tax, 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.~~

On April 30, 2018, we reached a settlement with the Buyer on the amount of cash and working capital at the closing date, as well as on various other matters, for a net payment from the Buyer in the amount of Euro 3.0 (with Euro 2.0 received in May 2018 and Euro 1.0 in July 2018). The settlement resulted in a gain, net of tax, of $3.8, which was recorded to “Gain (loss) on disposition of discontinued operations, net of tax” during the second quarter of 2018. See Note 3 for information on discontinued operations.

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, ~~2017.~~2018. Interim results are not necessarily indicative of full year results. We have reclassified certain prior year amounts to conform to the current year ~~presentation.~~presentation, including amounts related to the change in the segment reporting structure previously discussed. 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 ~~2018~~2019 are March 30, June 29 and September 28, compared to the respective March 31, June 30 and September 29, ~~compared to the respective April 1, July 1 and September 30, 2017~~2018 dates. We had one less day in the first quarter of ~~2018~~2019 and will have one more day in the fourth quarter of ~~2018~~2019 than in the respective ~~2017~~2018 periods. We do not believe the one less day during the first quarter of ~~2018~~2019 had a material impact on our consolidated operating results, ~~for the first half of 2018,~~ when compared to the consolidated operating results for the ~~first half of 2017.~~respective 2018 period.

(2) NEW ACCOUNTING PRONOUNCEMENTS

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

ASC Topic ~~606~~842

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued an amendment to existing guidance, Accounting Standards Codification (“ASC”) 842, that requires lessees to recognize assets and liabilities for the rights and obligations created by leases. Under the amendment, additional qualitative and quantitative disclosures are required to allow users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. Effective January 1, 2019, we adopted ASC 842 using the modified retrospective transition approach. The modified retrospective transition approach recognizes any changes as of the beginning of the year of initial application (i.e., as of January 1, 2019) through retained earnings, with no restatement of comparative periods.

The new standard provides a number of optional practical expedients upon transition. We elected the “package of practical expedients,” which allowed us to maintain our prior conclusions regarding lease identification, lease classification and initial direct costs. We did not elect the practical expedients for the use-of-hindsight or land easements; the latter not being applicable to us.

The impact of the initial adoption of the standard on our condensed consolidated balance sheet is summarized below, with the most significant impact being the recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases. Our accounting for finance leases remains substantially unchanged.



	December 31, 2018		Impact of Adoption of ASC 842		January 1, 2019
Assets
Other assets	$	657.7	$	27.7	$	685.4

Liabilities
Accrued expenses	183.7		7.9		191.6
Other long-term liabilities	$	817.3	$	19.8	$	837.1

The adoption of ASC 842 had no impact on our retained deficit and no significant impact on the accompanying condensed consolidated statement of operations and condensed consolidated statement of cash flows for the three months ended March 30, 2019.

See Note 5 for further discussion of the post adoption impact of ASC 842.

Other Accounting Pronouncements

In May 2014, the FASB issued a new standard on revenue recognition ~~(Accounting Standards Codification “ASC” 606)~~(“ASC 606”) that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASC 606 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. ASC 606 also requires a number of quantitative and qualitative disclosures intended to enable users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue, and the related cash flows. Effective January 1, 2018, we adopted ASC 606 using the modified retrospective transition approach for all contracts not completed as of the date of adoption. The modified retrospective transition approach recognizes any changes as of the beginning of the year of initial application (i.e., as of January 1, 2018) through retained earnings, with no restatement of comparative periods.

The only significant change in revenue recognition as a result of the adoption of ASC 606 ~~relates~~related to our power transformer business. Under ASC 606, revenues for our power transformer business

are being recognized over time, while under previous revenue recognition guidance (ASC 605), revenues for power transformers were recognized at a point in time. ~~See Note 4 for further discussion~~We adopted the standard as of ~~our revenue recognition principles and the post adoption impact of ASC 606.~~

~~Summarized below is the impact of the initial application of ASC 606 on our~~ January 1, 2018 ~~condensed consolidated balance sheet:~~

December 31,
2017 Impact of Adoption of ASC 606 January 1,
2018

Assets
Accounts receivable, net $ 267.5
$ (36.0 ) $ 231.5
Inventories, net 143.0
(40.2 ) 102.8
Contract assets —
70.7
70.7
Other current assets 97.7
(3.6 ) 94.1
Deferred income taxes 50.9
(0.9 ) 50.0

Liabilities
Contract liabilities —
86.9
86.9
Accrued expenses 292.6
(99.0 ) 193.6
Other long-term liabilities 885.8
(1.6 ) 884.2

Equity
Accumulated other comprehensive income 250.1
(0.3 ) 249.8
Retained deficit $ (742.3 ) $ 4.0
$ (738.3 )

~~Other Accounting Pronouncements~~

~~In February 2016,~~under the FASB issued an amendment to existing guidance that requires lessees to recognize assets 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 reporting periods beginning on or after December 15, 2018 for public business entities, and interim periods within those annual reporting periods. Early adoption is permitted, and adoption must be applied on a modified retrospective ~~basis. We have developed an implementation plan and are currently gathering data to further assess the impact~~transition approach, which resulted in a decrease of ~~this amendment on~~ our ~~consolidated financial statements. It is anticipated that the adoption will result in additional assets and liabilities on our consolidated balance sheet due to the recognition~~retained deficit of lease rights and obligations. However, we do not expect the adoption to have a material impact to our consolidated statement of operations and comprehensive income (loss) or consolidated statement of cash flows.$4.0.

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, and is to be applied retrospectively. We adopted this guidance during the first quarter of 2018, with such adoption having no material impact to our condensed consolidated financial statements.

In October 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-16, which removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. ASU 2016-16 isbecame effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. The requirements of ASU 2016-16 ~~are~~were to be applied on a modified retrospective basis, which ~~entails~~entailed recognizing the initial effect of adoption in retained earnings. We adopted ASU 2016-16 as of January 1, 2018, which resulted in an increase of our retained deficit of $0.2.

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 reporting periods, with the financial statement presentation requirements of the amendment applied retrospectively. We adopted this guidance during the first quarter of 2018, resulting in non-service pension and postretirement costs being presented outside of operating income within the accompanying condensed consolidated statements of operations. In connection with the adoption of this guidance, we reclassified $1.1 and $2.4 of net periodic pension and postretirement benefit cost from “Selling, general and administrative” expenses to “Other income (expense), net” within the accompanying condensed consolidated statements of operations for the three and six months ended July 1, 2017, respectively. See Note 10 for details of our pension and postretirement expense.

In August 2017, the FASB issued significant amendments to hedge accounting. The FASB’s new guidance will make more financial and nonfinancial hedging strategies eligible 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~~We adopted ~~immediately in any interim or annual period (including~~this guidance during the ~~current period). The mandatory effective date for calendar year-end public companies is January 1, 2019. We are currently evaluating the effect this amendment will have on~~first quarter of 2019, with such adoption having no material impact to our condensed consolidated financial statements.

In February 2018, the FASB amended its guidance for reporting comprehensive income to reflect the potential impacts of the reduction in the corporate tax rate resulting from the Tax Cuts and Jobs Act (the “Act”). The amendment gives the option of reclassifying the stranded tax effects within accumulated other comprehensive income (“AOCI”) to retained earnings during the fiscal year or quarter in which the effect of the lower tax rate is recorded. ~~The amendment is effective for years beginning after December 15, 2018, with early adoption permitted.~~ We adopted this guidance as of January 1, 2018, which resulted in an increase of our retained deficit of $4.8.


(3)	ACQUISITIONS AND DISCONTINUED OPERATIONS

Acquisition of Sabik

As indicated in Note 1, on February 1, 2019, we completed the acquisition of Sabik for $77.0, net of cash acquired of $0.6. The assets acquired and liabilities assumed have been recorded at estimates of fair value as determined by management, based on available information and on assumptions as to future operations and are subject to change upon completion of acquisition accounting. We financed the acquisition with available cash and borrowings under our senior credit and trade receivables financing arrangements. For the period February 1, 2019 to March 30, 2019, Sabik recognized revenues and a net loss of $4.3 and $0.1, respectively, with the net loss impacted by charges of $1.1 associated with the excess fair value (over historical cost) of inventory acquired which was subsequently sold during the period. During the three months ended March 30, 2019, we incurred acquisition related costs for Sabik of $0.3, which have been recorded to “Selling, general and administrative” within the accompanying condensed consolidated statement of operations. The pro forma effects of the Sabik acquisition are not material to our consolidated results of operations.

Acquisition of Cues

As indicated in Note 1, on June 7, 2018, we completed the acquisition of Cues for ~~$166.2,~~$164.4, net of cash acquired of $20.6. We financed the acquisition with available cash and borrowings under our senior credit and trade receivables financing arrangements. The assets acquired and liabilities assumed have been recorded at ~~preliminary~~ estimates of fair value as determined by management, based on information ~~currently~~ available and on ~~current~~ assumptions as to future operations and are subject to change ~~upon completion of~~based on the ~~acquisition method of accounting. The~~ final ~~determination of the fair values~~assessment and valuation of certain ~~assets and liabilities will be completed within the measurement period of up to one year from the acquisition date, as permitted under GAAP.~~income tax amounts. The following is a summary of the recorded ~~preliminary~~ fair values of the assets acquired and liabilities assumed for Cues as of June 7, 2018:


Assets acquired:
Current assets, including cash and equivalents of $20.6	$	72.8	$	70.4
Property, plant and equipment	7.4		7.4
Goodwill	46.6		47.8
Intangible assets	79.5		79.5
Other assets	2.7		2.3
Total assets acquired	209.0		207.4

Current liabilities assumed	8.4		7.8
Non-current liabilities assumed	13.8		14.6

Net assets acquired	$	186.8	$	185.0

The identifiable intangible assets acquired consist of a trademark, customer backlog, customer relationships, and technology of $27.6, $0.8, $42.6, and $8.5, respectively, with such amounts based on ~~a preliminary~~an assessment of the related fair values. We ~~expect to amortize~~are amortizing the customer backlog, customer relationships, and technology assets over ~~0.3,~~0.5, 12.0, and 11.0 years, respectively.

We acquired gross receivables of $13.6, which had a fair value at the acquisition date of $13.2 based on our estimates of cash flows expected to be recovered.

The qualitative factors that comprise the recorded goodwill include expected synergies from combining our existing inspection equipment operations with those of Cues, expected market growth for ~~Cues~~Cues’ existing operations, and various other factors. We expect none of this goodwill or the intangible assets described above to be deductible for tax purposes.

Between the acquisition date and June 30, 2018, we recognized revenues and a net loss for Cues of $6.9 and $0.8, respectively, with the net loss driven by charges of $1.6 associated with the excess fair value (over historical cost) of inventory acquired which was subsequently sold during the period June 7, 2018 through June 30, 2018. During the six months ended June 30, 2018, we incurred acquisition related costs for Cues of $1.7, which have been recorded to “Selling, general and administrative” within our condensed consolidated statement of operations.

The following unaudited pro forma information presents our results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 ~~and July 1, 2017, respectively,~~ as if the acquisition of Cues had taken place on January 1, ~~2017.~~2018. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the acquisition been completed as of the date presented, and should not be taken as representative of our future consolidated results of operations. The pro forma results include estimates and assumptions that management believes are reasonable; however, these results do not include any anticipated cost savings or expenses of the planned integration of Cues. These pro forma results of operations have been prepared for comparative purposes only and include additional interest expense on the borrowings required to finance the acquisition, additional depreciation and amortization expense associated with fair value adjustments to the acquired property, plant and equipment and intangible assets, the removal of ~~charges associated with the excess fair value (over historical cost) of inventory acquired and subsequently sold, the removal of~~ professional fees incurred in connection with the transaction, and the related income tax effects.


	Three months ended					Six months ended				Three months ended
	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017		March 31, 2018
Revenues	$	395.9	$	370.9		$	765.2	$	732.3	$	369.3
Income (loss) from continuing operations	23.6		(7.4		)	36.3		4.3
Net income (loss)	26.9		(8.1		)	39.6		10.7
Income from continuing operations										12.7
Net income										12.7

Income (loss) from continuing operations per share of common stock:
Income from continuing operations per share of common stock:
Basic	$	0.55	$	(0.17	)	$	0.85	$	0.10	$	0.30
Diluted	$	0.53	$	(0.17	)	$	0.81	$	0.10	$	0.29

Net income (loss) per share of common stock:
Net income per share of common stock:
Basic	$	0.63	$	(0.19	)	$	0.92	$	0.25	$	0.30
Diluted	$	0.60	$	(0.19	)	$	0.89	$	0.25	$	0.29

Acquisition of Schonstedt

As indicated in Note 1, on March 1, 2018, we completed the acquisition of Schonstedt for $16.4, net of cash acquired of ~~$0.3.~~$0.3 , which included an additional amount paid during the three months ended June 30, 2018 of $0.1 related to the settlement of the agreed-upon working capital as of the acquisition date. The pro forma effects of the Schonstedt acquisition ~~were~~are not material to our consolidated results of operations.

Discontinued Operations

~~During~~Summarized below are the ~~first quarter~~components of ~~2017, we reduced the net loss associated with the sale of Balcke Dürr by $7.2. The reduction in the net loss was comprised of an additional income tax benefit recorded~~discontinued operations for the ~~sale~~three months ended March 30, 2019 and March 31, 2018:



	Three months ended
	March 30, 2019			March 31, 2018
Income (loss) from discontinued operations	$	—		$	—
Income tax provision ⁽¹⁾	(1.4		)	—
Loss from discontinued operations, net	$	(1.4	)	$	—

___________________________

⁽¹⁾We recorded a provision of $8.4, partially offset by the impact of adjustments to liabilities retained in connection with the sale, net of tax, 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.

As indicated in Note 1, during the second quarter of 2018, we reached a settlement with the Buyer on the working capital and cash at the closing date, as well as on various other matters. The settlement resulted in a gain, net of tax, of $3.8, which was recorded to “Gain (loss)$1.4 within “Loss on disposition of discontinued operations, net of tax” during the ~~second quarter of 2018.~~

~~In addition to the adjustments to the net loss related to the Balcke Dürr sale, we recognized a net loss of $0.5 during the~~ three ~~and six~~ months ended ~~June~~March 30, ~~2018 and net losses~~2019 as a result of ~~$0.3 and $0.4 during the three and six months ended July 1, 2017, respectively, resulting primarily from revisions to~~a change in estimate associated with income tax liabilities retained ~~from businesses discontinued~~in connection with a prior ~~to 2016.~~business divestiture.

For the three and six months ended June 30, 2018, the table below presents a reconciliation of discontinued operations activity to the related amounts in the condensed consolidated statements of operations:

Three months ended Six months ended
June 30,
2018 July 1,
2017 June 30,
2018 July 1,
2017
Balcke Dürr
Income (loss) from discontinued operations $ 6.3
$ (0.5 ) $ 6.3
$ (2.6 )
Income tax (provision) benefit (2.5 ) 0.1
(2.5 ) 9.4
Income (loss) from discontinued operations, net 3.8
(0.4 ) 3.8
6.8

All other
Loss from discontinued operations (0.7 ) (0.4 ) (0.7 ) (0.9 )
Income tax benefit 0.2
0.1
0.2
0.5
Loss from discontinued operations, net (0.5 ) (0.3 ) (0.5 ) (0.4 )

Total
Income (loss) from discontinued operations 5.6
(0.9 ) 5.6
(3.5 )
Income tax (provision) benefit (2.3 ) 0.2
(2.3 ) 9.9
Income (loss) from discontinued operations, net $ 3.3
$ (0.7 ) $ 3.3
$ 6.4

(4) REVENUES FROM CONTRACTS

As indicated in Note 2, effective January 1, 2018, we adopted ASC 606 under the modified retrospective transition approach. As a result, for periods prior to 2018, revenue continues to be presented based on prior guidance. Summarized below is our policy for recognizing revenue, as well as the various other disclosures required by ASC 606.

~~ASC 606 Policy~~

~~Performance Obligations~~ - Certain of our contracts are comprised of multiple deliverables, which can include hardware and software components, installation, maintenance, and extended warranties. For these contracts, we evaluate whether these deliverables represent separate performance obligations as defined by ASC 606. In some cases, a customer contracts with us to integrate a complex set of tasks and components into a single project or capability (even if the single project results in the delivery of multiple units). Hence, the entire contract is treated as a single performance obligation. In contrast, we may promise to provide distinct goods or services within a contract, in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. In cases where we sell standard products with observable standalone selling prices, these selling prices are used to determine the standalone selling price. In cases where we sell a customized customer specific solution, we typically use the expected cost plus margin approach to estimate the standalone selling price of each performance obligation. Sales taxes and other usage-based taxes are excluded from revenue.

Remaining performance obligations represent performance obligations that have yet to be satisfied. As a practical expedient, we do not disclose performance obligations that are (i) part of a contract that has an original expected duration of less than one year (this encompasses substantially all contracts with customers in the HVAC and Detection and Measurement reportable segments) and/or (ii) satisfied in a manner consistent with our right to consideration from the customer (i.e., revenue is recognized as value is transferred). Performance obligations for contracts with an original duration in excess of one year that have yet to be satisfied as of the end of a period primarily relate to our large process cooling systems and large South African projects, as well as certain of our bus fare collection systems. As of June 30, 2018, the aggregate amount allocated to remaining performance

obligations after the effect of practical expedients was $71.4. We expect to recognize revenue on approximately 63% and 94% of the remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

~~Options~~ - We offer options within certain of our contracts to purchase future goods or services. To the extent the option provides a material right to a future benefit (i.e., future goods and services at a discount from the relative standalone selling price), we separate the material right as a performance obligation and adjust the standalone selling price of the other performance obligations within the contract. When determining the relative standalone selling price of the option, we first determine the incremental discount that the customer would receive by exercising the option and then adjust that value based on the probability of option exercise (based, where possible, on historical experience). Revenue is recognized for the option as either the option is exercised or when it expires.

~~Contract Combination and Modification~~ - We assess each contract at its inception to determine whether it should be combined with other contracts for revenue recognition purposes. When making this determination, we consider factors such as whether two or more contracts with a customer were negotiated at or near the same time or were negotiated with an overall profit objective. Contracts are sometimes modified for changes in contract specifications, scope, or price (or a combination of these). Contract modifications for goods or services that are not distinct within the context of the contract (generally associated with specification changes in our engineered solutions product lines) are accounted for as part of the existing contract. Contract modifications for goods or services that are distinct (i.e., adding or subtracting distinct goods or services) are accounted for as either a termination of the existing contract and the creation of a new contract (where the goods or services are not priced at their standalone selling price), or the creation of separate contract (where the goods or services are priced at their standalone selling price).

~~Variable Consideration~~ - We determine the transaction price for each contract based on the consideration we expect to receive for the products or services being provided under the contract. For contracts where a portion of the price may vary, we estimate the variable consideration at the amount to which we expect to be entitled, which is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. We analyze the risk of a significant revenue reversal and, if necessary, constrain the amount of variable consideration recognized in order to mitigate this risk. Variable consideration primarily pertains to late delivery penalties, unapproved change orders and claims (levied by us and /or against us), and index-based pricing. Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary from our estimates, we will adjust these estimates, which would affect revenue and earnings in the period such variances become known.

As noted above, the nature of our contracts gives rise to several types of variable consideration, including unapproved change orders and claims. We include in our contract estimates additional revenue for unapproved change orders or claims against the customer when we believe we have an enforceable right to the unapproved change order or claim, the amount can be reliably estimated, and the above criteria have been met. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs, and the objective evidence available to support the claim. These estimates are also based on historical award experience. At June 30, 2018, the aggregate revenues related to our large power projects in South Africa included approximately $38.2 related to claims and unapproved change orders. See Note 14 for additional details on our large power projects in South Africa.

~~Returns, Customer Sales Incentives and Warranties~~ - We have certain arrangements that require us to estimate, at the time of sale, the amounts of variable consideration that should be excluded from revenue as (i) certain amounts are not expected to be collected from customers and/or (ii) the product may be returned. We principally rely on historical experience, specific customer agreements, and anticipated future trends to estimate these amounts at the time of shipment and to reduce the transaction price. These arrangements include volume rebates, which are estimated using the most likely amount method, as well as early payment discounts and promotional and advertising allowances, which are estimated using the expected value method. We primarily offer assurance-type standard warranties that the product will conform to published specifications for a defined period of time after delivery. These types of warranties do not represent separate performance obligations. We establish provisions for estimated returns and warranties primarily based on contract terms and historical experience, using the expected value method. Certain businesses separately offer extended warranties, which are considered separate performance obligations.

~~Contract Costs~~ - We have elected to apply the practical expedient provided under ASC 606 which allows an entity to expense incremental costs of obtaining or fulfilling a contract when incurred if the amortization period of the asset that the entity otherwise would have recorded is one year or less. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of products sold. The net asset recorded for incremental costs incurred to obtain or fulfill contracts, after consideration of the practical expedient mentioned above, was not material to our condensed consolidated financial statements.

~~Nature of Goods and Services, Satisfaction of Performance Obligations, and Payment Terms~~

Our HVAC product lines include package cooling towers, residential and commercial boilers, and comfort heating and ventilation products. Performance obligations for our HVAC product lines relate primarily to the delivery of equipment and components, with satisfaction of these performance obligations occurring at the time of shipment or delivery (i.e., control is transferred at a point in time). The typical length of a contract is one to three months and payment terms are generally 15-60 days after shipment to the customer.

Our detection and measurement product lines include underground pipe and cable locators, rehabilitation and inspection equipment, bus fare collection systems, signal monitoring, and obstruction lighting. Performance obligations for these product lines relate to delivery of equipment and components, installation and other short-term services, long-term maintenance and software subscription services. Performance obligations for equipment and components are satisfied at the time of shipment or delivery (i.e., control is transferred at a point in time). Performance obligations for installation and other short-term services are satisfied over time as the installation or service is performed. Performance obligations for maintenance and software subscription services are satisfied over time, with the related revenue recorded evenly throughout the contract service period as this method best depicts how control of the service is transferred. Payment terms for equipment and components are typically 30 to 60 days after shipment or delivery, while payment for services typically occurs at completion for shorter-term engagements (less than three months in duration) and throughout the service period for longer-term engagements (generally greater than three months in duration). These product lines have varying contract lengths ranging from one to eighteen months (with the longer term contracts generally associated with our bus fare collection systems and signal monitoring products lines), with the typical duration being one to three months.

Our engineered solutions product lines include medium and large power transformers, process cooling equipment and heat exchangers, as well as two large power plant contracts in our South African business. Performance obligations for these product lines relate to delivery of equipment and components, construction and reconstruction of cooling towers, and providing installation, replacement/spare parts, and various other services. For these product lines, our customers typically contract with us to provide a customer-specific solution. The customer typically controls the work in process due to contractual termination clauses whereby we have an enforceable right to recovery of cost incurred including a reasonable profit for work performed to date on products or services that do not have an alternative use to us. Additionally, certain projects are performed on customer sites such that the customer controls the asset as it is created or enhanced. As such, performance obligations for these product lines are generally satisfied over time, with the related revenue recorded based on the percentage of costs incurred to date for each contract to the estimated total costs for such contract at completion, as this method best depicts how control of the product or service is being transferred. Revenue for replacement/spare parts is recognized upon shipment or delivery (i.e., at a point in time). The length of customer contract is generally 6-12 months for our power transformers business and 6-18 months for our process cooling and heat exchanger businesses. The large contracts in our South African business relate to the construction of two large power plants that have a length in excess of 10 years. Payments on longer-term contracts are generally commensurate with milestones defined in the related contract, while payments for the replacement/spare parts contracts typically occur 30 to 60 days after delivery.

Customer prepayments, progress billings, and retention payments are customary in certain of our project-based businesses, generally for our engineered solutions product lines and, to a lesser extent, our detection and measurement product lines. Customer prepayments, progress billings, and retention payments are not considered a significant financing component because they are intended to protect either the customer or ourselves in the event that some or all of the obligations under the contract are not completed. Additionally, most contract assets are expected to convert to accounts receivable, and contract liabilities are expected to convert to revenue, within one year. As such, after applying the practical expedient to exclude potential significant financing components that are less than one year in duration, we do not have any such financing components.

Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments and other operating segments, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are effected by economic factors, with such disaggregation presented below for the three ~~and six~~ months ended ~~June~~March 30, 2019 and March 31, 2018:


	Three Months Ended June 30, 2018								Three Months Ended March 30, 2019
Reportable Segments	HVAC		Detection and Measurement		Engineered Solutions		Total
Reportable Segments and All Other									HVAC		Detection and Measurement		Engineered Solutions		All Other			Total

Major product lines
Cooling	$	76.9	$	—	$	—	$	76.9	$	58.9	$	—	$	—	$	—		$	58.9
Boilers, comfort heating, and ventilation	62.8		—		—		62.8		69.5		—		—		—			69.5
Underground locators and rehabilitation and inspection equipment	—		35.1		—		35.1
Underground locators and inspection and rehabilitation equipment									—		47.1		—		—			47.1
Signal monitoring, obstruction lighting, and bus fare collection systems	—		39.5		—		39.5		—		38.0		—		—			38.0
Power transformers	—		—		94.2		94.2		—		—		98.8		—			98.8
Process cooling equipment and services, and heat exchangers	—		—		56.0		56.0		—		—		39.2		3.7			42.9
South African projects(1)	—		—		14.7		14.7		—		—		—		(11.6		)	(11.6		)
	$	139.7	$	74.6	$	164.9	$	379.2	$	128.4	$	85.1	$	138.0	$	(7.9	)	$	343.6

Timing of Revenue Recognition
Revenues recognized at a point in time	$	139.7	$	72.1	$	17.1	$	228.9	$	128.4	$	79.6	$	12.5	$	1.1		$	221.6
Revenues recognized over time	—		2.5		147.8		150.3
Revenues recognized over time ⁽¹⁾									—		5.5		125.5		(9.0		)	122.0
	$	139.7	$	74.6	$	164.9	$	379.2	$	128.4	$	85.1	$	138.0	$	(7.9	)	$	343.6

___________________________

⁽¹⁾As further discussed below, during the three months ended March 30, 2019, we reduced the amount of cumulative revenue associated with the variable consideration on the large power projects in South Africa by $17.5.


	Six Months Ended June 30, 2018								Three Months Ended March 31, 2018
Reportable Segments	HVAC		Detection and Measurement		Engineered Solutions		Total
Reportable Segments and All Other									HVAC		Detection and Measurement		Engineered Solutions		All Other		Total

Major product lines
Cooling	$	136.5	$	—	$	—	$	136.5	$	59.6	$	—	$	—	$	—	$	59.6
Boilers, comfort heating, and ventilation	130.9		—		—		130.9		68.1		—		—		—		68.1
Underground locators and rehabilitation and inspection equipment	—		60.9		—		60.9
Underground locators and inspection and rehabilitation equipment									—		25.8		—		—		25.8
Signal monitoring, obstruction lighting, and bus fare collection systems	—		79.3		—		79.3		—		39.8		—		—		39.8
Power transformers	—		—		185.5		185.5		—		—		91.3		—		91.3
Process cooling equipment and services, and heat exchangers	—		—		109.0		109.0		—		—		36.5		16.5		53.0
South African projects	—		—		29.0		29.0		—		—		—		14.3		14.3
	$	267.4	$	140.2	$	323.5	$	731.1	$	127.7	$	65.6	$	127.8	$	30.8	$	351.9

Timing of Revenue Recognition
Revenues recognized at a point in time	$	267.4	$	136.1	$	31.0	$	434.5	$	127.7	$	64.0	$	12.6	$	1.3	$	205.6
Revenues recognized over time	—		4.1		292.5		296.6		—		1.6		115.2		29.5		146.3
	$	267.4	$	140.2	$	323.5	$	731.1	$	127.7	$	65.6	$	127.8	$	30.8	$	351.9

Contract Balances

Our customers are invoiced for products and services at the time of delivery or based on contractual milestones, resulting in outstanding receivables with payment terms from these customers (“Contract Accounts Receivable”). In some cases, the timing of revenue recognition, particularly for revenue recognized over time, differs from when such amounts are invoiced to customers, resulting in a contract asset (revenue recognition precedes the invoicing of the related revenue amount) or a contract liability (payment from the customer precedes recognition of the related revenue amount). Contract assets and liabilities are generally

classified as current. On a contract-by-contract basis, the contract assets and contract liabilities are reported net within our condensed consolidated balance ~~sheet.~~sheets. Our contract balances consisted of the following as of ~~June~~March 30, ~~2018~~2019 and ~~January 1,~~December 31, 2018:


Contract Balances	June 30, 2018			January 1, 2018 ⁽¹⁾			Change			March 30, 2019			December 31, 2018			Change
Contract Accounts Receivable ⁽²⁾⁽¹⁾	$	239.9		$	222.9		$	17.0		$	242.6		$	263.9		$	(21.3	)
Contract Assets	92.4			70.7			21.7			68.9			91.2			(22.3		)
Contract Liabilities - current	(78.3		)	(86.9		)	8.6			(84.0		)	(79.5		)	(4.5		)
Contract Liabilities - non-current ⁽³⁾⁽²⁾	(2.0		)	—			(2.0		)	(2.0		)	(2.1		)	0.1
Net contract balance	$	252.0		$	206.7		$	45.3		$	225.5		$	273.5		$	(48.0	)

_____________________

⁽¹⁾ ~~See Note 2 for the impact of the change at January 1, 2018 as a result of the adoption of ASC 606.~~

⁽²⁾ Included in “Accounts receivable, net” within the accompanying condensed consolidated balance ~~sheet.~~sheets.

⁽³⁾⁽²⁾ Included in “Other long-term liabilities” within the accompanying condensed consolidated balance ~~sheet.~~sheets.

The ~~$45.3 increase~~$48.0 decrease in our net contract balance from ~~January 1,~~December 31, 2018 to ~~June~~March 30, ~~2018~~2019 was due primarily to ~~revenue recognized during the period, partially offset by~~ cash payments received from customers during the period, partially offset by revenue recognized during the period.

During ~~2018,~~the first quarter of 2019, we recognized revenues of ~~$15.8 and $49.9 during the three and six months ended June 30, 2018, respectively,~~$27.4 related to our contract liabilities at ~~January 1,~~December 31, 2018.

~~Impact~~Performance Obligations

As of March 30, 2019, the aggregate amount allocated to remaining performance obligations was $81.7. We expect to recognize revenue on approximately 53% and 69% of remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

Variable Consideration

Our recorded cumulative revenue associated with the large power projects in South Africa includes amounts of variable consideration related to claims and unapproved change orders. As indicated in Note 15, during February, March, and April of 2019, we received a number of claims from the prime contractors on these projects asserting various amounts of damages. In consideration of these recent claims (including the magnitude of the claims and claims in areas that had not been previously identified by the prime contractors), and in accordance with ASC 606, ~~Adoption~~

~~Summarized below and~~we analyzed the risk of a significant revenue reversal associated with the amount of variable consideration noted above. Based on such analysis, we reduced the amount of cumulative revenue associated with the variable consideration on the ~~following page is a comparison of our condensed consolidated statements of operations and comprehensive income for~~large power projects in South Africa by $17.5 during the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019, as it was no longer probable that such amounts of revenue would not be reversed.

At March 30, 2019, our cumulative recognized revenue related to the variable consideration on the large power projects in South Africa, after the reduction noted above, totaled $19.9. We have recognized revenue associated with these claims, along with certain unapproved change orders, to the extent we have an enforceable right to the claim or change order, the amount can be reliably estimated, and ~~condensed consolidated balance sheet as~~it is probable that a significant reversal of ~~June 30, 2018 as prepared~~the cumulative revenue recognized will not occur. While we believe these amounts are recoverable under the provisions of ~~ASC 606 to~~the related contracts, actual amounts of consideration ultimately received may differ from our estimates, which could have a ~~presentation~~material impact on our consolidated results of ~~these financial statements under the prior revenue recognition guidance.~~ operations.

(5) LEASES

As previously discussed, the most significant impact of adopting ASC 606 relates to our power transformer business where, under ASC 606, revenues for power transformers are now being recorded over time versus at a point in time under the prior revenue recognition guidance. The initial transition to ASC 606 resulted in a reduction of inventory and deferred revenue (previously presented within “Accrued expenses”) and an increase to contract assets, as indicated in Note ~~2. Contract~~2, effective January 1, 2019, we adopted ASC 842 under the modified retrospective transition approach. As a result, for periods prior to 2019, leases continue to be presented based on prior guidance. Summarized below is our policy for leases under ASC 842, as well as the various other disclosures required by ASC 842.

We elected to account for lease agreements with lease and non-lease components as a single component for all leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis over the lease term.

We review if an arrangement is a lease at inception and conclude whether the contract contains an identified asset if we have the right to obtain substantially all the economic benefit and direct the use of the asset. Operating leases with ROU assets are reflected within “Other assets,” “Accrued expenses,” and ~~contract liabilities are now separately presented~~“Other long-term liabilities” within our condensed consolidated balance ~~sheet (previously~~sheet. Finance leases are included in ~~“Accounts receivable, net”~~“Property, plant and ~~“Accrued expenses”, respectively). Additionally,~~equipment,” “Current maturities of long-term debt,” and ~~as noted below,~~“Long-term debt.”

ROU assets represent our right to use an underlying asset for the ~~difference~~lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and the related liabilities are recognized at commencement date based on the present value of lease payments over the lease term. These payments include renewal options when reasonably certain to be exercised, and exclude termination options. As none of our leases provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in ~~revenue~~determining the present value of lease payments. The operating lease ROU asset also includes any prepaid lease payments and ~~earnings~~excludes lease incentives.

We have operating and finance leases for facilities, equipment, and vehicles. Our leases have remaining lease terms of one year to 10 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the lease within one year. We rent or sublease certain space within owned facilities to third parties under ~~prior revenue recognition guidance during~~operating leases, with the impact of these lease arrangements being immaterial to our condensed consolidated financial statements.



The components of lease expense for the three months ended March 30, 2019 were as follows:


Operating lease cost ⁽¹⁾	$	3.2
Variable lease cost	$	0.1

Finance lease cost:
Amortization of right-of-use assets	$	0.3
Interest on lease liabilities	—
Total finance lease cost	$	0.3

_________________________

⁽¹⁾ Includes short-term lease cost of $0.8 for the three ~~and six~~ months ended ~~June~~March 30, ~~2018 is due primarily to the timing of power transformer deliveries.~~

Three months ended June 30, 2018
Condensed consolidated statement of operations and comprehensive income Reported Effect of ASC 606 Adoption Under Prior Revenue Recognition Guidance
Revenues $ 379.2
$ 1.8
$ 381.0
Cost of products sold 281.5
2.3
283.8
Selling, general and administrative 72.6
—
72.6
Operating income 22.7
(0.5 ) 22.2
Income from continuing operations before income taxes 20.1
(0.5 ) 19.6
Income tax provision (0.4 ) 0.1
(0.3 )
Income from continuing operations 19.7
(0.4 ) 19.3
Net income $ 23.0
$ (0.4 ) $ 22.6

Comprehensive income $ 20.0
$ (0.2 ) $ 19.8

Basic income per share of common stock:
Income from continuing operations $ 0.46
$ (0.01 ) $ 0.45
Net income per share $ 0.54
$ (0.01 ) $ 0.53

Diluted income per share of common stock:
Income from continuing operations $ 0.44
$ (0.01 ) $ 0.43
Net income per share $ 0.51
$ (0.01 ) $ 0.50
2019.

Six months ended June 30, 2018
Condensed consolidated statement of operations and comprehensive income Reported Effect of ASC 606 Adoption Under Prior Revenue Recognition Guidance
Revenues $ 731.1
$ (19.6 ) $ 711.5
Cost of products sold 543.3
(16.5 ) 526.8
Selling, general and administrative 141.2
(0.6 ) 140.6
Operating income 42.0
(2.5 ) 39.5
Income from continuing operations before income taxes 36.6
(2.5 ) 34.1
Income tax provision (4.5 ) 0.6
(3.9 )
Income from continuing operations 32.1
(1.9 ) 30.2
Net income $ 35.4
$ (1.9 ) $ 33.5

Comprehensive income $ 36.8
$ (1.2 ) $ 35.6

Basic income per share of common stock:
Income from continuing operations $ 0.75
$ (0.05 ) $ 0.70
Net income per share $ 0.83
$ (0.05 ) $ 0.78

Diluted income per share of common stock:
Income from continuing operations $ 0.72
$ (0.04 ) $ 0.68
Net income per share $ 0.79
$ (0.04 ) $ 0.75



Supplemental cash flow information related to leases for the three months ended March 30, 2019 was as follows:


Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	2.4
Operating cash flows from finance leases	—
Financing cash flows from finance leases	0.3
Non-cash activities:
Operating lease right-of-use assets obtained in exchange for new lease obligations	0.9
Finance lease right-of-use assets obtained in exchange for new lease obligations	0.2

As of June 30, 2018
Condensed consolidated balance sheet Reported Effect of ASC 606 Adoption Under Prior Revenue Recognition Guidance
Accounts receivable, net $ 247.1
$ 40.2
$ 287.3
Contract assets 92.4
(92.4 ) —
Inventories, net 141.9
56.5
198.4
Other current assets 74.3
4.1
78.4
Total current assets 622.4
8.4
630.8
Deferred income taxes 29.5
1.5
31.0
TOTAL ASSETS $ 2,123.8
$ 9.9
$ 2,133.7
Contract liabilities $ 78.3
$ (78.3 ) $ —
Accrued expenses 179.8
91.9
271.7
Total current liabilities 543.9
13.6
557.5
Other long-term liabilities 849.1
1.5
850.6
Total long-term liabilities $ 1,221.3
$ 1.5
$ 1,222.8

Retained deficit $ (707.9 ) $ (5.9 ) $ (713.8 )
Accumulated other comprehensive income 251.5
0.7
252.2
Total equity 358.6
(5.2 ) 353.4
TOTAL LIABILITIES AND EQUITY $ 2,123.8
$ 9.9
$ 2,133.7



Supplemental balance sheet information related to leases as of March 30, 2019 was as follows:
Operating Leases:			Affected Line Item in the Condensed Consolidated Balance Sheet
Operating lease ROU assets	$	26.3	Other assets

Operating lease current liabilities	$	8.1	Accrued expenses
Operating lease non-current liabilities	20.0		Other long-term liabilities
Total operating lease liabilities	$	28.1


Finance Leases:
Finance Lease Assets	$	2.4	Property, plant and equipment, net

Finance lease current liabilities	$	1.0	Current maturities of long-term debt
Finance lease non-current liabilities	1.5		Long-term debt
Total finance lease liabilities	$	2.5

~~Condensed~~



	The weighted average remaining lease terms (years) of our leases as of March 30, 2019 were as follows:


	Operating Leases	5.2
	Finance Leases	2.9

The discount rate utilized to determine the present value of lease payments over the lease term is our incremental borrowing rate based on the information available at commencement date. In developing the incremental borrowing rate, we considered the interest rate that reflects a term similar to the underlying lease term on a fully collateralized basis. We concluded to apply the incremental borrowing rate at a consolidated ~~statement of cash flows~~ ~~- The impact of ASC 606 on our condensed consolidated statement of cash flows for the six months ended June 30, 2018 is not presented,~~portfolio level using a five year term, as the ~~only impact to~~results did not materially differ upon further stratification. The weighted-average discount for both our operating ~~cash flows related to changes to net income~~ and ~~certain working capital amounts (no change to total operating cash flows) and there is no impact to investing or financing cash flows.~~finance leases was 3.8% at March 30, 2019.



The future minimum payments under our operating and finance leases were as follows as of March 30, 2019:
	Operating Leases		Finance Leases		Total

Next 12 months	$	9.0	$	1.1	$	10.1
12 to 24 months	6.9		0.8		7.7
24 to 36 months	4.5		0.5		5.0
36 to 48 months	3.9		0.2		4.1
48 to 60 months	3.7		0.1		3.8
Thereafter	3.3		—		3.3
Total lease payments	31.3		2.7		34.0
Less imputed interest	3.2		0.2		3.4
Total	$	28.1	$	2.5	$	30.6

As a result of adopting ASC 842 on January 1, 2019, we are required to present the future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year that were previously disclosed in our 2018 Annual Report on Form 10-K and accounted for under the previous lease guidance. Our operating lease commitments as of December 31, 2018 were as follows:



2019	$	9.1
2020	7.3
2021	4.5
2022	3.8
2023	3.4
Thereafter	3.1
Total minimum payments	$	31.2

~~(5)~~(6) INFORMATION ON REPORTABLE AND OTHER OPERATING SEGMENTS

We are a global supplier of highly specialized, engineered solutions with operations in 1417 countries and sales in over 100 countries around the world.

As indicated in Note 1, our DBT and Heat Transfer operating segments are now being reported in an “All Other” category for segment reporting purposes. We have aggregated our other operating segments into the following three reportable segments: HVAC, Detection and Measurement, and Engineered Solutions. 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. Operating income or loss for each of our operating segments is determined before considering impairment and special charges, long-term incentive compensation and other indirect corporate expenses. This is consistent with the way our chief operating decision maker evaluates the results of each segment.

HVAC Reportable Segment

Our HVAC reportable segment engineers, designs, manufactures, installs and services cooling products for the HVAC and industrial 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.

Detection and Measurement Reportable Segment

Our Detection and Measurement reportable segment engineers, designs, manufactures and installs underground pipe and cable locators, ~~rehabilitation~~inspection and ~~inspection~~rehabilitation equipment, bus fare collection systems, ~~signal monitoring,~~communication technologies, and obstruction lighting. The primary distribution channels for the segment’s products are direct to customers and third-party distributors. The segment serves a global customer base, with a strong presence in North America, Europe, 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.

All Other

Our “All Other” group of operating segments engineer, design, manufacture, install and service equipment, including heat exchangers, primarily for the power generation market. The primary distribution channels for the group’s products are direct to customers and third-party representatives. These operating segments have a presence in North America and South Africa.

Corporate Expense

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

Financial data for our reportable segments and other operating segments for the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017~~March 31, 2018 are presented below:

Three months ended Six months ended
June 30,
2018 July 1,
2017 June 30,
2018 July 1,
2017
Revenues:

HVAC segment $ 139.7
$ 120.3
$ 267.4
$ 230.4
Detection and Measurement segment 74.6
64.5
140.2
118.1
Engineered Solutions segment ⁽¹⁾
164.9
164.9
323.5
341.8
Consolidated revenues $ 379.2
$ 349.7
$ 731.1
$ 690.3

Income (loss):

HVAC segment $ 18.5
$ 15.4
$ 37.1
$ 31.9
Detection and Measurement segment 16.5
17.3
32.2
28.5
Engineered Solutions segment ⁽¹⁾
6.0
(12.0 ) 8.7
(5.4 )
Total income for segments 41.0
20.7
78.0
55.0

Corporate expense (12.5 ) (11.3 ) (24.3 ) (22.7 )
Long-term incentive compensation expense (4.2 ) (3.6 ) (8.1 ) (6.8 )
Pension and postretirement expense —
(0.1 ) —
(0.2 )
Special charges, net (1.6 ) (0.5 ) (3.6 ) (1.0 )
Consolidated operating income $ 22.7
$ 5.2
$ 42.0
$ 24.3

~~_________________________~~



	Three months ended
	March 30, 2019			March 31, 2018
Revenues:
HVAC reportable segment	$	128.4		$	127.7
Detection and Measurement reportable segment	85.1			65.6
Engineered Solutions reportable segment	138.0			127.8
All Other ⁽¹⁾	(7.9		)	30.8
Consolidated revenues	$	343.6		$	351.9

Income (loss):
HVAC reportable segment	$	18.4		$	18.6
Detection and Measurement reportable segment	17.0			15.7
Engineered Solutions reportable segment	8.0			6.8
All Other ⁽¹⁾	(22.6		)	(4.1		)
Total income for segments	20.8			37.0

Corporate expense	(12.4		)	(11.8		)
Long-term incentive compensation expense	(3.5		)	(3.9		)
Special charges, net	(0.1		)	(2.0		)
Other operating expenses	(1.8		)	—
Consolidated operating income	$	3.0		$	19.3

_____________________

⁽¹⁾As ~~further discussed~~indicated in Note ~~14,~~4, during the ~~second quarter~~three months ended March 30, 2019, we reduced the amount of ~~2017, we made revisions to our expected revenues and profits~~cumulative revenue associated with the variable consideration on ~~our~~the large power projects in South ~~Africa. As a result of these revisions, we reduced revenue and segment income~~Africa by ~~$13.5 and $22.9, respectively, for the three and six months ended July 1, 2017.~~$17.5.

~~(6)~~(7) SPECIAL CHARGES, NET

Special charges, net, for the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017~~March 31, 2018 are described in more detail below:

Three months ended Six months ended
June 30,
2018 July 1,
2017 June 30,
2018 July 1,
2017
HVAC segment $ —
$ 0.3
$ —
$ 0.4
Detection and Measurement segment —
—
—
0.3
Engineered Solutions segment 1.6
0.2
3.2
0.2
Corporate —
—
0.4
0.1
Total $ 1.6
$ 0.5
$ 3.6
$ 1.0



	Three months ended
	March 30, 2019		March 31, 2018
HVAC reportable segment	$	0.1	$	—
Detection and Measurement reportable segment	—		—
Engineered Solutions reportable segment	—		—
All Other	—		1.6
Corporate	—		0.4
Total	$	0.1	$	2.0

HVAC Segment — Charges for the three ~~and six~~ months ended ~~July 1, 2017~~March 30, 2019 related primarily to severance costs associated with a restructuring action at the segment’s Cooling ~~Americas~~EMEA business.

~~Detection and Measurement Segment~~All Other — Charges for the six months ended July 1, 2017 related to severance costs associated with a restructuring action at the segment’s communications technologies business during the first quarter of 2017.

~~Engineered Solutions Segment~~— Charges for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 related to severance costs associated with a restructuring action at ~~the segment’s~~DBT, our South African business and severance costs and asset impairment expenses related to the planned wind-down of our Heat Transfer business. Charges for the three and six months ended July 1, 2017 related primarily to severance costs associated with a restructuring action at the segment’s process cooling business.

Corporate — Charges for the ~~six~~three months ended ~~June 30,~~March 31, 2018 related to severance costs incurred in connection with the rationalization of certain administrative ~~functions, while~~functions.

No significant charges ~~for the six months ended July 1, 2017 related to severance costs incurred in connection with the sale of Balcke Dürr.~~

~~Expected charges still~~are expected to be incurred under actions approved as of ~~June~~March 30, ~~2018 are approximately $1.3 and relate primarily to the planned wind-down of our Heat Transfer business.~~2019.

The following is an analysis of our restructuring liabilities for the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017:~~March 31, 2018:

Six months ended
June 30,
2018 July 1,
2017
Balance at beginning of year $ 0.6
$ 0.9
Special charges ⁽¹⁾
3.0
1.0
Utilization — cash (0.9 ) (1.0 )
Balance at end of period $ 2.7
$ 0.9

~~____________________~~

⁽¹⁾



	Three months ended
	March 30, 2019			March 31, 2018
Balance at beginning of year	$	2.7		$	0.6
Special charges	0.1			2.0
Utilization — cash	(1.0		)	(0.4		)
Balance at end of period	$	1.8		$	2.2

~~For the six months ended June 30, 2018, excludes $0.6 of non-cash charges that impacted “Special charges” but not the restructuring liabilities.~~


~~(7)~~(8)	INVENTORIES, NET

Inventories at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017~~2018 comprised the following:

June 30,
2018 December 31,
2017
Finished goods $ 47.3
$ 33.0
Work in process 23.0
56.0
Raw materials and purchased parts 83.5
66.4
Total FIFO cost 153.8
155.4
Excess of FIFO cost over LIFO inventory value (11.9 ) (12.4 )
Total inventories, net $ 141.9
$ 143.0

As indicated in Note 2, in connection with the adoption of ASC 606, effective January 1, 2018, inventories were reduced by $40.2. In connection with the Cues transaction, we acquired $33.1 of inventories.



	March 30, 2019			December 31, 2018
Finished goods	$	60.6		$	49.8
Work in process	20.0			16.2
Raw materials and purchased parts	83.5			74.9
Total FIFO cost	164.1			140.9
Excess of FIFO cost over LIFO inventory value	(12.6		)	(12.1		)
Total inventories, net	$	151.5		$	128.8

Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated net realizable values. Certain inventories are valued using the last-in, first-out (“LIFO”) method. These inventories were approximately 44% and ~~56%~~45% of total inventory at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. Other inventories are valued using the first-in, first-out (“FIFO”) method.

~~(8)~~

(9) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill ~~by reportable segment,~~ for the ~~six~~three months ended ~~June~~March 30, ~~2018,~~2019, were as follows:


	December 31, 2017			Goodwill Resulting from Business Combinations ⁽¹⁾		Impairments		Foreign Currency Translation			June 30, 2018			December 31, 2018			Goodwill Resulting from Business Combinations ⁽¹⁾		Impairments		Foreign Currency Translation			March 30, 2019
HVAC segment
HVAC reportable segment
Gross goodwill	$	263.7		$	—	$	—	$	(1.1	)	$	262.6		$	261.8		$	—	$	—	$	(0.2	)	$	261.6
Accumulated impairments	(144.7		)	—		—		0.1			(144.6		)	(144.4		)	—		—		(0.2		)	(144.6		)
Goodwill	119.0			—		—		(1.0		)	118.0			117.4			—		—		(0.4		)	117.0

Detection and Measurement segment
Detection and Measurement reportable segment
Gross goodwill	216.6			48.4		—		(0.6		)	264.4			265.0			35.7		—		1.5			302.2
Accumulated impairments	(136.0		)	—		—		0.6			(135.4		)	(134.3		)	—		—		(1.2		)	(135.5		)
Goodwill	80.6			48.4		—		—			129.0			130.7			35.7		—		0.3			166.7

Engineered Solutions segment
Engineered Solutions reportable segment
Gross goodwill														335.3			—		—		(0.6		)	334.7
Accumulated impairments														(189.0		)	—		—		0.6			(188.4		)
Goodwill														146.3			—		—		—			146.3

All Other
Gross goodwill	358.3			—		—		(1.3		)	357.0			20.8			—		—		—			20.8
Accumulated impairments	(212.0		)	—		—		1.3			(210.7		)	(20.8		)	—		—		—			(20.8		)
Goodwill	146.3			—		—		—			146.3			—			—		—		—			—

Total
Gross goodwill	838.6			48.4		—		(3.0		)	884.0			882.9			35.7		—		0.7			919.3
Accumulated impairments	(492.7		)	—		—		2.0			(490.7		)	(488.5		)	—		—		(0.8		)	(489.3		)
Goodwill	$	345.9		$	48.4	$	—	$	(1.0	)	$	393.3		$	394.4		$	35.7	$	—	$	(0.1	)	$	430.0

___________________________

⁽¹⁾

Reflects ~~amounts~~goodwill acquired in connection with the ~~Schonstedt~~Sabik acquisition of $36.5, partially offset by a reduction in Cues’ goodwill during the period of $0.8 resulting from revisions to the valuation of certain income tax accounts. As indicated in Note 3, the acquired assets, including goodwill, and liabilities assumed in the Sabik and Cues acquisitions have been recorded at estimates of ~~$1.8~~fair value and ~~$46.6, respectively.~~are subject to change upon completion of acquisition accounting.

Other Intangibles, Net

Identifiable intangible assets at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017~~2018 comprised the following:


	June 30, 2018							December 31, 2017							March 30, 2019							December 31, 2018
	Gross 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:⁽¹⁾
Customer relationships	$	44.8	$	(1.7	)	$	43.1	$	1.4	$	(1.4	)	$	—	$	61.1	$	(4.7	)	$	56.4	$	44.8	$	(3.5	)	$	41.3
Technology	17.1		(0.5		)	16.6		2.1		(0.5		)	1.6		26.2		(1.4		)	24.8		17.1		(1.1		)	16.0
Patents	4.5		(4.5		)	—		4.5		(4.5		)	—		4.5		(4.5		)	—		4.5		(4.5		)	—
Other	11.3		(7.1		)	4.2		11.7		(7.9		)	3.8		11.8		(8.0		)	3.8		11.3		(7.9		)	3.4
	77.7		(13.8		)	63.9		19.7		(14.3		)	5.4		103.6		(18.6		)	85.0		77.7		(17.0		)	60.7
Trademarks with indefinite lives⁽²⁾	138.0		—			138.0		112.2		—			112.2		146.9		—			146.9		137.7		—			137.7
Total	$	215.7	$	(13.8	)	$	201.9	$	131.9	$	(14.3	)	$	117.6	$	250.5	$	(18.6	)	$	231.9	$	215.4	$	(17.0	)	$	198.4

___________________________

⁽¹⁾

The identifiable intangible assets associated with the ~~Schonstedt acquisition consist of customer relationships and technology of $0.8 and $8.3, respectively. The identifiable intangible assets associated with the Cues~~Sabik acquisition consist of customer backlog, customer relationships, definite lived trademarks, and technology of ~~$0.8, $42.6,~~$0.4, $16.3, $0.2 and ~~$8.5,~~$9.1, respectively. ~~Additionally, the technology associated with Heat Transfer of $1.5 was sold during the second quarter of 2018 in connection with the planned wind-down of the business.~~


⁽²⁾	Changes during the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 related primarily to the acquisition of ~~the Schonstedt and Cues~~Sabik trademarks of ~~$1.8 and $27.6, respectively, and the sale of the trademarks associated with Heat Transfer of $3.3 in connection with the planned wind-down of the business.~~ $9.0.

In connection with the acquisition of ~~Schonstedt and Cues,~~Sabik, which has determinable lived intangibles as noted above, we updated our estimated annual amortization expense related to intangible assets to ~~$4.2~~approximately $7.7 for the full year ~~2018,~~2019 and ~~$5.3~~ for each of the five years thereafter.

At ~~June~~March 30, ~~2018,~~2019, the net carrying value of intangible assets with determinable lives consisted of ~~$3.6~~$3.2 in the HVAC reportable segment and ~~$60.3~~$81.8 in the Detection and Measurement reportable segment. At ~~June~~March 30, ~~2018,~~2019, trademarks with indefinite lives consisted of ~~$89.4~~$89.3 in the HVAC reportable segment, ~~$39.5~~$48.5 in the Detection and Measurement reportable segment, and $9.1 in the Engineered Solutions reportable segment.

We perform our annual goodwill impairment testing during the fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of the end of the third quarter. In addition, we test goodwill for impairment on a more frequent basis if there are indications of potential impairment. 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.

We perform our annual trademarks impairment testing during the fourth quarter, or on a more frequent basis, if there are indications of potential impairment. The fair values of our trademarks are determined by 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 ~~16)~~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.

~~(9)~~(10)�� WARRANTY

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


	Six months ended						Three months ended
	June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Balance at beginning of year	$	33.9		$	35.8		$	34.0		$	33.9
Acquisitions	1.3			—			0.1			0.2
Impact of initial adoption of ASC 606	0.4			—			—			0.4
Provisions	4.3			5.2			2.9			2.0
Usage	(6.7		)	(8.1		)	(3.8		)	(3.4		)
Currency translation adjustment	—			0.2			—			0.1
Balance at end of period	33.2			33.1			33.2			33.2
Less: Current portion of warranty	13.6			12.7			11.0			13.3
Non-current portion of warranty	$	19.6		$	20.4		$	22.2		$	19.9

~~(10)~~(11) EMPLOYEE BENEFIT PLANS

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

Domestic Pension Plans


	Three months ended						Six months ended						Three months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Service cost	$	—		$	0.1		$	—		$	0.2		$	—		$	—
Interest cost	3.0			3.3			6.1			6.6			3.3			3.1
Expected return on plan assets	(2.6		)	(2.5		)	(5.2		)	(5.0		)	(2.5		)	(2.6		)
Net periodic pension benefit expense	$	0.4		$	0.9		$	0.9		$	1.8		$	0.8		$	0.5

Foreign Pension Plans


	Three months ended						Six months ended						Three months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Service cost	$	—		$	—		$	—		$	—		$	—		$	—
Interest cost	1.2			1.2			2.4			2.4			1.2			1.2
Expected return on plan assets	(1.9		)	(1.6		)	(3.8		)	(3.1		)	(1.6		)	(1.9		)
Net periodic pension benefit income	$	(0.7	)	$	(0.4	)	$	(1.4	)	$	(0.7	)	$	(0.4	)	$	(0.7	)

Postretirement Plans


	Three months ended						Six months ended						Three months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Service cost	$	—		$	—		$	—		$	—		$	—		$	—
Interest cost	0.6			0.9			1.1			1.9			0.6			0.5
Amortization of unrecognized prior service credits	(1.0		)	(0.2		)	(2.0		)	(0.4		)	(1.0		)	(1.0		)
Net periodic postretirement benefit (income) expense	$	(0.4	)	$	0.7		$	(0.9	)	$	1.5
Net periodic postretirement benefit income													$	(0.4	)	$	(0.5	)


~~(11)~~(12)	INDEBTEDNESS

The following summarizes our debt activity (both current and non-current) for the ~~six~~three months ended ~~June~~March 30, ~~2018:~~2019:


	December 31, 2017		Borrowings		Repayments			Other⁽⁴⁾		June 30, 2018		December 31, 2018		Borrowings		Repayments			Other⁽⁴⁾		March 30, 2019
Revolving loans	$	—	$	129.0	$	(33.0	)	$	—	$	96.0	$	6.4	$	89.3	$	(60.1	)	$	—	$	35.6
Term loan⁽¹⁾	347.7		—		—			0.2		347.9		348.1		—		(4.4		)	0.2		343.9
Trade receivables financing arrangement⁽²⁾	—		32.0		(10.0		)	—		22.0		23.0		40.0		(29.0		)	—		34.0
Other indebtedness⁽³⁾	9.1		13.3		(14.4		)	—		8.0		4.3		3.0		(0.2		)	0.9		8.0
Total debt	356.8		$	174.3	$	(57.4	)	$	0.2	473.9		381.8		$	132.3	$	(93.7	)	$	1.1	421.5
Less: short-term debt	7.0									124.1		31.9									75.0
Less: current maturities of long-term debt	0.5									9.2		18.0									14.2
Total long-term debt	$	349.3								$	340.6	$	331.9								$	332.3

___________________________


⁽¹⁾	The term loan is repayable in quarterly installments of 1.25% of the initial loan amount of $350.0, beginning in the first quarter of 2019, with the remaining balance payable in full on December 19, 2022. Balances are net of unamortized debt issuance costs of ~~$2.1~~$1.7 and ~~$2.3~~$1.9 at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.


⁽²⁾	Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. At ~~June~~March 30, ~~2018,~~2019, we had ~~$21.9~~$5.3 of available borrowing capacity under this facility after giving effect to outstanding borrowings of ~~$22.0.~~$34.0. 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 ~~$3.1~~$2.5 and ~~$2.8,~~$2.5, capital lease obligations of ~~$1.9~~$2.5 and ~~$2.1,~~$1.8, and borrowings under a line of credit in China ~~totaling~~of $3.0 and ~~$4.1~~$0.0, at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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

A detailed description of our senior credit facilities is included in our ~~2017~~2018 Annual Report on Form 10-K.

At ~~June~~March 30, ~~2018,~~2019, we had ~~$32.4~~$30.7 and ~~$147.9~~$116.0 of outstanding letters of credit issued under our revolving credit and our foreign credit instrument facilities of our senior credit agreement, respectively.

The weighted-average interest rate of outstanding borrowings under our senior credit agreement was approximately ~~3.55%~~4.0% at ~~June~~March 30, ~~2018.~~2019.

At ~~June~~March 30, ~~2018,~~2019, we were in compliance with all covenants of our senior credit agreement.


~~(12)~~(13)	DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swaps

~~During the second quarter of 2016,~~On March 8, 2018, we entered into an interest rate swap agreement to hedge the interest rate risk on our then existing variable rate term loan. As a result of amending our senior credit agreement on December 19, 2017, these swaps (“Old Swaps”) no longer qualified for hedge accounting. On March 8, 2018, we extinguished the Old Swaps and entered into a new interest rate swap agreement (the ~~“New Swaps”~~“Swaps”) to hedge the interest rate risk on the variable interest rate borrowings under our senior credit agreement. The ~~New~~ Swaps, which we have designated and are accounting for as cash flow hedges, ~~have~~had an initial notional amount of $260.0 and maturities through December 2021 and effectively convert a portion of the borrowings under our senior credit agreement to a fixed rate of 2.535%, plus the applicable margin. As of ~~June~~March 30, ~~2018,~~2019, the aggregate notional amounts of the ~~New~~ Swaps was ~~$260.0~~$256.8. As of March 30, 2019 and December 31, 2018, the fair value of the Swaps were $1.0 (long-term liability) and $0.2 (long-term asset), respectively. The unrealized gain (loss), net of tax, recorded in AOCI was ~~$0.3. In addition, as of June~~$(0.7) and $0.2 at March 30, 2019 and December 31, 2018, ~~we recorded a long-term asset of $0.4 to recognize the fair value of the New Swaps. Changes in fair value for the New~~respectively. We reclassify AOCI associated with our Swaps ~~are reclassified~~ into earnings as a component of interest expense when the forecasted transaction impacts earnings.

Currency Forward Contracts and Currency Forward Embedded Derivatives

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 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 ~~$12.9~~$20.2 and ~~$9.0~~$14.4 outstanding as of ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, with all of the ~~$12.9~~$20.2 scheduled to mature within one year. We also had FX embedded derivatives with an aggregate notional amount of ~~$0.6 and $1.1~~$0.4 at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017, respectively,~~2018, with all of the ~~$0.6~~$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 ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017.~~2018.

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 ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017.~~2018.

Commodity Contracts

From time to time, we enter into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials. At ~~both June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the outstanding notional amount of commodity contracts was ~~3.6~~3.2 and 3.9 pounds of ~~copper.~~copper, respectively. We designate and account for these contracts as cash flow hedges and, to the extent these commodity contracts are effective in offsetting the variability of the forecasted purchases, the change in fair value is included in AOCI. We reclassify AOCI associated with our commodity contracts to cost of products sold when the forecasted transaction impacts earnings. As of ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the fair value of these contracts were ~~$0.6~~$0.3 (current ~~liability)~~asset) and ~~$1.1~~$1.0 (current ~~asset)~~liability), respectively. The unrealized gains (losses), net of taxes, recorded in AOCI were ~~$(0.5)~~$0.2 and ~~$0.8~~$(0.8) as of ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. We anticipate reclassifying the unrealized ~~losses~~gains as of ~~June~~March 30, ~~2018~~2019 to earnings over the next 12 months.


~~(13)~~	~~EQUITY AND LONG-TERM INCENTIVE COMPENSATION~~

(14) EQUITY AND LONG-TERM INCENTIVE COMPENSATION

Income Per Share

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


	Three months ended		Six months ended		Three months ended
	June 30, 2018	July 1, 2017	June 30, 2018	July 1, 2017	March 30, 2019	March 31, 2018
Weighted-average number of common shares used in basic income per share	42.988	42.388	42.881	42.249	43.618	42.772
Dilutive securities — Employee stock options, restricted stock shares and restricted stock units	1.735	—	1.664	1.373
Dilutive securities — Employee stock options and restricted stock units					1.262	1.581
Weighted-average number of common shares and dilutive securities used in diluted income per share	44.723	42.388	44.545	43.622	44.880	44.353

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 0.476 and 1.037,0.864, respectively, for the three months ended July 1, 2017, and 0.435 and 1.010, respectively, for the six months ended July 1, 2017. In addition, for the three months ended July 1, 2017, 0.804 and 0.597 of restricted stock shares/units and stock options, respectively, were excluded from the related computation of diluted income per share due to the net loss from continuing operations during the period.March 30, 2018.

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 ~~2018~~2019 is included in our ~~2017~~2018 Annual Report on Form 10-K.

Awards granted on February ~~22, 2018~~21, 2019 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’s and ~~long-term cash awards.~~PSU’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~~

Non-employee directors receive annual long-term incentive awards ~~are eligible to vest~~ at the ~~end~~time 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 15, 2018, we granted 0.023 RSU’s to our non-employee directors, which vest in their entirety immediately prior to the~~ annual meeting of stockholders, inwith the 2019 meeting scheduled for May 9, 2019.

Compensation expense within income from continuing operations related to long-term incentive awards totaled ~~$4.2~~$3.5 and ~~$3.6~~$3.9 for the three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017, respectively and $8.1 and $6.8 for the six months ended June 30,~~March 31, 2018, ~~and July 1, 2017,~~ respectively. The related tax benefit was ~~$1.1~~$0.9 and ~~$1.4~~$1.0 for the three months ended ~~June~~March 30, 2019 and March 31, 2018, respectively.

PSU’s and ~~July 1, 2017, respectively~~RSU’s

We use the Monte Carlo simulation model valuation technique to determine the fair value of our restricted stock units that contain a market condition (i.e., the PSU’s). The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and ~~$2.1~~calculates the fair value of each PSU.

The following table summarizes the PSU and ~~$2.6 for the six months ended June~~RSU activity from December 31, 2018 through March 30, ~~2018~~2019:



	Unvested PSU’s and RSU’s,		Weighted-Average Grant-Date Fair Value Per Share
Outstanding at December 31, 2018	0.652		$	24.65
Granted	0.394		40.47
Vested	(0.430	)	18.26
Forfeited	(0.002	)	35.19
Outstanding at March 30, 2019	0.614		36.15

As of March 30, 2019, there was $16.3 of unrecognized compensation cost related to PSU’s and ~~July 1, 2017.~~RSU’s. We expect this cost to be recognized over a weighted-average period of 1.8 years.

Stock Options

On February 21, 2019, we granted 0.186 stock options, all of which were outstanding (but not exercisable) as of March 30, 2019. The exercise price per share of these options is $36.51 and the maximum contractual term of these options is 10 years.

The fair value per share of the stock options granted on February 21, 2019 was $13.31. The fair value of each option grant was estimated using the Black-Scholes option-pricing model with the following assumptions:



Annual expected stock price volatility	32.70	%
Annual expected dividend yield	—	%
Risk-free interest rate	2.53	%
Expected life of stock option (in years)	6.0

Annual expected stock price volatility is based on a weighted average of SPX’s stock volatility since the spin-off of SPX FLOW, Inc. on September 26, 2015, and an average of the most recent six-year historical volatility of a peer company group. There is no annual expected dividend yield as we discontinued dividend payments in 2015 and do not expect to pay dividends for the foreseeable future. The average risk-free interest rate is based on the five-year and seven-year treasury constant maturity rates. The expected option life is based on a three-year pro-rata vesting schedule and represents the period of time that awards are expected to be outstanding.

As of March 30, 2019, there was $3.3 of unrecognized compensation cost related to stock options. We expect this cost to be recognized over a weighted-average period of 1.7 years.

Accumulated Other Comprehensive Income

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended ~~June~~March 30, ~~2018~~2019 were as follows:


	Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Qualifying Cash Flow Hedges⁽¹⁾			Pension and Postretirement Liability Adjustment⁽²⁾			Total			Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges⁽¹⁾			Pension and Postretirement Liability Adjustment⁽²⁾			Total
Balance at beginning of period	$	231.2		$	0.3		$	23.0		$	254.5		$	225.8	$	(0.6	)	$	19.7		$	244.9
Other comprehensive loss before reclassifications	(1.8		)	(0.5		)	—			(2.3		)	—		(0.1		)	—			(0.1		)
Amounts reclassified from accumulated other comprehensive income	—			—			(0.7		)	(0.7		)
Current-period other comprehensive loss	(1.8		)	(0.5		)	(0.7		)	(3.0		)
Amounts reclassified from accumulated other comprehensive income (loss)													2.4		0.2			(0.8		)	1.8
Current-period other comprehensive income (loss)													2.4		0.1			(0.8		)	1.7
Balance at end of period	$	229.4		$	(0.2	)	$	22.3		$	251.5		$	228.2	$	(0.5	)	$	18.9		$	246.6

__________________________


⁽¹⁾	Net of tax ~~(provision)~~ benefit of $0.1 and ~~$(0.1)~~$0.2 as of ~~June~~March 30, ~~2018~~2019 and ~~March~~December 31, 2018, respectively.


⁽²⁾	Net of tax provision of ~~$7.3~~$6.4 and ~~$7.6~~$6.6 as of ~~June~~March 30, ~~2018~~2019 and ~~March~~December 31, 2018. The balances as of ~~June~~March 30, ~~2018~~2019 and ~~March~~December 31, 2018 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the ~~six~~three months ended ~~June 30,~~March 31, 2018 were as follows:


	Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Qualifying Cash Flow Hedges⁽¹⁾			Pension and Postretirement Liability Adjustment⁽²⁾			Total			Foreign Currency Translation Adjustment		Net Unrealized Gains on Qualifying Cash Flow Hedges⁽¹⁾			Pension and Postretirement Liability Adjustment⁽²⁾			Total
Balance at beginning of period	$	230.2		$	0.8		$	19.1		$	250.1		$	230.2	$	0.8		$	19.1		$	250.1
Other comprehensive loss before reclassifications	(0.8		)	(0.8		)	—			(1.6		)
Other comprehensive income (loss) before reclassifications													1.0		(0.3		)	—			0.7
Amounts reclassified from accumulated other comprehensive income:
Impact of initial adoption of ASC 606 - See Note 2	—			(0.3		)	—			(0.3		)			(0.3		)	—			(0.3		)
Stranded income tax effects resulting from tax reform - See Note 2	—			0.2			4.6			4.8			—		0.2			4.6			4.8
Commodity contracts and amortization of prior service credits - See below	—			(0.1		)	(1.4		)	(1.5		)	—		(0.1		)	(0.7		)	(0.8		)
Current-period other comprehensive income (loss)	(0.8		)	(1.0		)	3.2			1.4			1.0		(0.5		)	3.9			4.4
Balance at end of period	$	229.4		$	(0.2	)	$	22.3		$	251.5		$	231.2	$	0.3		$	23.0		$	254.5

__________________________


⁽¹⁾	Net of tax ~~(provision) benefit~~provision of $0.1 and ~~$(0.5)~~$0.5 as of ~~June 30,~~March 31, 2018 and December 31, 2017, respectively.


⁽²⁾	Net of tax provision of ~~$7.3~~$7.6 and $12.5 as of ~~June 30,~~March 31, 2018 and December 31, 2017. The balances as of ~~June 30,~~March 31, 2018 and December 31, 2017 ~~include unamortized prior service credits.~~

~~The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended July 1, 2017 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 $ 228.2
$ 2.2
$ 3.7
$ 234.1
Other comprehensive income (loss) before reclassifications 1.1
(0.6 ) —
0.5
Amounts reclassified from accumulated other comprehensive income —
(0.3 ) (0.1 ) (0.4 )
Current-period other comprehensive income (loss) 1.1
(0.9 ) (0.1 ) 0.1
Balance at end of period $ 229.3
$ 1.3
$ 3.6
$ 234.2

~~___________________________~~


⁽¹⁾	~~Net of tax provision of $0.8 and $1.3 as of July 1, 2017 and April 1, 2017, respectively.~~


⁽²⁾	~~Net of tax provision of $2.6 and $2.7 as of July 1, 2017 and April 1, 2017. The balances as of July 1, 2017 and April 1, 2017 include unamortized prior service credits.~~

~~The changes in the components of accumulated other comprehensive income, net of tax, for the six months ended July 1, 2017 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 $ 229.7
$ 1.5
$ 3.9
$ 235.1
Other comprehensive income (loss) before reclassifications (0.4 ) 0.5
—
0.1
Amounts reclassified from accumulated other comprehensive income —
(0.7 ) (0.3 ) (1.0 )
Current-period other comprehensive income (loss) (0.4 ) (0.2 ) (0.3 ) (0.9 )
Balance at end of period $ 229.3
$ 1.3
$ 3.6
$ 234.2

~~___________________________~~


⁽¹⁾	~~Net of tax provision of $0.8 and $0.9 as of July 1, 2017 and December 31, 2016, respectively.~~


⁽²⁾	~~Net of tax provision of $2.6 and $2.7 as of July 1, 2017 and December 31, 2016. The balances as of July 1, 2017 and December 31, 2016~~ include unamortized prior service credits.

The following summarizes amounts reclassified from each component of accumulated comprehensive income for the three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017:~~March 31, 2018:

Amount Reclassified from AOCI
Three months ended
June 30, 2018 July 1, 2017
Affected Line Item in the Condensed
Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:

Commodity contracts $ —
$ (0.7 ) Cost of products sold
Swaps —
0.2
Interest expense
Pre-tax —
(0.5 )
Income taxes —
0.2

$ —
$ (0.3 )

Gains on pension and postretirement items:

Amortization of unrecognized prior service credits - Pre-tax $ (1.0 ) $ (0.2 ) Other income (expense), net
Income taxes 0.3
0.1

$ (0.7 ) $ (0.1 )

~~The following summarizes amounts reclassified from each component of accumulated comprehensive income for the six months ended June 30, 2018 and July 1, 2017:~~


	Amount Reclassified from AOCI							Amount Reclassified from AOCI
	Six months ended							Three months ended
	June 30, 2018			July 1, 2017			Affected Line Item in the Condensed Consolidated Statements of Operations	March 30, 2019			March 31, 2018			Affected Line Item in the Condensed Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:
Commodity contracts	$	(0.2	)	$	(1.4	)	Cost of products sold	$	0.3		$	(0.2	)	Cost of products sold
Swaps	—			0.3			Interest expense	—			—			Interest expense
Pre-tax	(0.2		)	(1.1		)		0.3			(0.2		)
Income taxes	0.1			0.4				(0.1		)	0.1
	$	(0.1	)	$	(0.7	)		$	0.2		$	(0.1	)

Gains on pension and postretirement items:
Amortization of unrecognized prior service credits - Pre-tax	$	(2.0	)	$	(0.4	)	Other income (expense), net	$	(1.0	)	$	(1.0	)	Other income (expense), net
Income taxes	0.6			0.1				0.2			0.3
	$	(1.4	)	$	(0.3	)		$	(0.8	)	$	(0.7	)

Common Stock in Treasury

During the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017,~~March 31, 2018, “Common stock in treasury” was decreased by the settlement of restricted stock units issued from treasury stock of $15.0 and $12.1, ~~and $16.0, respectively.~~respectively, with the offset recorded to “Paid in capital.”

Changes in Equity

A summary of the changes in equity for the three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017 is provided below:~~

Three months ended
June 30, 2018 July 1, 2017
Equity, beginning of period $ 333.2
$ 211.0
Net income (loss) 23.0
(9.0 )
Net unrealized losses on qualifying cash flow hedges, net of tax benefit of $0.2 and $0.5 for the three months ended June 30, 2018 and July 1, 2017, respectively (0.5 ) (0.9 )
Pension and postretirement liability adjustment, net of tax benefit of $0.3 and $0.1 for the three months ended June 30, 2018 and July 1, 2017, respectively (0.7 ) (0.1 )
Foreign currency translation adjustments (1.8 ) 1.1
Total comprehensive income (loss), net 20.0
(8.9 )
Incentive plan activity 2.3
3.6
Long-term incentive compensation expense 3.1
3.0
Equity, end of period $ 358.6
$ 208.7

~~A summary of the changes in equity for the six months ended June 30,~~March 31, 2018 ~~and July 1, 2017~~ is provided below:


	Six months ended						Three months ended
	June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Equity, beginning of period	$	314.7		$	191.6		$	414.9		$	314.7
Net income	35.4			8.4
Net unrealized losses on qualifying cash flow hedges, net of tax benefit of $0.6 and $0.1 for the six months ended June 30, 2018 and July 1, 2017, respectively	(1.0		)	(0.2		)
Pension and postretirement liability adjustment, net of tax benefit of $5.2 and $0.1 for the six months ended June 30, 2018 and July 1, 2017, respectively	3.2			(0.3		)
Net income (loss)							(0.8		)	12.4
Net unrealized gains (losses) on qualifying cash flow hedges, net of tax (provision) benefit of $(0.1) and $0.4 for the three months ended March 30, 2019 and March 31, 2018, respectively							0.1			(0.5		)
Pension and postretirement liability adjustment, net of tax benefit of $0.2 and $4.9 for the three months ended March 30, 2019 and March 31, 2018, respectively							(0.8		)	3.9
Foreign currency translation adjustments	(0.8		)	(0.4		)	2.4			1.0
Total comprehensive income, net	36.8			7.5
Total comprehensive income							0.9			16.8
Impact of initial adoption of ASC 606 - See Note 2	4.0			—			—			4.0
Stranded income tax effects resulting from tax reform - See Note 2	(4.8		)	—			—			(4.8		)
Impact of adoption of ASU 2016-16 - See Note 2	(0.2		)	—			—			(0.2		)
Incentive plan activity	5.3			7.4			3.4			3.0
Long-term incentive compensation expense	6.1			5.8			2.6			3.0
Restricted stock and restricted stock unit vesting, net of tax withholdings	(3.3		)	(3.6		)	(6.5		)	(3.3		)
Equity, end of period	$	358.6		$	208.7		$	415.3		$	333.2


~~(14)~~(15)	CONTINGENT LIABILITIES AND OTHER MATTERS

General

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

Our recorded liabilities related to these matters totaled ~~$658.7~~$619.9 (including ~~$615.3~~$574.0 for asbestos product liability matters) and ~~$685.7~~$631.7 (including ~~$641.2~~$587.5 for asbestos product liability matters) at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. Of these amounts, ~~$627.7~~$591.4 and ~~$651.6~~$600.3 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these claims 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. While we base our assumptions on facts currently known to us, they entail inherently subjective judgments and uncertainties. As a result, our current assumptions for estimating these liabilities may not prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations.

Our asbestos-related claims are typical in certain of the industries in which we operate or pertain to legacy businesses we no longer operate. It is not unusual in these cases for fifty 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. During the ~~six~~three months ended ~~June~~March 30, ~~2018,~~2019, our payments for asbestos-related matters, net of insurance recoveries of ~~$19.4,~~$11.2, were ~~$7.8.~~$2.8. During the ~~six~~three months ended ~~July 1, 2017,~~March 31, 2018, our insurance recoveries for asbestos-related matters, net of payments of ~~$24.8,~~$8.8, were ~~$7.8, which included cash proceeds received during the first quarter of 2017 of $8.5 related to a settlement reached with an insurance carrier.~~$3.7. 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, have a material impact on our financial position, results of operations and cash flows.

We have recorded insurance recovery assets associated with the asbestos product liability matters, with such amounts totaling ~~$571.5~~$530.7 and ~~$590.9~~$541.9 at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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.

~~There~~During the three months ended March 30, 2019 and March 31, 2018, there were no changes in estimates associated with the liabilities and assets related to our asbestos product liability matters during the three and six months ended June 30, 2018. During the three and six months ended July 1, 2017, we recorded a charge of $3.0 to “Other income (expense), net” related to the settlement of a group of asbestos related claims.matters.

Large Power Projects in South Africa

~~The business environment surrounding~~Overview - Since 2008, our South African subsidiary, DBT, has been executing contracts on two large power projects in South Africa ~~remains~~(Kusile and Medupi). Over such time, the business environment surrounding these projects has been difficult, as weDBT, along with many other contractors on the projects, have experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including usDBT and ~~our~~its subcontractors), and various suppliers. We currently are involved in a number of claim disputes relating to these challenges. We are pursuing various commercial alternatives for addressing these challenges, in attempt to mitigate our overall financial exposure.

During the second quarter of 2017, we revised our estimates of revenues, costs, and profits associated with the projects due to higher than expected costs associated with (i) our efforts to accelerate completion of certain scopes of work, (ii) financial and other challenges facing certain of our subcontractors, and (iii) delays and other on-site productivity challenges. These revisions resulted in a charge to “Income (loss) from continuing operations before income taxes” of $22.9 during the three and six months ended July 1, 2017, which is comprised of a reduction in revenue of $13.5 and an increase in cost of products sold of $9.4.

Over the past two years, we have implemented various 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 the projects. In addition, significant progressDBT has ~~occurred with regard to the projects, as we have now~~ completed the majority of ~~our~~its contractual scope of work on the projects and ~~are targeting to~~we believe its remaining scope of work will be substantially complete ~~the remainder~~ by the end of 2019.

The challenges related to these 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 could

be resolved in 2019, while others 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 made numerous claims against the two prime contractors on the projects, Alstom S&E (PTY) LTD (“Alstom/GE”) and Mitsubishi-Hitachi Power Systems Africa (PTY) LTD (“MHPSA”).Most of these claims have been submitted to dispute adjudication processes as required under the relevant contracts.As of March 30, 2019, the recorded cumulative revenues related to these claims, as well as certain unapproved change orders, totaled $19.9 (see Note 4 for further discussion).It is possible that recovery on these claims and unapproved change orders could be delayed as a result of current and potential future claims by the prime contractors against DBT (see below for further discussion). In addition to existing asserted claims, DBT may have additional claims and rights to recovery based on its remaining performance under the contracts and actions taken by either Alstom/GE or MHPSA.

Claims by Prime Contractors - In February and March of 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 277.5 (or $19.0) from Alstom/GE alleging that DBT failed to meet certain project milestones related to construction of the air-cooled condensers on the Kusile project. DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a probable loss associated with these claims. As such, no loss has been recorded in the accompanying 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.

In April 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 264.4 (or $18.1) from MHPSA alleging that DBT failed to meet certain project milestones related to the construction of the filters for both the Kusile and Medupi projects. DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a probable loss associated with these claims. As such, no loss has been recorded in the accompanying 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.

On February 26, 2019, DBT received notification of an interim claim consisting of both direct and consequential damages from MHPSA alleging, among other things, that DBT (i) provided defective product and (ii) failed to meet certain project milestones. We believe the notification is unsubstantiated and the vast majority of the claimed damages are prohibited under the relevant contracts. Therefore, we believe any loss for these claimed damages is remote. For the remainder of the claims, which largely appear to be direct in nature (approximately South African Rand 948.0 or $65.0), DBT has numerous other defenses and, thus, we believe that ~~our current estimates~~DBT’s probable loss associated with these claims has been appropriately reflected in provisions established in prior periods and included in the accompanying condensed consolidated balance sheets. It is reasonably possible that DBT’s ultimate loss could exceed the provisions that have been recorded, but we currently cannot estimate the potential additional loss, or the range of ~~revenues, costs~~the potential additional loss, associated with these claims due to the (i) lack of support provided by MPHSA for these claims; (ii) complexity of contractual relationships between the end customer, prime contractor, and ~~profits relating~~DBT; (iii) legal interpretation of the contract provisions and application of South African common law to the contracts; and (iv) unpredictable nature of any dispute resolution processes that may occur in connection with these claims.

Bank Bonds and Guarantees - In connection with these projects, we have issued, in favor of the prime contractors, bonds totaling $56.9 and an additional bond totaling $22.4 with more stringent payment conditions. In the event that the prime contractors were to receive payment on a portion, or all, of these bonds, we would be required to reimburse the bank. In addition to these ~~projects are reasonable,~~bonds, SPX Corporation has guaranteed DBT’s performance on these projects.

Claims by Subcontractor - On October 30, 2018, a non-governmental business adjudicator in South Africa provided a decision on certain claims made against DBT by one of its subcontractors. As part of its decision, the adjudicator concluded that the subcontractor was entitled to payment of South African Rand 256.0 (or $17.5). We believe this decision is invalid on numerous bases. Specifically, we believe, among other things, that these and other claims were previously settled and satisfied by way of a 2015 amendment to the contract between DBT and the subcontractor. Therefore, DBT is pursuing all available legal recourse in the matter, including referring the matter to both an arbitration process and court proceedings. Based on the reasons stated above, we have concluded that it is ~~possible~~not probable that ~~future revisions of such estimates could have~~ a ~~material effect on our~~loss has been incurred with respect to this matter and, therefore, a loss has not been recorded in the accompanying condensed consolidated financial statements.

On March 4, 2019, an arbitration panel accepted jurisdiction of the matter allowing it to proceed through an arbitration process.

Noncontrolling Interest in South African Subsidiary

~~Our South African subsidiary,~~ DBT ~~Technologies (PTY) LTD (“DBT”),~~ has a Black Economic Empowerment shareholder (the “BEE Partner”) that holds a 25.1% noncontrolling interest in DBT. Under the terms of the shareholder agreement between the BEE Partner and SPX Technologies (PTY) LTD (“SPX Technologies”), the BEE Partner had the option to put its ownership

interest in DBT to SPX Technologies, the majority shareholder

of DBT, at a redemption amount determined in accordance with the terms 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 with the exercise of the Put Option, having not considered an amount due from the BEE Partner under a promissory note of South African Rand 30.3 held by SPX Technologies. As a result, we have reflected the net redemption amount of South African Rand 257.0 (or ~~$18.6~~$17.6 and ~~$20.9~~$17.7 at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively) within “Accrued expenses” on our condensed consolidated balance ~~sheet,~~sheets, with the related offset recorded to “Paid-in capital” and “Accumulated other comprehensive income.”

In August 2016, SPX Technologies applied to the High Court of South Africa (the “Court”) to have the Arbitration Tribunal’s ruling set aside. ~~The Court heard arguments on SPX Technologies’ application in November 2017.~~ On January 22, 2018, the Court ruled in SPX ~~Technologies~~Technologies’ favor and set aside the Arbitration Tribunal’s ruling. This ruling by the Court is subject to appeal by the BEE Partner. The BEE Partner ~~has filed for leave to appeal~~appealed the decision and SPX Technologies ~~will continue~~continues to assert all legal defenses available to it.

~~Patent Infringement Lawsuit~~

~~Our subsidiary, SPX Cooling Technologies, Inc. (“SPXCT”), was a defendant~~ We expect the appeals court to hear this matter 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 and BAC appealed. On May 4, 2018, the Federal Circuit Court of Appeals ruled in favor of SPXCT and upheld the jury verdict, which we believe resolves the matter.

late 2019.

Litigation Matters

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

Environmental Matters

Our operations and properties are subject to federal, state, local and foreign regulatory requirements relating to environmental protection. It is our policy to comply fully with all applicable requirements. As part of our effort to comply, we have a comprehensive environmental compliance program that includes environmental audits conducted by internal and external independent professionals, as well as regular communications with our operating units regarding environmental compliance requirements and anticipated regulations. Based on current information, we believe that our operations are in substantial compliance with applicable environmental laws and regulations, and we are not aware of any violations that could have a material effect, individually or in the aggregate, on our business, financial condition, and results of operations or cash flows. As of ~~June~~March 30, ~~2018,~~2019, we had liabilities for site investigation and/or remediation at 2829 sites (28 sites at December 31, ~~2017)~~2018) that we own or control, or formerly owned and controlled. In addition, while we believe that we maintain adequate accruals to cover the costs of site investigation and/or remediation, we cannot provide assurance that new matters, developments, laws and regulations, or stricter interpretations of existing laws and regulations will not materially affect our business or operations in the future.

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

In the case of contamination at offsite, third-party disposal sites, as of ~~June~~March 30, ~~2018,~~2019, we have been notified that we are potentially responsible and have received other notices of potential liability pursuant to various environmental laws at 15 sites at which the liability has not been settled, of which 911 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.


~~(15)~~(16)	INCOME TAXES

Uncertain Tax Benefits

As of ~~June~~March 30, ~~2018,~~2019, we had gross unrecognized tax benefits of ~~$29.0~~$20.3 (net unrecognized tax benefits of ~~$20.2)~~$13.9). Of these net unrecognized tax benefits, ~~$16.5~~$10.2 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 ~~June~~March 30, ~~2018,~~2019, gross accrued interest totaled ~~$4.5~~$4.1 (net accrued interest of ~~$3.4)~~$3.1). As of ~~June~~March 30, ~~2018,~~2019, 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 ~~$10.0.~~$4.0. The previously unrecognized tax benefits relate to a variety of tax matters including ~~deemed income inclusions,~~ transfer pricing and various state matters.

Other Tax Matters

For the three months ended ~~June~~March 30, ~~2018,~~2019, we recorded an income tax provision of ~~$0.4~~$4.6 on ~~$20.1~~$5.2 of pre-tax income from continuing operations, resulting in an effective rate of ~~2.0%~~88.5%. This compares to an income tax provision for the three months ended ~~July 1, 2017~~March 31, 2018 of ~~$6.0~~$4.1 on $2.3 of a pre-tax loss from continuing operations, resulting in an effective rate of (260.9)%. The most significant items impacting the income tax provision for the second quarter of 2018 were tax benefits of (i) $1.7 related to reductions in valuation allowances recorded against certain deferred tax assets and (ii) $1.1 associated with further revisions to provisional amounts that were recorded as a result of the Act, with the Act described more fully below. The most significant item impacting the income tax provision for the second quarter of 2017 was $24.6 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.

~~For the six months ended June 30, 2018, we recorded an income tax provision of $4.5 on $36.6~~$16.5 of pre-tax income from continuing operations, resulting in an effective rate of ~~12.3% This compares to an income tax provision for the six months ended July 1, 2017 of $9.2 on $11.2 of pre-tax income from continuing operations, resulting in an effective rate of 82.1%~~24.8%. The most significant items impacting the income tax provision for the first ~~six months~~quarter of 2018 were tax benefits of (i) $1.7 related to reductions in valuation allowances recorded against certain deferred tax assets and (ii) $0.9 of excess tax benefits resulting from stock-based compensation awards that vested during the year. The most significant items impacting the income tax provision for the first six months of 20172019 were (i) ~~$29.6 of~~ foreign losses ~~generated during the period~~ for which no foreign tax benefit was recognized as future realization of any such foreign tax benefit is considered unlikely and (ii) $1.2 of excess tax benefits resulting from stock-based compensation awards ~~which~~that vested induring the ~~period.~~

~~On December 22, 2017,~~quarter. The most significant items impacting the ~~Act was enacted which significantly changes U.S.~~ income tax ~~law~~provision for ~~businesses. As a result of~~ the reduction in the federal corporate income tax rate and other legislative changes in the Act, we revalued our net U.S. federal deferred tax assets, resulting in a provisional charge of $11.8 in the fourthfirst quarter of ~~2017. During the first two quarters~~2018 were (i) $1.5 of ~~2018, we have continued~~tax charges related to ~~evaluate the impact of~~ the Act and ~~have recorded a net additional charge~~(ii) $0.8 of ~~$0.4 to revalue certain deferred~~excess tax ~~assets.~~

~~Given~~benefits resulting from stock-based compensation awards that vested during the significance of the number of changes required by the Act and the historical complexity of our global tax structure, we have yet to complete our analysis of the impact of the Act on our condensed consolidated financial statements. As a result, the above net charges are based on current estimates (i.e., provisional amounts). In addition, other adjustments may be necessary to our income tax accounts to properly reflect the impact of certain provisions of the Act that have not been contemplated. For example, the impact on the repatriation of certain foreign earnings or the potential various state tax implications of the Act have not been considered in our provisional amounts. As more guidance is issued and we better understand the full impact of the Act on our tax positions, we will finalize our analysis, with any resulting adjustments reflected in our 2018 consolidated financial results.

quarter.

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~~The Internal Revenue Service (“IRS”) currently is performing an audit of our 2014, 2015, 2016 and 2017 federal income tax ~~returns for the 2014, 2015 and 2016 tax years and those returns are subject to examination.~~returns. 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 are 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 effect on our results of operations or cash flows in the quarter and year in which an adjustment is recorded or the tax is due or paid. As audits and examinations are still in process, the timing of the ultimate resolution and any payments that may be required for the above matters cannot be determined at this time.


~~(16)~~(17)	FAIR VALUE

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

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

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

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

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

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

Parent Guarantees and Bonds Associated with Balcke Dürr — In connection with the 2016 sale of Balcke Dürr, existing parent company guarantees and bank surety bonds, which totaled approximately Euro 79.0 and Euro 79.0, respectively, at the time of sale (and Euro ~~43.0~~31.7 and Euro ~~33.2,~~18.1, respectively, at ~~June~~March 30, ~~2018)~~2019) will remain in place through each instrument’s expiration date, with such expiration dates occurring through 2022. These guarantees and bonds provide 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 relate to lease obligations and foreign tax matters in existence at the time of sale. Balcke Dürr and the ~~Buyer~~acquirer of Balcke Dürr have provided us an indemnity in the event that any bank guarantees or bonds are called. Also, at the time of sale, Balcke Dürr provided cash collateral of Euro 4.0 and mutares AG, an affiliate of the acquirer of Balcke Dürr, provided a guarantee of Euro 5.0 as a security for the above indemnifications (Euro ~~3.5~~3.0 and Euro 5.0, respectively, at ~~June~~March 30, ~~2018)~~2019). 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 cash collateral and indemnities provided. Summarized below are changes in the liability and asset ~~recorded at the time of sale, along with the change in the liability and the asset~~ during the ~~six~~three months ended ~~June~~March 30, ~~2018,~~2019, and ~~July 1, 2017.~~March 31, 2018.


	Six months ended												Three months ended
	June 30, 2018						July 1, 2017						March 30, 2019						March 31, 2018
	Guarantees and Bonds Liability ⁽¹⁾			Indemnification Assets ⁽¹⁾			Guarantees and Bonds Liability ⁽¹⁾			Indemnification Assets ⁽¹⁾			Guarantees and Bonds Liability ⁽¹⁾			Indemnification Assets ⁽¹⁾			Guarantees and Bonds Liability ⁽¹⁾			Indemnification Assets ⁽¹⁾
Balance at beginning of year	$	8.7		$	2.8		$	9.9		$	4.8		$	4.4		$	1.2		$	8.7		$	2.8
Reduction/Amortization for the period ⁽²⁾	(2.7		)	(0.9		)	(1.1		)	(1.3		)	(1.3		)	(0.2		)	(0.7		)	(0.4		)
Impact of changes in foreign currency rates	—			(0.1		)	0.9			0.5			(0.1		)	—			0.3			0.1
Balance at end of period ⁽³⁾	$	6.0		$	1.8		$	9.7		$	4.0		$	3.0		$	1.0		$	8.3		$	2.5

___________________________

⁽¹⁾

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


⁽²⁾	We 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.”


⁽³⁾	The 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.”

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

Valuation Methodologies Used to Measure Fair Value on a Recurring Basis

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

As of ~~June~~March 30, ~~2018,~~2019, 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 — During 2018, we adopted an amendment to guidance that requires, among other things, equity securities (excluding equity method investments) to be measured at fair value. In connection with our adoption, we adjusted the carrying value of an equity security, previously reflected on our consolidated balance sheet at its historical cost of $0.7, to its estimated fair value of $16.6. We determined the estimated fair value utilizing a practical expedient under the amended 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. The increase in the equity security’s carrying value resulted in a reduction, net of tax, of our retained deficit of $12.0. We are restricted from transferring this investment without approval of the manager of the investee.

During the three months ended March 30, 2019, we recorded a gain of $6.3 to “Other income, net” to reflect an increase in the estimated fair value of the equity security, with such amount determined based on the investee’s most recent audited financial statements. In addition, we received a distribution during the three months ended March 30, 2019 of $2.6 included within “Cash flows from operating activities” in our condensed consolidated cash flows. As of March 30, 2019, the estimated fair value of the equity security was $20.3.

Indebtedness and Other — The estimated fair value of our debt instruments as of ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017~~2018 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments. See Note 1112 for further details.

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

FORWARD-LOOKING STATEMENTS

Some of the statements in this document and any documents incorporated by reference, including any statements as to operational and financial projections, constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our businesses’ or our industries’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Such statements may address our plans, our strategies, our prospects, changes and trends in our business and the markets in which we operate under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) or in other sections of this document. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential” or “continue” or the negative of those terms or other comparable terminology. Particular risks facing us include economic, business and other risks stemming from our internal operations, legal and regulatory risks, costs of raw materials, pricing pressures, pension funding requirements, integration of acquisitions and changes in the economy. 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 ~~2017~~2018 Annual Report on Form 10-K, in any subsequent filing with the U.S. Securities and Exchange Commission, as well as in any documents incorporated by reference that describe risks and 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.

OVERVIEW OF OPERATING RESULTS

Revenues for the three ~~and six~~ months ended ~~June~~March 30, ~~2018 increased by $29.5 (or 8.4%) and $40.8 (or 5.9%), respectively, when~~2019 totaled $343.6, compared to $351.9 for the ~~same periods in 2017.~~three months ended March 31, 2018. The ~~increase~~decrease in revenues was due primarily ~~due~~ to (i) ~~a reduction in revenue of $13.5~~an adjustment, during the ~~second quarter of 2017 resulting from a revision~~three months ended March 30, 2019, to the ~~expected revenues and profits~~amount of cumulative revenue associated with variable consideration on ~~our~~the large power projects in South Africa of $17.5 (see ~~Note 14 to our condensed consolidated financial statements~~below for ~~additional details),~~further discussion) and (ii) a decline in organic revenue, partially offset by increases in revenue associated with the impact of the ~~adoption~~acquisitions of ~~ASC 606 (see below for additional details), and (iii) the impact of the~~ Schonstedt ~~and~~Instrument Company (“Schonstedt”) on March 1, 2018, Cues, ~~acquisitions during the first and second quarters of 2018, respectively. Organic revenue increased during the three months ended~~Inc. (“Cues”) on June ~~30,~~7, 2018, and ~~declined during the six months ended June 30, 2018. Organic~~Sabik Marine (“Sabik”) on February 1, 2019. The decline in organic revenue ~~during the three and six months ended June 30, 2018~~ was impacted by (i) higher sales of heating and cooling products within our HVAC reportable segment and communication technologies products within our Detection and Measurement reportable segment and (ii) lower revenues within our Engineered Solutions reportable segment associateddue primarily ~~with~~to lower sales ~~of process cooling products.~~

During the three and six months ended June 30, 2018, we generated operating income of $22.7 and $42.0, respectively, compared to $5.2 and $24.3 for the same periods in 2017. Operating income for the three and six months ended July 1, 2017 included a charge of $22.9 resulting from a revisionrelated to the ~~expected revenues and profits on our~~ large power projects in South Africa. Operating income for the three and six months ended June 30, 2018 was favorably impacted, when compared to the same periods in 2017, by additional income within our HVAC and Detection and Measurement reportable segments associated with organic revenue growth. Operating income for the three and six months ended June 30, 2018 was negatively impacted by (i) a decline in income from power transformers related primarily to increases in commodity costs and a less profitable sales mix, (ii) charges associated with the excess fair value (over historical cost) of inventory acquiredAfrica, as these projects are generally in the ~~Schonstedt~~latter stages of completion, and ~~Cues transactions which has been subsequently sold (charges~~the impact of ~~$1.6 and $1.9 during the three and six months ended June 30, 2018, respectively), and (iii) charges of $2.0 recorded during the second quarter of 2018 related to~~ the wind-down of the SPX Heat Transfer business ~~(see below~~(“Heat Transfer”), partially offset by increases in organic revenue within our Engineered Solutions reportable segment. See “Results of Reportable and Other Operating Segments” for additional ~~details).~~details.

During the three months ended March 30, 2019, we generated operating income of $3.0, compared to $19.3 during the three months ended March 31, 2018. The decrease in operating income was due primarily to the reduction in revenue of $17.5 noted above associated with the large power projects in South Africa, partially offset by additional income within our (i) Detection and Measurement reportable segment associated with the acquisitions noted above and (ii) Engineered Solutions reportable segment associated with organic revenue growth. See “Results of Reportable and Other Operating Segments” for additional details.

Cash flows from operating activities associated with continuing operations totaled ~~$5.8~~$11.5 for the three months ended March 30, 2019, compared to $2.7 during the ~~six~~three months ended ~~June 30, 2018, compared to cash flows used in operating activities of $10.0 during the six months ended July 1, 2017.~~March 31, 2018. The increase in cash flows from operating activities was due primarily to reductions in working capital at certain of our businesses and a decline in cash outflows related to the large power projects in South Africa, as these projects are generally in the latter stages of completion. These improvements in operating cash flows were offset partially by a decline in net income tax refunds (net payments of $3.3 during the ~~first six~~three months ended March 30, 2019 versus net refunds of ~~2018 of $17.2 (versus net income tax payments of $16.4~~

$18.9 during the ~~same period in 2017), partially offset by the impact of a settlement reached with an insurance carrier which resulted in the receipt of $8.5 of cash proceeds during the first quarter of 2017.~~three months ended March 31, 2018).

Other significant items impacting our financial results for the three ~~and six~~ months ended ~~June~~March 30, ~~2018 are~~2019 were as follows:

Effective January 1, 2018, we adopted a new standard on revenue recognition (“ASC 606”) using the modified retrospective transition approach - See Notes 2 and 4 to our condensed consolidated financial statements for additional details:Acquisition of Sabik


◦	~~The most significant effect~~Completed the acquisition on February 1, 2019 for a purchase price of ~~adopting ASC 606 is on our power transformer business.~~


◦	~~The adoption~~$77.0, net of ~~ASC 606 resulted in a decreasein revenues~~cash acquired of $1.8 and an increase in revenues of $19.6 during the three and six months ended June 30, 2018, respectively, and an increase in operating income of $0.5 and $2.5 during the three and six months ended June 30, 2018, respectively, when compared to the same periods in 2017. $0.6.

~~On March 1, 2018, we completed the acquisition of Schonstedt Instrument Company (“Schonstedt”) - See Note 1 to our condensed consolidated financial statements for additional details:~~


◦	~~The purchase price for Schonstedt was $16.4, net of cash acquired of $0.3.~~


◦	~~Schonstedt’s~~Sabik’s revenues for the twelve months prior to the date of acquisition were approximately ~~$9.0.~~$28.0.


◦	The post-acquisition operating results of ~~Schonstedt~~Sabik are reflected within our Detection and Measurement reportable segment.

Charges Related to the Dry Cooling Sale - During the three months ended March ~~8, 2018,~~30, 2019, in connection with recent settlement activities, we ~~settled~~revised our ~~then-existing interest rate swap agreement (“Old Swaps”) and entered into~~estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business, which resulted in charges of $1.8 during the period.

Sale of Heat Transfer Facility - In connection with the wind-down of the business, we sold, during the three months ended March 30, 2019, Heat Transfer’s manufacturing facility for net cash proceeds of $5.5, resulting in a ~~new swap agreement (“New Swaps”)~~gain of $0.3 recorded within “Other income, net.”

Change in Estimated Fair Value of an Equity Security - During the three months ended March 30, 2019, we recorded a gain of $6.3 within “Other income, net” related to the increase in the estimated fair value of an equity security that we hold. See Note 1217 to our condensed consolidated financial statements for additional ~~details:~~details.


◦	~~Old Swaps~~


▪	~~We discontinued hedge accounting for the Old Swaps in the fourth quarter of 2017 in connection with an amendment of our senior credit agreement.~~


▪	During the three months ended March 31, 2018, we recorded a gain of $0.6 (to “Other income, net”) representing the change in fair value of the Old Swaps from January 1, 2018 through the date of settlement on March 8, 2018.


◦	~~New Swaps~~


▪	The New Swaps have an initial notional amount of $260.0 and effectively convert a portion of our borrowings under our senior credit agreement to a fixed interest rate of 2.535%, plus the applicable margin.


▪	~~We have designated and are accounting for the New Swaps as cash flow hedges.~~

~~On April 30, 2018,~~

Adjustment to Cumulative Revenue on Large Power Projects in South Africa - In consideration of recent claims received from the prime contractors on the projects, and in accordance with ASC 606, we ~~reached an agreement~~analyzed the risk of a significant revenue reversal associated with ~~a subsidiary of mutares AG, the acquirer of Balcke Dürr in 2016 (the “Buyer”), on (i)~~ the amount of ~~cash and working capital~~variable consideration recorded on the projects. Based on such analysis, we reduced the amount of ~~Balcke Dürr at~~cumulative revenue associated with the ~~closing date of~~variable consideration on the ~~sale and (ii) various other matters. The settlement:~~


◦	~~Requires a net payment from the Buyer in the amount of Euro 3.0, with Euro 2.0 received in May 2018 and Euro 1.0 in July 2018; and~~


◦	~~Resulted in a gain, net of tax, of $3.8, which was recorded to “Gain (loss) on disposition of discontinued operations, net of tax”~~projects by $17.5 during ~~the second quarter of 2018.~~

~~On June 7, 2018, we completed~~ the ~~acquisition of Cues, Inc. (“Cues”) -~~three months ended March 30, 2019. See Notes 14 and 315 to ~~our~~the accompanying condensed consolidated financial statements for additional ~~details:~~details.


◦	~~The purchase price for Cues was $166.2, net of cash acquired of $20.6.~~


◦	~~Cues’ revenues for the twelve months prior to the acquisition were approximately $84.0.~~


◦	~~The post-acquisition operating results of Cues are reflected within our Detection and Measurement reportable segment.~~

During the second quarter of 2018, as a continuation of our strategic shift away from power generation end markets, we initiated a plan to wind-down the SPX Heat Transfer, LLC (“Heat Transfer”) business within our Engineered Solutions reportable segment.


◦	In connection with the planned wind-down, we recorded charges of $2.0 in our second quarter 2018 operating results, with $0.9 related to the write-down of inventories (included in “Cost of products sold”), $0.6 related to the impairment of machinery and equipment, and $0.5 related to severance costs (both included in “Special charges, net”).


◦	~~In addition, we sold certain intangible assets of the Heat Transfer business for cash proceeds of $5.5, which resulted in a gain of less than $0.1 within our second quarter 2018 operating results.~~


◦	~~We anticipate completing the wind-down by the end of the first quarter of 2019.~~

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 ~~2017~~2018 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 ~~2018~~2019 are March 30, June 29 and September 28, compared to the respective March 31, June 30 and September 29, ~~compared to the respective April 1, July 1 and September 30, 2017~~2018 dates. We had one less day in the first quarter of ~~2018~~2019 and will have one more day in the fourth quarter of ~~2018~~2019 than in the respective ~~2017~~2018 periods. We do not believe the one less day during the first quarter of ~~2018~~2019 had a material impact on our consolidated operating results, ~~for the first half of 2018,~~ when compared to the consolidated operating results for the ~~first half of 2017.~~respective 2018 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 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 ~~accounting standard adoptions, and the impact of~~ the ~~revenue~~ reduction ~~that resulted from the second quarter 2017 revision~~ to the ~~expected~~cumulative revenues ~~and profits~~ on ~~our~~the large power projects in South Africa ~~which resulted in a reduction of revenues of $13.5 for~~during the three ~~and six~~ months ended ~~July 1, 2017.~~March 30, 2019 of $17.5. We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented, as, when read 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 six~~ months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017,~~March 31, 2018, respectively, including the reconciliation of organic revenue ~~growth (decline)~~decline to the net revenue ~~increase:~~decrease:


	Three months ended								Six months ended								Three months ended
	June 30, 2018			July 1, 2017			% Change		June 30, 2018			July 1, 2017			% Change		March 30, 2019			March 31, 2018			% Change
Revenues	$	379.2		$	349.7		8.4		$	731.1		$	690.3		5.9		$	343.6		$	351.9		(2.4	)
Gross profit	97.7			76.1			28.4		187.8			164.2			14.4		83.2			90.1			(7.7	)
% of revenues	25.8		%	21.8		%			25.7		%	23.8		%			24.2		%	25.6		%
Selling, general and administrative expense	72.6			70.3			3.3		141.2			138.6			1.9		76.7			68.6			11.8
% of revenues	19.1		%	20.1		%			19.3		%	20.1		%			22.3		%	19.5		%
Intangible amortization	0.8			0.1			700.0		1.0			0.3			233.3		1.6			0.2			*
Special charges, net	1.6			0.5			220.0		3.6			1.0			260.0		0.1			2.0			(95.0	)
Other income (expense), net	2.2			(3.2		)	*		3.2			(5.2		)	*
Other operating expenses																	1.8			—			*
Other income, net																	7.2			1.0			*
Interest expense, net	(4.8		)	(4.3		)	11.6		(8.6		)	(7.9		)	8.9		(5.0		)	(3.8		)	31.6
Income (loss) from continuing operations before income taxes	20.1			(2.3		)	*		36.6			11.2			226.8
Income from continuing operations before income taxes																	5.2			16.5			(68.5	)
Income tax provision	(0.4		)	(6.0		)	(93.3	)	(4.5		)	(9.2		)	(51.1	)	(4.6		)	(4.1		)	12.2
Income (loss) from continuing operations	19.7			(8.3		)	*		32.1			2.0			1,505.0
Income from continuing operations																	0.6			12.4			(95.2	)

Components of consolidated revenue increase:
Components of consolidated revenue decrease:
Organic							1.7								(1.5	)							(2.5	)
Foreign currency							0.6								1.1								(1.4	)
South Africa revenue revision							3.9								2.0
South Africa revenue adjustment																							(4.7	)
Acquisitions							2.7								1.5								6.2
Adoption of ASC 606							(0.5	)							2.8
Net revenue increase							8.4								5.9
Net revenue decrease																							(2.4	)


*	Not meaningful for comparison purposes.

Revenues — For the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, the ~~increase~~decrease in ~~revenues,~~revenue, compared to the respective ~~periods~~period in ~~2017,~~2018, was due primarily to (i) an adjustment, during the three months ended March 30, 2019, to the ~~impact~~amount of ~~(i) the~~cumulative revenue ~~reduction of $13.5 in the second quarter of 2017~~ associated with ~~our~~variable consideration on the large power projects in South Africa of $17.5, (ii) ~~the Schonstedt acquisition on March 1, 2018~~a decline in organic revenue, and ~~the Cues acquisition on June 7, 2018,~~ (iii) ~~the adoption of ASC 606, and (iv)~~ a ~~weaker~~stronger U.S. dollar (primarily against the South African Rand and British Pound) during the three ~~and six~~ months ended March 30, 2019, partially offset by increases in revenue associated with the acquisitions of Schonstedt on March 1, 2018, Cues on June ~~30, 2018. Organic revenue increased during the three months ended June 30,~~7, 2018, and ~~declined during~~Sabik on February 1, 2019. The decline in organic revenue was due primarily to lower sales related to the ~~six months ended June 30, 2018. Organic~~large power projects in South Africa, as these projects are generally in the latter stages of completion, and the impact of the wind-down of Heat Transfer, partially offset by increases in organic revenue during the three and six months ended June 30, 2018 was impacted by (i) higher sales of heating and cooling products within our HVAC reportable segment and communication technologies products within our Detection and Measurement reportable segment and (ii) lower revenues within our Engineered Solutions reportable ~~segment associated primarily with lower sales of process cooling products.~~segment. See “Results of Reportable and Other Operating Segments” for additional details.

Gross Profit — ~~The increase~~For the three months ended March 30, 2019, the decrease in gross profit and gross profit as a percentage of revenues, ~~for the three and six months ended June 30, 2018,~~ compared to the respective ~~periods~~period in ~~2017,~~2018, was due primarily to the ~~increase~~reduction in ~~revenues~~revenue of $17.5 noted above ~~and~~associated with the ~~impact of the reduction of gross profit of $22.9 in the second quarter of 2017 resulting from a revision to the expected revenues and profits of our~~ large power projects in South ~~Africa.~~Africa, partially offset by the impact of the acquisitions noted above and a favorable revenue mix during the period (i.e., revenue increases were associated with businesses and products that historically generate higher gross margins).

Selling, General and Administrative (“SG&A”) Expense — For the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, the increase in SG&A expense, compared to the respective ~~periods~~period in ~~2017,~~2018, was due primarily ~~a result~~to the impact of ~~higher long-term incentive compensation,~~ the incremental SG&A associated with Schonstedt and Cues since their respective dates of acquisition, and higher professional fees related to acquisition activities, partially offset by cost reductions associated with restructuring actions implemented over the past year.acquisitions noted above.

Intangible Amortization -— For the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, the increase in intangible amortization, compared to the respective ~~periods~~period in ~~2017,~~2018, was due to the impact of the ~~intangible assets acquired in connection with the Schonstedt and Cues transactions during the first and second quarters of 2018, respectively.~~acquisitions noted above.

Special Charges, net — Special charges, net, related primarily to restructuring initiatives to reduce ~~workforce and the planned wind-down of our Heat Transfer business.~~workforce. See Note 67 to our condensed consolidated financial statements for the details of actions taken in the first ~~six~~three months of ~~2018~~2019 and ~~2017.~~2018.

Other Operating Expenses— Other operating expenses for the three months ended March 30, 2019 relate to charges associated with revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business, with such revisions resulting from settlement activities during the period.

Other Income, ~~(Expense),~~ net — Other income, net, for the three months ended ~~June~~March 30, 2019 was composed primarily of (i) a gain of $6.3 related to a change in the estimated fair value of an equity security that we hold and (ii) income derived from company-owned life insurance policies of $1.4, partially offset by foreign currency transaction losses of $0.9.

Other income, net, for the three months ended March 31, 2018 was composed primarily of (i) pension and postretirement income of $0.7 and (ii) income of $1.5 related to the reduction of the liability and the amortization of the asset associated with the parent company guarantees and bank surety bonds that remain outstanding in connection with the Balcke Dürr sale (See Note 16 for additional details).

Other expense, net, for the three months ended July 1, 2017 was composed primarily of (i) a charge of $3.0 associated with the settlement of a group of asbestos-related claims, (ii) pension and postretirement expense of $1.1, and (iii) foreign currency transaction losses of $0.8, partially offset by income derived from company-owned life insurance policies of $0.7, income associated with transition services provided in connection with business dispositions of $0.4, gains on currency forward embedded derivatives (“FX embedded derivatives”) of $0.2, and equity earnings in joint ventures of $0.2.

~~Other income, net, for the six months ended June 30, 2018 was composed primarily of (i) pension and postretirement income of $1.4, (ii)~~ a gain on ~~the Old Swaps~~interest rate swaps of $0.6, and (iii) income of $1.8 related to the reduction of the liability and the amortization of the asset associated with the parent company guarantees and bank surety bonds that remain outstanding in connection with the Balcke Dürr sale, partially offset by foreign currency transaction losses of ~~$0.6.~~$0.5.

Other expense, net, for the six months ended July 1, 2017 was composed primarily of (i) a charge of $3.0 associated with the settlement of a group of asbestos-related claims, (ii) pension and postretirement expense of $2.4, (iii) foreign currency transaction losses of $1.2, and (iv) losses on FX embedded derivatives of $0.4, partially offset by income derived from company-owned life insurance policies of $1.0, income associated with transition services provided in connection with business dispositions of $0.6, and equity earnings in joint ventures of $0.3.

Interest Expense, net — Interest expense, net, includes both interest expense and interest income. The increase in interest expense, net, during the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, compared to the same ~~periods~~period in ~~2017,~~2018, was ~~primarily a~~the result of ~~the~~higher borrowings ~~required to finance the acquisition of Cues~~ and a higher ~~weighted-average~~average interest ~~rate~~rates during the first ~~six months~~quarter of ~~2018 on~~2019, with the ~~outstanding~~higher borrowings ~~of our senior credit facilities.~~attributable to the funding required for the Sabik acquisition.

Income Tax Provision — For the three months ended ~~June~~March 30, ~~2018,~~2019, we recorded an income tax provision of ~~$0.4~~$4.6 on ~~$20.1~~$5.2 of pre-tax income from continuing operations, resulting in an effective rate of ~~2.0%~~88.5%. This compares to an income tax provision for the three months ended ~~July 1, 2017~~March 31, 2018 of ~~$6.0~~$4.1 on ~~$2.3~~$16.5 of a pre-tax loss from continuing operations, resulting in an effective rate of (260.9)%. The most significant items impacting the income tax provision for the second quarter of 2018 were tax benefits of (i) $1.7 related to reductions in valuation allowances recorded against certain deferred tax assets and (ii) $1.1 associated with f

urther revisions to provisional amounts that were recorded as a result of the Tax Cut and Jobs Act (“the “Act”). The most significant item impacting the income tax provision for the second quarter of 2017 was $24.6 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.

~~For the six months ended June 30, 2018, we recorded an income tax provision of $4.5 on $36.6 of~~ pre-tax income from continuing operations, resulting in an effective rate of ~~12.3% This compares to an income tax provision for the six months ended July 1, 2017 of $9.2 on $11.2 of pre-tax income from continuing operations, resulting in an effective rate of 82.1%~~24.8%. The most significant items impacting the income tax provision for the first ~~six months~~quarter of 2018 were tax benefits of (i) $1.7 related to reductions in valuation allowances recorded against certain deferred tax assets and (ii) $0.9 of excess tax benefits resulting from stock-based compensation awards that vested during the year. The most significant items impacting the income tax provision for the first six months of 20172019 were (i) ~~$29.6 of~~ foreign losses ~~generated during the period~~ for which no foreign tax benefit was recognized as future realization of any such foreign tax benefit is considered unlikely and (ii) $1.2 of excess tax benefits resulting from stock-based compensation awards ~~which~~that vested induring the ~~period.~~

quarter. The most significant items impacting the income tax provision for the first quarter of 2018 were (i) $1.5 of tax charges related to the adoption of the Tax Cuts and Jobs Act and (ii) $0.8 of excess tax benefits resulting from stock-based compensation awards that vested during the quarter.

RESULTS OF ~~DISCONTINUED OPERATIONS~~

During the first quarter of 2017, we reduced the net loss associated with the sale of Balcke Dürr by $7.2. The reduction in the net loss was comprised of an additional income tax benefit recorded for the sale of $8.4, partially offset by the impact of adjustments to liabilities retained in connection with the sale, net of tax, 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.

As indicated in Note 1, during the second quarter of 2018, we reached a settlement with the Buyer of Balcke Dürr on the working capital and cash at the closing date, as well as on various other matters. The settlement resulted in a gain, net of tax, of $3.8, which was recorded to “Gain (loss) on disposition of discontinued operations, net of tax” during the second quarter of 2018.

In addition to the adjustments to the net loss related to the Balcke Dürr sale, we recognized net losses of $0.5 during the three and six months ended June 30, 2018 and net losses of $0.3 and $0.4 during the three and six months ended July 1, 2017, respectively, resulting primarily from revisions to liabilities retained from businesses discontinued prior to 2016.

For the three and six months ended June 30, 2018 and July 1, 2017, the table below presents a reconciliation of discontinued operations activity to the related amounts in the condensed consolidated statements of operations:

~~RESULTS OF~~ REPORTABLE AND OTHER OPERATING 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 56 to the 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 ended							Six months ended							Three months ended
	June 30, 2018			July 1, 2017			% Change	June 30, 2018			July 1, 2017			% Change	March 30, 2019			March 31, 2018			% Change
Revenues	$	139.7		$	120.3		16.1	$	267.4		$	230.4		16.1	$	128.4		$	127.7		0.5
Income	18.5			15.4			20.1	37.1			31.9			16.3	18.4			18.6			(1.1	)
% of revenues	13.2		%	12.8		%		13.9		%	13.8		%		14.3		%	14.6		%
Components of revenue increase:
Organic							15.6							15.3							1.0
Foreign currency							0.5							0.8							(0.5	)
Net revenue increase							16.1							16.1							0.5

Revenues — For the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, the increase in revenues, compared to the respective ~~periods~~period in ~~2017,~~2018, was due to an increase in organic revenue, ~~and, to a lesser extent,~~partially offset by the impact of a ~~weaker~~stronger U.S. dollar during the ~~2018 periods. For the three months ended June 30, 2018, the~~first quarter of 2019. The increase in organic revenue was due primarily to ~~an increase~~increased sales of boiler products, partially offset by a decline in sales of cooling products ~~while for~~in the ~~six months ended June 30, 2018, the increase in organic revenue was due to an increase in sales of both heating and cooling products.~~Asia Pacific region.

Income — For the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, the slight decline in income ~~increased,~~and margin, compared to the respective ~~periods~~period in ~~2017,~~2018, was due primarily to a less favorable sales mix during the first quarter of 2019.

Backlog — The segment had backlog of $58.5 and $49.7 as of March 30, 2019 and March 31, 2018, respectively.

Detection and Measurement Reportable Segment



	Three months ended
	March 30, 2019			March 31, 2018			% Change
Revenues	$	85.1		$	65.6		29.7
Income	17.0			15.7			8.3
% of revenues	20.0		%	23.9		%
Components of revenue increase:
Organic							(3.4	)
Foreign currency							(1.1	)
Acquisitions							34.2
Net revenue increase							29.7

Revenues — For the three months ended March 30, 2019, the increase in revenues, compared the respective period in 2018, was due to the impact of the acquisitions of Schonstedt on March 1, 2018, Cues on June 7, 2018, and Sabik on February 1, 2019, partially offset by a decline in organic revenue and the impact of a stronger U.S. dollar during the first quarter of 2019. The decline in organic revenue was due primarily to the timing of projects related to bus fare collection systems.

Income — For the three months ended March 30, 2019, the increase in income, compared to the respective period in 2018, was due to the impact of the acquisitions noted above, while the decline in margin was primarily the result of the incremental amortization expense associated with the acquisitions and charges of $1.3 associated with the excess fair value (over historical cost) of inventory acquired in the Sabik and Cues transactions which has been subsequently sold.

Backlog — The segment had backlog of $87.4 and $46.5 as of March 30, 2019 and March 31, 2018, respectively, with the amount at March 30, 2019 including $23.4 related to Cues and Sabik.

Engineered Solutions Reportable Segment



	Three months ended
	March 30, 2019			March 31, 2018			% Change
Revenues	$	138.0		$	127.8		8.0
Income	8.0			6.8			17.6
% of revenues	5.8		%	5.3		%
Components of revenue increase:
Organic							8.0
Foreign currency							—
Net revenue increase							8.0

Revenues — For the three months ended March 30, 2019, the increase in revenues, compared the respective period in 2018, was due to an organic revenue increase primarily within our power transformers business.

Income — For the three months ended March 30, 2019, the increase in income and margin, compared the respective period in 2018, was due primarily to the revenue increase noted above.

Backlog — The segment had backlog of ~~$48.7~~$296.3 and ~~$39.8~~$292.3 as of ~~June~~March 30, 2019 and March 31, 2018, ~~and July 1, 2017,~~ respectively.

~~Detection and Measurement Reportable Segment~~

Three months ended Six months ended
June 30, 2018 July 1, 2017 % Change June 30, 2018 July 1, 2017 % Change
Revenues $ 74.6
$ 64.5
15.7
$ 140.2
$ 118.1
18.7
Income 16.5
17.3
(4.6 ) 32.2
28.5
13.0
% of revenues 22.1 % 26.8 %
23.0 % 24.1 %
Components of revenue increase:

Organic

—

8.2
Foreign currency

0.8

1.7
Acquisitions 14.9
8.8
Net revenue increase

15.7

18.7

~~Revenues~~ — For the three months ended June 30, 2018, the increase in revenues, compared to the respective period in 2017, was due to the Schonstedt acquisition, which was completed on March 1, 2018, and the Cues acquisition, which was completed on June 7, 2018. For the six months ended June 30, 2018, the increase in revenues was due primarily to the acquisitions noted above and an increase in organic revenue primarily related to sales of communication technologies products. A weaker U.S. dollar also contributed to an increase in revenue during the 2018 periods.

~~Income~~ — For the three months ended June 30, 2018, income and margin decreased, compared to the respective period in 2017, primarily as a result of a charge of $1.6 associated with the excess fair value (over historical cost) of inventory acquired in the Cues transaction which was sold during the period of June 7, 2018 to June 30, 2018.

For the six months ended June 30, 2018, income and margin increased, compared to the respective period in 2017, primarily as a result of the revenue increase noted above, partially offset by the $1.6 charge noted above associated with the Cues acquisition.

~~Backlog~~ ~~— The segment had backlog of $58.5 and $81.4 as of June 30, 2018 and July 1, 2017, respectively.~~

~~Engineered Solutions Reportable Segment~~

Three months ended Six months ended
June 30, 2018 July 1, 2017 % Change June 30, 2018 July 1, 2017 % Change
Revenues $ 164.9
$ 164.9
—
$ 323.5
$ 341.8
(5.4 )
Income (loss) 6.0
(12.0 ) 150.0
8.7
(5.4 ) 261.1
% of revenues 3.6 % (7.3 )%
2.7 % (1.6 )%
Components of revenue decline:

Organic

(7.6 )

(16.2 )
Foreign currency

0.5

1.1
South Africa revenue revision 8.2
4.0
Adoption of ASC 606 (1.1 ) 5.7
Net revenue decline

—

(5.4 )

~~Revenues~~ — Revenue for the three months ended June 30, 2018 was consistent with the amount for the respective period in 2017, while revenue for the six months ended June 30, 2018 decreased in relation to the amount for the respective period in 2017. Revenues for the three and six months ended June 30, 2018 were impacted, when compared to the respective periods in 2017, by (i) a reduction in revenue of $13.5 during the second quarter of 2017 resulting from a revision to the expected revenues and profits on our large power projects in South Africa, (ii) the adoption of ASC 606, and (iii) a decline in organic revenue. The decline in organic revenue during the three and six months ended June 30, 2018 primarily resulted from a decrease in sales of process cooling products. Revenue for the segment’s process cooling business continues to be impacted by a shift in its sales model, as the business is now focused more on high-margin components and services and less on low-margin large projects. In addition, organic revenue for the six months ended June 30, 2018 was negatively impacted by the timing of power transformer shipments.

~~Income (loss)~~ — For the three and six months ended June 30, 2018, income and margin increased, compared to the respective periods in 2017, primarily as a result of the revision to the expected revenues and profits on our large projects in South Africa during the second quarter of 2017, which resulted in a charge of $22.9. Income and margin for the three and six months ended June 30, 2018 were negatively impacted by a decline in profitability from power transformers associated primarily with increases in commodity costs and a less profitable sales mix.

~~Backlog~~ — The segment had backlog of $369.7 and $393.7 as of June 30, 2018 and July 1, 2017, respectively. The adoption of ASC 606 resulted in a reduction in the segment’s backlog of $40.0 as of January 1, 2018. Portions of the segment’s backlog are long-term in nature, with the related revenues expected to be recorded through ~~2018~~2019 and beyond.

All Other



	Three months ended
	March 30, 2019			March 31, 2018			% Change
Revenues	$	(7.9	)	$	30.8		(125.6	)
Loss	(22.6		)	(4.1		)	451.2
% of revenues	*			(13.3		)%
Components of revenue decrease:
Organic							(57.0	)
Foreign currency							(11.8	)
South Africa revenue adjustment							(56.8	)
Net revenue decrease							(125.6	)


*	Not meaningful for comparison purposes.

Revenues — For the three months ended March 30, 2019, the decrease in revenues, compared the respective period in 2018, was due to an adjustment, during the three months ended March 30, 2019, to the amount of cumulative revenue associated with variable consideration on the large power projects in South Africa of $17.5, a decline in organic revenue, and a stronger U.S. dollar during the first quarter of 2019. The decline in organic revenue was the result of lower sales related to (i) the large power projects in South Africa, as these projects generally are in the latter stages of completion, and (ii) the impact of the wind-down of the Heat Transfer business.

Loss — For the three months ended March 30, 2019, the loss increased, compared to the respective period in 2018, primarily as a result of the reduction in revenues noted above.

Backlog — These operating segments had backlog of $30.2 and $89.1 as of March 30, 2019 and March 31, 2018, respectively.

CORPORATE AND OTHER EXPENSES


	Three months ended							Six months ended							Three months ended
	June 30, 2018			July 1, 2017			% Change	June 30, 2018			July 1, 2017			% Change	March 30, 2019			March 31, 2018			% Change
Total consolidated revenues	$	379.2		$	349.7		8.4	$	731.1		$	690.3		5.9	$	343.6		$	351.9		(2.4	)
Corporate expense	12.5			11.3			10.6	24.3			22.7			7.0	12.4			11.8			5.1
% of revenues	3.3		%	3.2		%		3.3		%	3.3		%		3.6		%	3.4		%
Long-term incentive compensation expense	4.2			3.6			16.7	8.1			6.8			19.1	3.5			3.9			(10.3	)

Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, ~~North Carolina~~NC corporate headquarters. The increase in corporate expense during the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, compared to the respective ~~periods~~period in ~~2017,~~2018, was due primarily ~~related~~ to ~~professional fees~~acquisition-related costs incurred ~~in connection with acquisition-related activities.~~during the first quarter of 2019.

Long-Term Incentive Compensation Expense — Long-term incentive compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes. The ~~increase~~decrease in long-term incentive compensation expense during the three ~~and six~~ months ended ~~June~~March 30, ~~2018,~~2019, compared to the respective ~~periods~~period in ~~2017,~~2018, was due ~~primarily~~ to ~~the timing and extent of compensation expense associated with~~certain one-time awards, ~~granted to the members of our senior management team following the spin-off of SPX FLOW Inc.~~which were issued in 2015, that fully vested in the third quarter of ~~2015.~~2018.

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 ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017.~~March 31, 2018.


	Six months ended						Three months ended
	June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Continuing operations:
Cash flows from (used in) operating activities	$	5.8		$	(10.0	)
Cash flows from operating activities							$	11.5		$	2.7
Cash flows used in investing activities	(177.7		)	(4.5		)	(74.7		)	(19.3		)
Cash flows from financing activities	113.9			7.8
Cash flows from (used in) discontinued operations	1.3			(5.7		)
Cash flows from (used in) financing activities							32.7			(3.6		)
Cash flows used in discontinued operations							(0.9		)	(0.4		)
Change in cash and equivalents due to changes in foreign currency exchange rates	(0.9		)	(3.7		)	1.6			—
Net change in cash and equivalents	$	(57.6	)	$	(16.1	)	$	(29.8	)	$	(20.6	)

Operating Activities — The increase in cash flows from operating activities during the ~~six~~three months ended ~~June~~March 30, ~~2018, as~~2019, compared to the same period in ~~2017,~~2018, was due primarily to reductions in working capital at certain of our businesses and a decline in cash outflows related to the large power projects in South Africa. These improvements in operating cash flows were offset partially by a decline in net income tax refunds (net payments of $3.3 during the ~~first six~~three months ended March 30, 2019 versus net refunds of ~~2018 of $17.2 (versus net income tax payments of $16.4~~$18.9 during the ~~same period in 2017), partially offset by the impact of a settlement reached with an insurance carrier which resulted in the receipt of $8.5 of cash proceeds during the first quarter of 2017.~~ three months ended March 31, 2018).

Investing Activities — Cash flows used in investing activities for the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 were comprised primarily of cash utilized infor the ~~acquisitions~~acquisition of ~~Schonstedt and Cues~~Sabik of ~~$182.6~~$77.0 and capital expenditures of ~~$5.4,~~$3.7, partially offset by ~~cash~~ proceeds of $5.5 received in connection with the sale of ~~certain intangible assets of our~~ Heat ~~Transfer business and cash proceeds of $4.6 received in connection with the subsequent sale of marketable securities acquired in connection with the Cues transaction.~~ Transfer’s manufacturing facility.

Cash flows used in investing activities for the ~~six~~three months ended ~~July 1, 2017~~March 31, 2018 were comprised primarily of cash utilized for the acquisition of Schonstedt of $16.3 and capital expenditures of ~~$4.8, partially offset by net proceeds from company-owned life insurance policies of $0.3.~~$3.2.

Financing Activities — Cash flows from financing activities for the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 were comprised primarily ~~related to our~~of net borrowings ~~under our senior credit facility in connection with~~of $38.6 which resulted primarily from the ~~Cues acquisition.~~ acquisition of Sabik, partially offset by minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $5.9.

Cash flows ~~from~~used in financing activities for the ~~six~~three months ended ~~July 1, 2017~~March 31, 2018 were comprised primarily ~~related to~~of minimum withholdings paid on behalf of employees on long-term incentive awards, net ~~borrowings under our various debt instruments~~ of ~~$9.6.~~proceeds from options exercised, of $3.2.

Discontinued Operations — Cash flows from discontinued operations for the six months ended June 30, 2018 related primarily to proceeds of $2.4 received in connection with a settlement reached with the buyer of Balcke Dürr, partially offset by disbursements for liabilities retained in connection with dispositions. Cash flows used in discontinued operations for the ~~six~~three months ended ~~July 1, 2017~~March 30, 2019 and March 31, 2018 related primarily to disbursements for liabilities retained in connection with dispositions.

Change in Cash and Equivalents due to Changes in Foreign Currency Exchange Rates — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during the first ~~six months~~quarters of ~~2018~~2019 and ~~2017.~~2018.

Borrowings and Availability

Borrowings —The following summarizes our debt activity (both current and non-current) for the ~~six~~three months ended ~~June~~March 30, ~~2018.~~2019.


	December 31, 2017		Borrowings		Repayments			Other⁽⁴⁾		June 30, 2018		December 31, 2018		Borrowings		Repayments			Other⁽⁴⁾		March 30, 2019
Revolving loans	$	—	$	129.0	$	(33.0	)	$	—	$	96.0	$	6.4	$	89.3	$	(60.1	)	$	—	$	35.6
Term loan⁽¹⁾	347.7		—		—			0.2		347.9		348.1		—		(4.4		)	0.2		343.9
Trade receivables financing arrangement⁽²⁾	—		32.0		(10.0		)	—		22.0		23.0		40.0		(29.0		)	—		34.0
Other indebtedness⁽³⁾	9.1		13.3		(14.4		)	—		8.0		4.3		3.0		(0.2		)	0.9		8.0
Total debt	356.8		$	174.3	$	(57.4	)	$	0.2	473.9		381.8		$	132.3	$	(93.7	)	$	1.1	421.5
Less: short-term debt	7.0									124.1		31.9									75.0
Less: current maturities of long-term debt	0.5									9.2		18.0									14.2
Total long-term debt	$	349.3								$	340.6	$	331.9								$	332.3

___________________________


⁽¹⁾	The term loan is repayable in quarterly installments of 1.25% of the initial loan amount of $350.0, beginning in the first quarter of 2019, with the remaining balance payable in full on December 19, 2022. Balances are net of unamortized debt issuance costs of ~~$2.1~~$1.7 and ~~$2.3~~$1.9 at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.


⁽²⁾	Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. At ~~June~~March 30, ~~2018,~~2019, we had ~~$21.9~~$5.3 of available borrowing capacity under this facility after giving effect to outstanding borrowings of ~~$22.0.~~$34.0. 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 ~~$3.1~~$2.5 and ~~$2.8,~~$2.5, capital lease obligations of ~~$1.9~~$2.5 and ~~$2.1,~~$1.8, and borrowings under a line of credit in China ~~totaling~~of $3.0 and ~~$4.1~~$0.0 at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 ~~June~~March 30, ~~2018,~~2019, we were in compliance with all covenant provisions of our senior credit agreement.

Availability — At ~~June~~March 30, ~~2018,~~2019, we had ~~$221.6~~$283.7 of available borrowing capacity under our revolving credit facilities after giving effect to borrowings under the domestic revolving loan facility of ~~$96.0~~$35.6 and ~~$32.4~~$30.7 reserved for domestic outstanding letters of credit. In addition, at ~~June~~March 30, ~~2018,~~2019, we had ~~$52.1~~$34.0 of available issuance capacity under our foreign ~~trade~~credit instrument facilities after giving effect to ~~$147.9~~$116.0 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, capital 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, and interest rate swap, foreign currency forwards, and commodity contracts. These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions throughout the world. We periodically evaluate the credit standing of these financial institutions.

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.

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

Other Matters

Contractual Obligations — There have been no material changes in the amounts of our contractual obligations from those disclosed in our ~~2017~~2018 Annual Report on Form 10-K. Our total net liabilities for unrecognized tax benefits including interest were ~~$23.1~~$17.0 as of ~~June~~March 30, ~~2018.~~2019. 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 ~~$10.0.~~$4.0.

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), 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 1415 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 ~~2017~~2018 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 ~~2017~~2018 Annual Report on Form 10-K. We have affected no material change in either our critical accounting policies or use of estimates since the filing of our ~~2017~~2018 Annual Report on Form ~~10-K, except for changes to our revenue recognition policy that resulted from our adoption of ASC 606 (see Notes 2 and 4 to our condensed consolidated financial statements for additional details).~~10-K.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Management does not believe our exposure to market risk has significantly changed since December 31, ~~2017~~2018 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 ~~June~~March 30, ~~2018.~~2019. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~June~~March 30, ~~2018.~~2019.

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 ~~June~~March 30, ~~2018~~2019 were identified that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings

The information required by this Item is incorporated by reference from the footnotes to the condensed consolidated financial statements, specifically Note ~~14,~~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 ~~2017~~2018 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results.

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

None.

~~ITEM 4. Mine Safety Disclosures~~

~~None.~~

ITEM 6. Exhibits



~~2.1~~	Agreement and Plan of Merger dated as of April 22, 2018 by and among SPX Corporation, SPX PoolCo 2018, Inc., and ELXSI Corporation incorporated herein by reference from our Current Report on Form 8-K filed on April 23, 2018 (File No. 1-6948).
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

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

101.1	SPX Corporation financial information from its Form 10-Q for the quarterly period ended ~~June~~March 30, ~~2018,~~2019, formatted in XBRL, including: (i) Condensed Consolidated Statements of Operations and Comprehensive Income for the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017;~~March 31, 2018; (ii) Condensed Consolidated Balance Sheets at ~~June~~March 30, ~~2018~~2019 and December 31, ~~2017;~~2018; (iii) Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017;~~March 31, 2018; and (iv) Notes to Condensed Consolidated Financial Statements.

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: ~~August 2, 2018~~May 6, 2019	By		/s/ Eugene J. Lowe, III
			President and Chief Executive Officer


Date: ~~August 2, 2018~~May 6, 2019	By		/s/ Scott W. Sproule
			Vice President, Chief Financial Officer and Treasurer

4643



	December 31, 2017			Impact of Adoption of ASC 606			January 1, 2018

Assets
Accounts receivable, net	$	267.5		$	(36.0	)	$	231.5
Inventories, net	143.0			(40.2		)	102.8
Contract assets	—			70.7			70.7
Other current assets	97.7			(3.6		)	94.1
Deferred income taxes	50.9			(0.9		)	50.0

Liabilities
Contract liabilities	—			86.9			86.9
Accrued expenses	292.6			(99.0		)	193.6
Other long-term liabilities	885.8			(1.6		)	884.2

Equity
Accumulated other comprehensive income	250.1			(0.3		)	249.8
Retained deficit	$	(742.3	)	$	4.0		$	(738.3	)



	Three months ended June 30, 2018
Condensed consolidated statement of operations and comprehensive income	Reported			Effect of ASC 606 Adoption			Under Prior Revenue Recognition Guidance
Revenues	$	379.2		$	1.8		$	381.0
Cost of products sold	281.5			2.3			283.8
Selling, general and administrative	72.6			—			72.6
Operating income	22.7			(0.5		)	22.2
Income from continuing operations before income taxes	20.1			(0.5		)	19.6
Income tax provision	(0.4		)	0.1			(0.3		)
Income from continuing operations	19.7			(0.4		)	19.3
Net income	$	23.0		$	(0.4	)	$	22.6

Comprehensive income	$	20.0		$	(0.2	)	$	19.8

Basic income per share of common stock:
Income from continuing operations	$	0.46		$	(0.01	)	$	0.45
Net income per share	$	0.54		$	(0.01	)	$	0.53

Diluted income per share of common stock:
Income from continuing operations	$	0.44		$	(0.01	)	$	0.43
Net income per share	$	0.51		$	(0.01	)	$	0.50



	As of June 30, 2018
Condensed consolidated balance sheet	Reported			Effect of ASC 606 Adoption			Under Prior Revenue Recognition Guidance
Accounts receivable, net	$	247.1		$	40.2		$	287.3
Contract assets	92.4			(92.4		)	—
Inventories, net	141.9			56.5			198.4
Other current assets	74.3			4.1			78.4
Total current assets	622.4			8.4			630.8
Deferred income taxes	29.5			1.5			31.0
TOTAL ASSETS	$	2,123.8		$	9.9		$	2,133.7
Contract liabilities	$	78.3		$	(78.3	)	$	—
Accrued expenses	179.8			91.9			271.7
Total current liabilities	543.9			13.6			557.5
Other long-term liabilities	849.1			1.5			850.6
Total long-term liabilities	$	1,221.3		$	1.5		$	1,222.8

Retained deficit	$	(707.9	)	$	(5.9	)	$	(713.8	)
Accumulated other comprehensive income	251.5			0.7			252.2
Total equity	358.6			(5.2		)	353.4
TOTAL LIABILITIES AND EQUITY	$	2,123.8		$	9.9		$	2,133.7