UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~March 28, 2020~~April 3, 2021


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

For the transition period from to

Commission File Number 1-6948

SPX CORPORATION

(Exact Name of registrant as specified in its charter)


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

~~13320-A Ballantyne Corporate Place,~~6325 Ardrey Kell Road, Suite 400, Charlotte, North Carolina 28277

(Address of principal executive offices) (Zip Code)

(980) 474-3700

(Registrant’s telephone number, including area code)

NOT APPLICABLE

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

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


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

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Common shares outstanding April ~~24, 2020,~~ ~~44,559,420~~30, 2021, 45,253,465

SPX CORPORATION AND SUBSIDIARIES

FORM 10-Q INDEX

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited; in millions, except per share amounts)


		Three months ended							Three months ended
		March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
Revenues	Revenues	$	369.3	$	343.6	Revenues	$	398.5	$	367.4
Costs and expenses:	Costs and expenses:					Costs and expenses:
Cost of products sold	Cost of products sold	255.2		260.4		Cost of products sold	273.3		253.7
Selling, general and administrative	Selling, general and administrative	78.9		76.7		Selling, general and administrative	88.8		78.9
Intangible amortization	Intangible amortization	2.6		1.6		Intangible amortization	4.0		2.6
Special charges, net	Special charges, net	0.3		0.1		Special charges, net	0.7		0.3

Other operating (income) expense		(0.4)		1.8
Other operating income						Other operating income	0		(0.4)
Operating income	Operating income	32.7		3.0		Operating income	31.7		32.3

Other income, net	Other income, net	0.7		7.2		Other income, net	7.0		0.7
Interest expense	Interest expense	(4.7)		(5.3)		Interest expense	(4.2)		(4.7)
Interest income	Interest income	—		0.3		Interest income	0.1		0

Income from continuing operations before income taxes	Income from continuing operations before income taxes	28.7		5.2		Income from continuing operations before income taxes	34.6		28.3
Income tax provision	Income tax provision	(6.0)		(4.6)		Income tax provision	(7.0)		(6.0)
Income from continuing operations	Income from continuing operations	22.7		0.6		Income from continuing operations	27.6		22.3

Income from discontinued operations, net of tax						Income from discontinued operations, net of tax	0		0.4
Loss on disposition of discontinued operations, net of tax						Loss on disposition of discontinued operations, net of tax	(0.8)		0
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	—		—		Income (loss) from discontinued operations, net of tax	(0.8)		0.4
Loss on disposition of discontinued operations, net of tax		—		(1.4)
Loss from discontinued operations, net of tax		—		(1.4)

Net income (loss)		$	22.7	$	(0.8)
Net income						Net income	$	26.8	$	22.7

Basic income (loss) per share of common stock:
Basic income per share of common stock:						Basic income per share of common stock:
Income from continuing operations	Income from continuing operations	$	0.51	$	0.01	Income from continuing operations	$	0.61	$	0.50
Loss from discontinued operations		—		(0.03)
Net income (loss) per share		$	0.51	$	(0.02)
Income (loss) from discontinued operations						Income (loss) from discontinued operations	(0.02)		0.01
Net income per share						Net income per share	$	0.59	$	0.51

Weighted-average number of common shares outstanding — basic	Weighted-average number of common shares outstanding — basic	44.309		43.618		Weighted-average number of common shares outstanding — basic	45.132		44.309

Diluted income (loss) per share of common stock:
Diluted income per share of common stock:						Diluted income per share of common stock:
Income from continuing operations	Income from continuing operations	$	0.50	$	0.01	Income from continuing operations	$	0.60	$	0.49
Loss from discontinued operations		—		(0.03)
Net income (loss) per share		$	0.50	$	(0.02)
Income (loss) from discontinued operations						Income (loss) from discontinued operations	(0.02)		0.01
Net income per share						Net income per share	$	0.58	$	0.50

Weighted-average number of common shares outstanding — diluted	Weighted-average number of common shares outstanding — diluted	45.527		44.880		Weighted-average number of common shares outstanding — diluted	46.319		45.527

Comprehensive income	Comprehensive income	$	9.8	$	0.9	Comprehensive income	$	29.5	$	9.8

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share data)


		March 28, 2020		December 31, 2019			April 3, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and equivalents	Cash and equivalents	$	163.1	$	54.7	Cash and equivalents	$	106.9	$	68.3
Accounts receivable, net	Accounts receivable, net	239.6		265.9		Accounts receivable, net	237.6		271.9
Contract assets	Contract assets	73.6		63.4		Contract assets	75.8		81.1
Inventories, net	Inventories, net	175.1		154.9		Inventories, net	169.7		162.0
Other current assets (includes income taxes receivable of $22.7 and $23.0 at March 28, 2020 and December 31, 2019, respectively)		92.6		93.2
Other current assets (includes income taxes receivable of $29.3 and $27.3 at April 3, 2021 and December 31, 2020, respectively)						Other current assets (includes income taxes receivable of $29.3 and $27.3 at April 3, 2021 and December 31, 2020, respectively)	105.5		99.3

Total current assets	Total current assets	744.0		632.1		Total current assets	695.5		682.6
Property, plant and equipment:	Property, plant and equipment:					Property, plant and equipment:
Land	Land	18.7		18.7		Land	19.4		19.4
Buildings and leasehold improvements	Buildings and leasehold improvements	121.0		121.9		Buildings and leasehold improvements	129.0		128.0
Machinery and equipment	Machinery and equipment	343.3		342.6		Machinery and equipment	358.9		356.7
		483.0		483.2			507.3		504.1
Accumulated depreciation	Accumulated depreciation	(306.1)		(304.1)		Accumulated depreciation	(320.7)		(314.4)
Property, plant and equipment, net	Property, plant and equipment, net	176.9		179.1		Property, plant and equipment, net	186.6		189.7
Goodwill	Goodwill	446.6		449.3		Goodwill	500.2		499.9
Intangibles, net	Intangibles, net	247.6		251.7		Intangibles, net	300.3		305.0
Other assets	Other assets	592.0		605.9		Other assets	613.0		616.6
Deferred income taxes	Deferred income taxes	14.8		16.4		Deferred income taxes	1.4		3.9

TOTAL ASSETS	TOTAL ASSETS	$	2,221.9	$	2,134.5	TOTAL ASSETS	$	2,297.0	$	2,297.7
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	148.0	$	141.6	Accounts payable	$	135.0	$	138.7
Contract liabilities	Contract liabilities	94.0		100.8		Contract liabilities	106.7		103.5
Accrued expenses	Accrued expenses	195.0		220.4		Accrued expenses	234.6		233.9
Income taxes payable	Income taxes payable	2.2		2.2		Income taxes payable	1.6		0.4
Short-term debt	Short-term debt	260.3		142.6		Short-term debt	100.0		101.2
Current maturities of long-term debt	Current maturities of long-term debt	2.6		1.0		Current maturities of long-term debt	8.9		7.2

Total current liabilities	Total current liabilities	702.1		608.6		Total current liabilities	586.8		584.9
Long-term debt	Long-term debt	248.6		249.9		Long-term debt	282.6		304.0
Deferred and other income taxes	Deferred and other income taxes	26.2		26.3		Deferred and other income taxes	29.0		23.8
Other long-term liabilities	Other long-term liabilities	729.9		747.3		Other long-term liabilities	737.8		755.8

Total long-term liabilities	Total long-term liabilities	1,004.7		1,023.5		Total long-term liabilities	1,049.4		1,083.6
Commitments and contingent liabilities (Note 15)	Commitments and contingent liabilities (Note 15)					Commitments and contingent liabilities (Note 15)	0		0
Equity:	Equity:					Equity:

Common stock (52,225,682 and 44,533,979 issued and outstanding at March 28, 2020, respectively, and 52,017,204 and 44,202,503 issued and outstanding at December 31, 2019, respectively)		0.5		0.5
Common stock (52,806,597 and 45,237,949 issued and outstanding at April 3, 2021, respectively, and 52,704,973 and 45,032,325 issued and outstanding at December 31, 2020, respectively)						Common stock (52,806,597 and 45,237,949 issued and outstanding at April 3, 2021, respectively, and 52,704,973 and 45,032,325 issued and outstanding at December 31, 2020, respectively)	0.5		0.5
Paid-in capital	Paid-in capital	1,298.5		1,302.4		Paid-in capital	1,315.8		1,319.9
Retained deficit	Retained deficit	(562.6)		(584.8)		Retained deficit	(461.3)		(488.1)
Accumulated other comprehensive income	Accumulated other comprehensive income	231.4		244.3		Accumulated other comprehensive income	251.2		248.5
Common stock in treasury (7,691,703 and 7,814,701 shares at March 28, 2020 and December 31, 2019, respectively)		(452.7)		(460.0)
Common stock in treasury (7,568,648 and 7,672,648 shares at April 3, 2021 and December 31, 2020, respectively)						Common stock in treasury (7,568,648 and 7,672,648 shares at April 3, 2021 and December 31, 2020, respectively)	(445.4)		(451.6)

Total equity	Total equity	515.1		502.4		Total equity	660.8		629.2
TOTAL LIABILITIES AND EQUITY	TOTAL LIABILITIES AND EQUITY	$	2,221.9	$	2,134.5	TOTAL LIABILITIES AND EQUITY	$	2,297.0	$	2,297.7

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in millions)

Three months ended March 28, 2020
Common
Stock Paid-In
Capital Retained
Deficit Accum. Other
Comprehensive
Income Common
Stock In
Treasury SPX
Corporation
Shareholders’
Equity
Balance at December 31, 2019 $ 0.5 $ 1,302.4 $ (584.8) $ 244.3 $ (460.0) $ 502.4
Impact of adoption of ASU 2016-13 - See Note 2 — — (0.5) — — (0.5)
Net income — — 22.7 — — 22.7
Other comprehensive loss, net — — — (12.9) — (12.9)
Incentive plan activity — 4.7 — — — 4.7
Long-term incentive compensation expense — 3.0 — — — 3.0
Restricted stock and restricted stock unit vesting — (11.6) — — 7.3 (4.3)
Balance at March 28, 2020 $ 0.5 $ 1,298.5 $ (562.6) $ 231.4 $ (452.7) $ 515.1


	Three months ended April 3, 2021
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at December 31, 2020	$	0.5	$	1,319.9	$	(488.1)	$	248.5	$	(451.6)	$	629.2
Net income	—		—		26.8		—		—		26.8
Other comprehensive income, net	—		—		—		2.7		—		2.7
Incentive plan activity	—		3.8		—		—		—		3.8
Long-term incentive compensation expense	—		3.0		—		—		—		3.0
Restricted stock unit vesting	—		(10.9)		—		—		6.2		(4.7)
Balance at April 3, 2021	$	0.5	$	1,315.8	$	(461.3)	$	251.2	$	(445.4)	$	660.8

Three months ended March 30, 2019
Common
Stock Paid-In
Capital Retained
Deficit Accum. Other
Comprehensive
Income Common
Stock In
Treasury SPX
Corporation
Shareholders’
Equity
Balance at December 31, 2018 $ 0.5 $ 1,295.4 $ (650.1) $ 244.9 $ (475.8) $ 414.9
Net loss — — (0.8) — — (0.8)
Other comprehensive income, net — — — 1.7 — 1.7
Incentive plan activity — 3.4 — — — 3.4
Long-term incentive compensation expense — 2.6 — — — 2.6
Restricted stock and restricted stock unit vesting — (21.5) — — 15.0 (6.5)
Balance at March 30, 2019 $ 0.5 $ 1,279.9 $ (650.9) $ 246.6 $ (460.8) $ 415.3


	Three months ended March 28, 2020
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at December 31, 2019	$	0.5	$	1,302.4	$	(584.8)	$	244.3	$	(460.0)	$	502.4
Impact of adoption of ASU 2016-13 - See Note 2	—		—		(0.5)		—		—		(0.5)
Net income	—		—		22.7		—		—		22.7
Other comprehensive loss, net	—		—		—		(12.9)		—		(12.9)
Incentive plan activity	—		4.7		—		—		—		4.7
Long-term incentive compensation expense	—		3.0		—		—		—		3.0
Restricted stock unit vesting	—		(11.6)		—		—		7.3		(4.3)
Balance at March 28, 2020	$	0.5	$	1,298.5	$	(562.6)	$	231.4	$	(452.7)	$	515.1

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


		Three months ended							Three months ended
		March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
Cash flows from (used in) operating activities:	Cash flows from (used in) operating activities:					Cash flows from (used in) operating activities:
Net income (loss)		$	22.7	$	(0.8)
Less: Loss from discontinued operations, net of tax		—		(1.4)
Net income						Net income	$	26.8	$	22.7
Less: Income (loss) from discontinued operations, net of tax						Less: Income (loss) from discontinued operations, net of tax	(0.8)		0.4
Income from continuing operations	Income from continuing operations	22.7		0.6		Income from continuing operations	27.6		22.3
Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:	Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:					Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:
Special charges, net	Special charges, net	0.3		0.1		Special charges, net	0.7		0.3
Gain on change in fair value of equity security	Gain on change in fair value of equity security	—		(6.3)		Gain on change in fair value of equity security	(5.2)		0

Deferred and other income taxes	Deferred and other income taxes	3.9		2.5		Deferred and other income taxes	8.3		3.9
Depreciation and amortization	Depreciation and amortization	9.2		8.1		Depreciation and amortization	11.1		9.2
Pension and other employee benefits	Pension and other employee benefits	2.2		2.8		Pension and other employee benefits	1.7		2.2
Long-term incentive compensation	Long-term incentive compensation	3.5		3.5		Long-term incentive compensation	3.0		3.5
Other, net	Other, net	0.7		0.3		Other, net	0		0.7
Changes in operating assets and liabilities, net of effects from acquisitions:	Changes in operating assets and liabilities, net of effects from acquisitions:					Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable and other assets	Accounts receivable and other assets	23.8		47.5		Accounts receivable and other assets	41.2		24.4
Inventories	Inventories	(22.7)		(14.4)		Inventories	(7.5)		(22.8)
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	(40.4)		(32.2)		Accounts payable, accrued expenses and other	(16.7)		(40.7)
Cash spending on restructuring actions	Cash spending on restructuring actions	(0.5)		(1.0)		Cash spending on restructuring actions	(0.5)		(0.5)
Net cash from continuing operations	Net cash from continuing operations	2.7		11.5		Net cash from continuing operations	63.7		2.5
Net cash used in discontinued operations	Net cash used in discontinued operations	(3.1)		(0.9)		Net cash used in discontinued operations	(3.5)		(2.9)
Net cash from (used in) operating activities	Net cash from (used in) operating activities	(0.4)		10.6		Net cash from (used in) operating activities	60.2		(0.4)
Cash flows from (used in) investing activities:	Cash flows from (used in) investing activities:					Cash flows from (used in) investing activities:
Proceeds from company-owned life insurance policies, net	Proceeds from company-owned life insurance policies, net	1.1		0.5		Proceeds from company-owned life insurance policies, net	3.5		1.1
Business acquisitions, net of cash acquired		—		(77.0)
Net proceeds from sales of assets		—		5.5

Capital expenditures	Capital expenditures	(3.6)		(3.7)		Capital expenditures	(2.6)		(3.6)
Net cash used in continuing operations		(2.5)		(74.7)
Net cash from (used in) continuing operations						Net cash from (used in) continuing operations	0.9		(2.5)
Net cash from discontinued operations	Net cash from discontinued operations	—		—		Net cash from discontinued operations	0		0
Net cash used in investing activities		(2.5)		(74.7)
Net cash from (used in) investing activities						Net cash from (used in) investing activities	0.9		(2.5)
Cash flows from (used in) financing activities:	Cash flows from (used in) financing activities:					Cash flows from (used in) financing activities:

Borrowings under senior credit facilities	Borrowings under senior credit facilities	178.7		89.3		Borrowings under senior credit facilities	54.0		178.7
Repayments under senior credit facilities	Repayments under senior credit facilities	(88.7)		(64.5)		Repayments under senior credit facilities	(81.6)		(88.7)
Borrowings under trade receivables financing arrangement	Borrowings under trade receivables financing arrangement	55.0		40.0		Borrowings under trade receivables financing arrangement	54.0		55.0
Repayments under trade receivables financing arrangement	Repayments under trade receivables financing arrangement	(27.0)		(29.0)		Repayments under trade receivables financing arrangement	(48.0)		(27.0)
Net borrowings (repayments) under other financing arrangements	Net borrowings (repayments) under other financing arrangements	(0.7)		2.8		Net borrowings (repayments) under other financing arrangements	0.2		(0.7)
Payment of contingent consideration	Payment of contingent consideration	(1.5)		—		Payment of contingent consideration	0		(1.5)
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	(2.8)		(5.9)		Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	(4.2)		(2.8)

Net cash from continuing operations		113.0		32.7
Net cash from (used in) discontinued operations		—		—
Net cash from financing activities		113.0		32.7
Net cash from (used in) continuing operations						Net cash from (used in) continuing operations	(25.6)		113.0
Net cash from discontinued operations						Net cash from discontinued operations	0		0
Net cash from (used in) financing activities						Net cash from (used in) financing activities	(25.6)		113.0
Change in cash and equivalents due to changes in foreign currency exchange rates	Change in cash and equivalents due to changes in foreign currency exchange rates	(1.7)		1.6		Change in cash and equivalents due to changes in foreign currency exchange rates	3.1		(1.7)
Net change in cash and equivalents	Net change in cash and equivalents	108.4		(29.8)		Net change in cash and equivalents	38.6		108.4
Consolidated cash and equivalents, beginning of period	Consolidated cash and equivalents, beginning of period	54.7		68.8		Consolidated cash and equivalents, beginning of period	68.3		54.7
Consolidated cash and equivalents, end of period	Consolidated cash and equivalents, end of period	$	163.1	$	39.0	Consolidated cash and equivalents, end of period	$	106.9	$	163.1

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. Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only (see Note 3 for information on discontinued operations).

We account for investments in unconsolidated companies where we exercise significant influence but do not have control using the equity method. In determining whether we are the primary beneficiary of a variable interest entity (“VIE”), we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties to determine which party has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and which party has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. ~~We have an interest in a VIE, in which we are not the primary beneficiary, as a result~~All of ~~the 2016 sale of Balcke Dürr. All other~~our VIEs are considered immaterial, individually and in aggregate, to our condensed consolidated financial statements.

Wind-Down of the SPX Heat Transfer Business

As a continuation of our strategic shift away from power-generation markets, during the fourth quarter of 2020, we completed the wind-down of the SPX Heat Transfer (“Heat Transfer“) business, which included providing all products and services on the business’s remaining contracts with customers. As a result, we are reporting Heat Transfer as a discontinued operation in the accompanying condensed consolidated financial statements. See Note 3 for additional details.

Acquisition of ~~Sabik~~ULC

On ~~February 1, 2019,~~September 2, 2020, we completed the acquisition of ~~Sabik Marine~~ULC Robotics (“~~Sabik”~~ULC”), ~~primarily~~ a ~~manufacturer~~leading developer of ~~obstruction lighting products,~~robotic systems, machine learning applications, and inspection technology for ~~a purchase price~~the energy, utility, and industrial markets, for cash proceeds of ~~$77.2,~~$89.2, net of cash acquired of ~~$0.6.~~$4.0. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $45.0, with payments scheduled to be made in 2021 and 2022 upon successful achievement of certain operational and financial performance milestones. The estimated fair value of such contingent consideration is $24.3, which is reflected as a liability in our condensed consolidated balance sheets as of April 3, 2021 and December 31, 2020. The post-acquisition operating results of ~~Sabik~~ULC are reflected in our Detection and Measurement reportable segment.

Acquisition of Sensors & Software

On November 11, 2020, we completed the acquisition of Sensors & Software Inc. (“Sensors & Software”), a leading manufacturer and distributor of ground penetrating radar products used for locating underground utilities, detecting unexploded ordinances, and geotechnical and geological investigations, for cash proceeds of $15.2, net of cash acquired of $0.3. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $4.0, with payment scheduled to be made in 2021 upon successful achievement of a financial performance milestone during the twelve months following the date of acquisition. The estimated fair value of such contingent consideration is $0.7, which is reflected as a liability in the accompanying condensed consolidated balance sheets as of April 3, 2021 and December 31, 2020. The post-acquisition operating results of Sensors & Software are reflected within our Detection and Measurement reportable segment.

~~Acquisition of SGS~~

On July 3, 2019, we completed the acquisition of SGS Refrigeration Inc. (“SGS”), a manufacturer of industrial refrigeration products in North America, for cash proceeds of $11.5, including contingent consideration of $1.5 that was paid during the three months ended March 28, 2020. The assets acquired and liabilities assumed ~~have been recorded at preliminary estimates of fair value as determined by management, based on information currently available~~in the ULC and on current assumptions as to future operations and are subject to change upon completion of acquisition accounting. The post-acquisition operating results of SGS are reflected within our HVAC reportable segment.

~~Acquisition of Patterson-Kelley~~

On November 12, 2019, we completed the acquisition of Patterson-Kelley, LLC (“Patterson-Kelley”), a manufacturer and distributor of commercial boilers and water heaters, for cash proceeds of $59.9. The assets acquired and liabilities assumedSensors & Software transactions 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~~primarily for the final assessment and valuation of ~~acquisition accounting. The post-acquisition operating results of Patterson-Kelley are reflected within our HVAC reportable segment.~~certain income tax amounts.

Impact of the Coronavirus Disease (the “COVID-19 pandemic”)

We ~~began to experience the~~experienced adverse impacts of the COVID-19 pandemic during the first half of 2020 with a diminishing impact in the second half of 2020 and into the first quarter of ~~2020 and these adverse impacts are expected to continue in the second quarter of 2020, and possibly longer.~~2021. Despite the adverse impacts, there are no indications that the COVID-19 pandemic has resulted in a material decline in the carrying value of any assets, or a material change in the estimate of any contingent amounts, recorded in our condensed consolidated balance sheet as of ~~March 28, 2020.~~April 3, 2021. However, there is uncertainty as to the duration and overall impact of the COVID-19 pandemic, which could result in an adverse material change in a future period to the estimates we have made for the valuation of assets and contingent amounts.

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, ~~2019.~~2020. Interim results are not necessarily indicative of full

year results. 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 ~~2020~~2021 are April 3, July 3 and October 2, compared to the respective March 28, June 27 and September 26, ~~compared to the respective March 30, June 29 and September 28, 2019~~2020 dates. We had ~~one less day~~five more days in the first quarter of ~~2020~~2021 and will have ~~two more~~six fewer days in the fourth quarter of ~~2020~~2021 than in the respective ~~2019~~2020 periods. ~~We do~~It is not ~~believe~~practicable to estimate the ~~one less day during~~impact of the ~~first quarter of 2020 had a material impact~~five additional days on our consolidated operating results for the three months ended April 3, 2021, when compared to the consolidated operating results for the ~~first quarter 2019.~~2020 respective period.

Reclassification of Prior Year Amounts

Certain prior year amounts have been reclassified to conform to the current year presentation, with the amounts related to the inclusion of Heat Transfer within discontinued operations.

(2) NEW ACCOUNTING PRONOUNCEMENTS

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

In ~~February~~June 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. The adoption of ASC 842 had no impact on our retained deficit.

~~In June 2016, the FASB~~ issued Accounting Standards Update (“ASU”) 2016-13. ASU 2016-13 changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, based on historical experience, current conditions and reasonable and supportable forecasts. The requirements of ASU 2016-13 are to be applied on a modified retrospective basis, which entails recognizing the initial effect of adoption in retained earnings. We adopted ASU 2016-13 on January 1, 2020, which resulted in an increase of our retained deficit of $0.5.

In 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. The impact of this amendment on our consolidated financial statements will depend on the results of future goodwill impairment tests.

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. We adopted this guidance during the first quarter of 2019, with such adoption having no material impact to our condensed consolidated financial statements.

In August 2018, the FASB issued amended guidance to simplify fair value measurement disclosure requirements. The new provisions eliminate the requirements to disclose (i) transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) policies related to valuation processes and the timing of transfers between levels of the fair value hierarchy, and (iii) net asset value disclosure of estimates of timing of future liquidity events. The FASB also modified disclosure requirements of Level 3 fair value measurements. This guidance is effective for annual periods beginning after December 15, 2019. We adopted this standard on January 1, 2020 with no impact on our condensed consolidated financial statements.

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

The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on June 30, 2023, with some tenors ceasing on December 31, 2021. In an effort to address the various challenges created by such discontinuance, the FASB issued ~~an amendment~~two amendments to existing guidance, ASU No. 2020-04 and No. 2021-01, Reference Rate Reform. The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, ~~borrowings)~~etc.) necessitated by the reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge

accounting to certain hedging relationships impacted by the reference rate reform. Application of the guidance in the ~~amendment~~amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. We are currently evaluating the impacts of reference rate reform and the new guidance on our condensed consolidated financial statements.

(3) ACQUISITIONS AND DISCONTINUED OPERATIONS

As indicated in Note 1, on ~~February 1, 2019, July 3, 2019,~~September 2, 2020 and November ~~12, 2019,~~11, 2020, we completed the acquisitions of ~~Sabik, SGS,~~ULC and ~~Patterson-Kelley,~~Sensors & Software, respectively. The pro forma effects of these acquisitions are not material to ~~our~~the condensed consolidated results of operations for the three months ended March ~~30, 2019.~~28, 2020.

Wind-Down of the Heat Transfer Business

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

Major line items constituting pre-tax income and after-tax income of Heat Transfer for the period ended March 28, 2020 is shown below:


	Three months ended
	March 28, 2020
Revenues	$	1.9

Cost of product sold	1.5




Income before income tax	0.4
Income tax provision	0
Income from discontinued operations, net of tax	$	0.4

During the three months ended ~~March 30, 2019,~~April 3, 2021, we recorded ~~an income tax provision of $1.4~~ $0.8 within “Loss on disposition of discontinued operations, net of tax” ~~as a result of a change in estimate associated with income tax~~ resulting primarily from revisions to liabilities retained in connection with ~~a prior business divestiture.~~ businesses classified as discontinued operations.

(4) REVENUES FROM CONTRACTS

Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments and our other operating ~~segments,~~segment, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are affected by economic factors, with such disaggregation presented below for the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019:~~2020:

Three months ended March 28, 2020
Reportable Segments and All Other HVAC Detection and Measurement Engineered Solutions All Other Total
Major product lines
Cooling $ 57.9 $ — $ — $ — $ 57.9
Boilers, comfort heating, and ventilation 60.6 — — — 60.6
Underground locators and inspection and rehabilitation
equipment — 48.7 — — 48.7
Signal monitoring, obstruction lighting, and bus fare collection systems — 43.2 — — 43.2
Power transformers — — 110.6 — 110.6
Process cooling equipment and services, and heat exchangers — — 44.3 1.9 46.2
South African projects — — — 2.1 2.1
$ 118.5 $ 91.9 $ 154.9 $ 4.0 $ 369.3
Timing of Revenue Recognition
Revenues recognized at a point in time
$ 118.5 $ 83.5 $ 11.6 $ 1.3 $ 214.9
Revenues recognized over time
— 8.4 143.3 2.7 154.4
$ 118.5 $ 91.9 $ 154.9 $ 4.0 $ 369.3


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

Major product lines
Cooling	$	72.6	$	0	$	0	$	0	$	72.6
Boilers, comfort heating, and ventilation	73.9		0		0		0		73.9
Underground locators, inspection and rehabilitation equipment, and robotic systems	0		67.4		0		0		67.4
Signal monitoring, obstruction lighting, and bus fare collection systems	0		44.2		0		0		44.2
Power transformers	0		0		110.6		0		110.6
Process cooling equipment and services	0		0		29.1		0.2		29.3
South African projects	0		0		0		0.5		0.5
	$	146.5	$	111.6	$	139.7	$	0.7	$	398.5

Timing of Revenue Recognition
Revenues recognized at a point in time	$	146.5	$	96.5	$	10.9	$	0	$	253.9
Revenues recognized over time	0		15.1		128.8		0.7		144.6
	$	146.5	$	111.6	$	139.7	$	0.7	$	398.5

Three months ended March 30, 2019
Reportable Segments and All Other HVAC Detection and Measurement Engineered Solutions All Other Total
Major product lines
Cooling $ 58.9 $ — $ — $ — $ 58.9
Boilers, comfort heating, and ventilation 69.5 — — — 69.5
Underground locators and inspection and rehabilitation
equipment — 47.1 — — 47.1
Signal monitoring, obstruction lighting, and bus fare collection systems — 38.0 — — 38.0
Power transformers — — 98.8 — 98.8
Process cooling equipment and services, and heat exchangers — — 39.2 3.7 42.9
South African projects ⁽¹⁾
— — — (11.6) (11.6)
$ 128.4 $ 85.1 $ 138.0 $ (7.9) $ 343.6
Timing of Revenue Recognition
Revenues recognized at a point in time
$ 128.4 $ 79.6 $ 12.5 $ 1.1 $ 221.6
Revenues recognized over time ⁽¹⁾
— 5.5 125.5 (9.0) 122.0
$ 128.4 $ 85.1 $ 138.0 $ (7.9) $ 343.6

~~___________________________~~



	Three months ended March 28, 2020
Reportable Segments and Other	HVAC		Detection and Measurement		Engineered Solutions		Other		Total

Major product lines
Cooling	$	57.9	$	0	$	0	$	0	$	57.9
Boilers, comfort heating, and ventilation	60.6		0		0		0		60.6
Underground locators and inspection and rehabilitation equipment	0		48.7		0		0		48.7
Signal monitoring, obstruction lighting, and bus fare collection systems	0		43.2		0		0		43.2
Power transformers	0		0		110.6		0		110.6
Process cooling equipment and services	0		0		44.3		0		44.3
South African projects	0		0		0		2.1		2.1
	$	118.5	$	91.9	$	154.9	$	2.1	$	367.4

Timing of Revenue Recognition
Revenues recognized at a point in time	$	118.5	$	83.5	$	11.6	$	0	$	213.6
Revenues recognized over time	0		8.4		143.3		2.1		153.8
	$	118.5	$	91.9	$	154.9	$	2.1	$	367.4

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

Contract Balances

Our customers are invoiced for products and services at the time of delivery or based on contractual milestones, resulting in outstanding receivables with payment terms from these customers (“Contract Accounts Receivable”). In some cases, the timing of revenue recognition, particularly for revenue recognized over time, differs from when such amounts are invoiced to customers, resulting in a contract asset (revenue recognition precedes the invoicing of the related revenue amount) or a contract liability (payment from the customer precedes recognition of the related revenue amount). Contract assets and liabilities are generally classified as current. On a contract-by-contract basis, the contract assets and contract liabilities are reported net within our condensed consolidated balance sheets. Our contract balances consisted of the following as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019:~~2020:


Contract Balances	Contract Balances	March 28, 2020		December 31, 2019		Change		Contract Balances	April 3, 2021		December 31, 2020		Change
Contract Accounts Receivable⁽¹⁾	Contract Accounts Receivable⁽¹⁾	$	235.2	$	260.8	$	(25.6)	Contract Accounts Receivable(1)	$	226.6	$	260.7	$	(34.1)
Contract Assets	Contract Assets	73.6		63.4		10.2		Contract Assets	75.8		81.1		(5.3)
Contract Liabilities - current	Contract Liabilities - current	(94.0)		(100.8)		6.8		Contract Liabilities - current	(106.7)		(103.5)		(3.2)
Contract Liabilities - non-current⁽²⁾	Contract Liabilities - non-current⁽²⁾	(2.4)		(3.3)		0.9		Contract Liabilities - non-current(2)	(3.2)		(3.4)		0.2
Net contract balance	Net contract balance	$	212.4	$	220.1	$	(7.7)	Net contract balance	$	192.5	$	234.9	$	(42.4)

___________________________

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

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

The ~~$7.7~~$42.4 decrease in our net contract balance from December 31, ~~2019~~2020 to ~~March 28, 2020~~April 3, 2021 was due primarily to cash payments received from customers during the period, partially offset by revenue recognized during the period.

During the three months ended ~~March 28, 2020,~~April 3, 2021, we recognized revenues of $~~$44.6~~46.3 related to our contract liabilities at December 31, ~~2019.~~2020.

Performance Obligations

As of ~~March 28, 2020,~~April 3, 2021, the aggregate amount allocated to remaining performance obligations was $~~74.0~~100.7. We expect to recognize revenue on approximately~~36%~~ 54% and 72% o~~61%~~ off remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

~~Variable Consideration~~

During February, March, and April of 2019, we received a number of claims from the prime contractors on the large power projects in South Africa asserting various amounts of damages. In consideration of these 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, we analyzed the risk of a significant revenue reversal associated with the amount of variable consideration that had been recorded for the projects. Based on such analysis, we reduced the amount of cumulative revenue associated with the variable consideration on the large power projects in South Africa by $17.5 during the first quarter of 2019, as it was no longer probable that such amounts of revenue would not be reversed. As of March 28, 2020, there was $0.3 of cumulative revenue associated with variable consideration recorded for the large power projects in South Africa.

(5) LEASES

~~We entered into a~~ ~~ten~~-year agreement to lease office space for a new corporate headquarters location in Charlotte, NC, with scheduled monthly payments under the agreement commencing on June 1, 2020. Aggregate scheduled payments under the agreement total $~~17.6. Our existing corporate headquarters lease agreement in Charlotte, NC, with annual lease payments of $2.1, expires in September 2020.~~ There ~~were~~have been no ~~other~~ material changes to our operating ~~lease commitments~~and finance leases during the three months ended ~~March 28, 2020.~~April 3, 2021.

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

We are a global supplier of highly ~~specialized,~~specialized, engineered solutions with operations in 17over 15 countries and sales in over 100 countries around the world.

Our ~~DB Thermal~~DBT Technologies (PTY) LTD (“DBT”) ~~and Heat Transfer~~ operating ~~segments are being~~segment is reported inwithin an ~~“All Other”~~“Other” category ~~for segment reporting purposes.~~outside of our reportable segments. We have aggregated our other operating segments into the following ~~three~~3 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 ~~ASC.~~Codification. Operating income or loss for each of our operating segments is determined before considering impairment and special charges, long-term incentive compensation, certain other operating ~~income/~~expenses, and other indirect corporate expenses. This is consistent with the way our ~~chief operating decision maker~~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.~~Asia.

Detection and Measurement Reportable Segment

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

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 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

As noted above, “Other” consists of our South African operating segment, DBT. Our ~~“All Other” group of~~DBT operating ~~segments engineer, design, manufacture, install~~segment engineers, designs, manufactures, installs, and ~~service~~services equipment ~~including heat exchangers, primarily~~ for the industrial and power generation ~~markets. The primary distribution channels~~markets, with its efforts focused primarily on two large power projects in South Africa that are in the final stages of completion (see Note 15 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.~~additional details).

Corporate Expense

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

Financial data for our reportable segments and our other operating ~~segments~~segment for the three months ended April 3, 2021 and March 28, 2020 are presented below:


	Three months ended
	April 3, 2021		March 28, 2020
Revenues:
HVAC reportable segment	$	146.5	$	118.5
Detection and Measurement reportable segment	111.6		91.9
Engineered Solutions reportable segment	139.7		154.9
Other	0.7		2.1
Consolidated revenues	$	398.5	$	367.4

Income (loss):
HVAC reportable segment	$	24.2	$	15.0
Detection and Measurement reportable segment	20.0		18.2
Engineered Solutions reportable segment	10.0		17.9
Other	(4.6)		(4.3)
Total income for segments	49.6		46.8

Corporate expense	(14.2)		(11.1)
Long-term incentive compensation expense	(3.0)		(3.5)

Special charges, net	(0.7)		(0.3)
Other operating income(1)	0		0.4
Consolidated operating income	$	31.7	$	32.3

(1) For the three months ended March 28, 2020, ~~and March 30, 2019 are presented below:~~

Three months ended
March 28,
2020 March 30,
2019
Revenues:
HVAC reportable segment $ 118.5 $ 128.4
Detection and Measurement reportable segment 91.9 85.1
Engineered Solutions reportable segment 154.9 138.0
All Other ⁽¹⁾
4.0 (7.9)
Consolidated revenues $ 369.3 $ 343.6
Income (loss):
HVAC reportable segment $ 15.0 $ 18.4
Detection and Measurement reportable segment 18.2 17.0
Engineered Solutions reportable segment 17.9 8.0
All Other ⁽¹⁾
(3.9) (22.6)
Total income for segments 47.2 20.8
Corporate expense (11.1) (12.4)
Long-term incentive compensation expense (3.5) (3.5)
Special charges, net (0.3) (0.1)
Other operating income (expense) 0.4 (1.8)
Consolidated operating income $ 32.7 $ 3.0

~~_____________________~~

⁽¹⁾~~As indicated~~includes a gain of $0.4 related to revisions to estimates of certain liabilities retained in ~~Note 4, during the three months ended March 30, 2019, we reduced the amount of cumulative revenue associated~~connection with the ~~variable consideration on~~2016 sale of the ~~large power projects in South Africa by $17.5~~.dry cooling business.

(7) SPECIAL CHARGES, NET

Special charges, net, for the three months ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019~~ are described in more detail below:


		Three months ended							Three months ended
		March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
HVAC reportable segment	HVAC reportable segment	$	0.1	$	0.1	HVAC reportable segment	$	0	$	0.1
Detection and Measurement reportable segment	Detection and Measurement reportable segment	—		—		Detection and Measurement reportable segment	0.2		0
Engineered Solutions reportable segment	Engineered Solutions reportable segment	—		—		Engineered Solutions reportable segment	0		0
All Other		0.2		—
Other						Other	0.5		0.2
Corporate	Corporate	—		—		Corporate	0		0
Total	Total	$	0.3	$	0.1	Total	$	0.7	$	0.3

HVAC — Charges for the three months ended March 28, 2020 related primarily to severance costs associated with a restructuring action at the segment's Cooling Americas business.

Detection and Measurement — Charges for the three months ended ~~March 30, 2019~~April 3, 2021 related primarily to severance costs associated with a restructuring action at the ~~segment’s Cooling EMEA~~segment's pipeline inspection and rehabilitation business.

~~All~~ Other — Charges for the three months ended April 3, 2021 and March 28, 2020 related primarily to severance costs incurred in connection with the wind-down activities at DBT, our South African subsidiary.

No significant future charges are expected to be incurred under actions approved as of ~~March 28, 2020.~~April 3, 2021.

The following is an analysis of our restructuring liabilities for the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019:~~2020:


		Three months ended							Three months ended
		March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
Balance at beginning of year	Balance at beginning of year	$	1.7	$	2.7	Balance at beginning of year	$	1.5	$	1.7
Special charges	Special charges	0.3		0.1		Special charges	0.7		0.3
Utilization — cash	Utilization — cash	(0.5)		(1.0)		Utilization — cash	(0.5)		(0.5)
Currency translation adjustment and other	Currency translation adjustment and other	(0.2)		—		Currency translation adjustment and other	(0.1)		(0.2)
Balance at end of period	Balance at end of period	$	1.3	$	1.8	Balance at end of period	$	1.6	$	1.3

(8) INVENTORIES, NET

Inventories at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019~~2020 comprised the following:


		March 28, 2020		December 31, 2019			April 3, 2021		December 31, 2020
Finished goods	Finished goods	$	66.4	$	57.6	Finished goods	$	57.1	$	52.9
Work in process	Work in process	23.8		19.3		Work in process	22.2		22.3
Raw materials and purchased parts	Raw materials and purchased parts	97.7		90.3		Raw materials and purchased parts	105.1		101.5
Total FIFO cost	Total FIFO cost	187.9		167.2		Total FIFO cost	184.4		176.7
Excess of FIFO cost over LIFO inventory value	Excess of FIFO cost over LIFO inventory value	(12.8)		(12.3)		Excess of FIFO cost over LIFO inventory value	(14.7)		(14.7)
Total inventories, net	Total inventories, net	$	175.1	$	154.9	Total inventories, net	$	169.7	$	162.0

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 ~~41%~~36% and ~~36%~~38% of total inventory at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively. Other inventories are valued using the first-in, first-out (“FIFO”) method.

(9) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the three months ended ~~March 28, 2020~~April 3, 2021 were as follows:


		December 31, 2019		Goodwill Resulting from Business Combinations ⁽¹⁾		Impairments		Foreign Currency Translation		March 28, 2020			December 31, 2020		Goodwill Resulting from Business Combinations (1)		Impairments		Foreign Currency Translation		April 3, 2021
HVAC reportable segment	HVAC reportable segment											HVAC reportable segment
Gross goodwill	Gross goodwill	$	277.1	$	(0.1)	$	—	$	(1.7)	$	275.3	Gross goodwill	$	281.4	$	0	$	0	$	(1.4)	$	280.0
Accumulated impairments	Accumulated impairments	(144.6)		—		—		0.5		(144.1)		Accumulated impairments	(144.8)		—		—		(0.1)		(144.9)
Goodwill	Goodwill	132.5		(0.1)		—		(1.2)		131.2		Goodwill	136.6		0		0		(1.5)		135.1

Detection and Measurement reportable segment	Detection and Measurement reportable segment											Detection and Measurement reportable segment
Gross goodwill	Gross goodwill	304.1		—		—		(4.3)		299.8		Gross goodwill	351.5		2.8		0		(0.4)		353.9
Accumulated impairments	Accumulated impairments	(133.6)		—		—		2.9		(130.7)		Accumulated impairments	(134.5)		—		—		(0.6)		(135.1)
Goodwill	Goodwill	170.5		—		—		(1.4)		169.1		Goodwill	217.0		2.8		0		(1.0)		218.8

Engineered Solutions reportable segment	Engineered Solutions reportable segment											Engineered Solutions reportable segment
Gross goodwill	Gross goodwill	334.2		—		—		(2.5)		331.7		Gross goodwill	342.1		0		0		(3.6)		338.5
Accumulated impairments	Accumulated impairments	(187.9)		—		—		2.5		(185.4)		Accumulated impairments	(195.8)		—		—		3.6		(192.2)
Goodwill	Goodwill	146.3		—		—		—		146.3		Goodwill	146.3		0		0		0		146.3

All Other
Other												Other
Gross goodwill	Gross goodwill	20.8		—		—		—		20.8		Gross goodwill	0		0		0		0		0
Accumulated impairments	Accumulated impairments	(20.8)		—		—		—		(20.8)		Accumulated impairments	0		—		—		0		0
Goodwill	Goodwill	—		—		—		—		—		Goodwill	0		0		0		0		0

Total	Total											Total
Gross goodwill	Gross goodwill	936.2		(0.1)		—		(8.5)		927.6		Gross goodwill	975.0		2.8		0		(5.4)		972.4
Accumulated impairments	Accumulated impairments	(486.9)		—		—		5.9		(481.0)		Accumulated impairments	(475.1)		—		—		2.9		(472.2)
Goodwill	Goodwill	$	449.3	$	(0.1)	$	—	$	(2.6)	$	446.6	Goodwill	$	499.9	$	2.8	$	0	$	(2.5)	$	500.2

___________________________

⁽¹⁾Reflects a ~~reduction~~net increase in ~~Patterson-Kelley's~~ULC's goodwill during ~~the period~~2021 of ~~$0.5~~$0.8 resulting from revisions to the valuation of certain ~~tangible~~ assets ~~partially offset by~~and liabilities and an increase in ~~SGS's~~Sensors & Software's goodwill ~~during the period~~ of ~~$0.4~~$2.0 resulting from revisions to the valuation of certain income tax accounts. As indicated in Note 1, the acquired assets, including goodwill, and liabilities assumed in the ~~SGS~~ULC and ~~Patterson-Kelley~~Sensors & Software acquisitions have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

Other Intangibles, Net

Identifiable intangible assets at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019~~2020 comprised the following:


		March 28, 2020										December 31, 2019											April 3, 2021				December 31, 2020
		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:	Intangible assets with determinable lives:													Intangible assets with determinable lives:
Customer relationships	Customer relationships	$	77.2	$	(10.3)	$	66.9	$	77.4	$	(8.7)	$	68.7	Customer relationships	$	103.2	$	(18.4)	$	84.8	$	103.4	$	(16.2)	$	87.2
Technology	Technology	29.3		(4.0)		25.3		29.5		(3.3)		26.2		Technology	54.2		(7.9)		46.3		54.4		(6.8)		47.6
Patents	Patents	4.5		(4.5)		—		4.5		(4.5)		—		Patents	4.5		(4.5)		0		4.5		(4.5)		0
Other	Other	12.3		(9.4)		2.9		12.6		(9.2)		3.4		Other	18.9		(13.1)		5.8		18.8		(12.5)		6.3
		123.3		(28.2)		95.1		124.0		(25.7)		98.3			180.8		(43.9)		136.9		181.1		(40.0)		141.1
Trademarks with indefinite lives	Trademarks with indefinite lives	152.5		—		152.5		153.4		—		153.4		Trademarks with indefinite lives	163.4		—		163.4		163.9		—		163.9
Total	Total	$	275.8	$	(28.2)	$	247.6	$	277.4	$	(25.7)	$	251.7	Total	$	344.2	$	(43.9)	$	300.3	$	345.0	$	(40.0)	$	305.0

~~At March 28, 2020, the net carrying value of intangible assets with determinable lives consisted of $26.5 in the HVAC reportable segment and $68.6 in the Detection and Measurement reportable segment. At March 28, 2020, trademarks with~~

~~indefinite~~At April 3, 2021, the net carrying value of intangible assets with determinable lives consisted of ~~$96.1~~$23.8 in the HVAC reportable segment ~~$47.3~~and $113.1 in the Detection and Measurement reportable segment. At April 3, 2021, trademarks with indefinite lives consisted of $96.4 in the HVAC reportable segment, $57.9 in the Detection and Measurement reportable segment, and $9.1 in the Engineered Solutions reportable ~~segment.~~ 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.

Based on our annual goodwill impairment testing induring the fourth quarter of ~~2019,~~2020, we concluded that the estimated fair value of each of our reporting units, exclusive of Cues, ~~reporting unit~~ Inc. (“Cues”) and Patterson-Kelley, LLC (“Patterson-Kelley”), exceeded the carrying value of their respective net assets by over 75%. The estimated fair values of Cues and Patterson-Kelley exceeded the carrying value of their respective net assets by approximately 12% and 3%, while given the recent acquisition of ULC, its fair value approximated the carrying value of its net ~~assets by approximately 10%. An adverse~~assets. The total goodwill for Cues, Patterson-Kelley and ULC was $47.9, $14.2 and $38.4, respectively, as of April 3, 2021. A change in ~~any of the~~ assumptions used in ~~testing Cues’ goodwill for impairment~~valuing Cues, Patterson-Kelley, or ULC (e.g., projected ~~revenue~~revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in ~~Cues’~~these reporting units estimated fair value being less than the respective carrying value of ~~its~~their net assets. If ~~Cues~~any of these reporting units is unable to achieve ~~the~~its current financial ~~forecasts included in its 2019 annual goodwill impairment analysis,~~forecast, we may be required to record an impairment charge in a future period related to ~~Cues’~~its goodwill. ~~Cues’ goodwill was~~ ~~$47.9~~ ~~at March 28, 2020.~~

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 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.

As indicated in Note 1, the COVID-19 pandemic ~~is expected to~~could have an adverse impact on our ~~consolidated financial results in the second quarter of 2020, and possibly longer.~~future operating results. As of ~~March 28, 2020,~~April 3, 2021, there ~~were~~are no indications that the carrying value of our goodwill and other intangible assets may not be recoverable. However, a prolonged adverse impact of the COVID-19 pandemic on our ~~consolidated financial~~future operating results may require an impairment charge related to one or more of these assets in a future period.

(10) WARRANTY

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


		Three months ended							Three months ended
		March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
Balance at beginning of year	Balance at beginning of year	$	35.1	$	34.0	Balance at beginning of year	$	38.4	$	34.8
Acquisitions	Acquisitions	—		0.1		Acquisitions	0		0
Provisions	Provisions	2.9		2.9		Provisions	3.9		2.9
Usage	Usage	(3.5)		(3.8)		Usage	(3.9)		(3.5)
Currency translation adjustment	Currency translation adjustment	(0.1)		—		Currency translation adjustment	0		(0.1)
Balance at end of period	Balance at end of period	34.4		33.2		Balance at end of period	38.4		34.1
Less: Current portion of warranty	Less: Current portion of warranty	11.9		11.0		Less: Current portion of warranty	13.0		11.9
Non-current portion of warranty	Non-current portion of warranty	$	22.5	$	22.2	Non-current portion of warranty	$	25.4	$	22.2

(11) EMPLOYEE BENEFIT PLANS

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

Domestic Pension Plans

Three months ended
March 28,
2020 March 30,
2019
Service cost $ — $ —
Interest cost 2.7 3.3
Expected return on plan assets (2.4) (2.5)
Net periodic pension benefit expense $ 0.3 $ 0.8


	Three months ended
	April 3, 2021		March 28, 2020
Service cost	$	0	$	0
Interest cost	2.1		2.7
Expected return on plan assets	(2.2)		(2.4)



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

Foreign Pension Plans


		Three months ended							Three months ended
		March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
Service cost	Service cost	$	—	$	—	Service cost	$	0	$	0
Interest cost	Interest cost	1.0		1.2		Interest cost	0.8		1.0
Expected return on plan assets	Expected return on plan assets	(1.5)		(1.6)		Expected return on plan assets	(1.4)		(1.5)

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

Postretirement Plans


		Three months ended							Three months ended
		March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
Service cost	Service cost	$	—	$	—	Service cost	$	0	$	0
Interest cost	Interest cost	0.4		0.6		Interest cost	0.3		0.4

Amortization of unrecognized prior service credits	Amortization of unrecognized prior service credits	(1.2)		(1.0)		Amortization of unrecognized prior service credits	(1.2)		(1.2)
Net periodic postretirement benefit income	Net periodic postretirement benefit income	$	(0.8)	$	(0.4)	Net periodic postretirement benefit income	$	(0.9)	$	(0.8)

(12) INDEBTEDNESS

The following summarizes our debt activity (both current and non-current) for the three months ended ~~March 28, 2020:~~April 3, 2021:


		December 31, 2019		Borrowings		Repayments		Other⁽⁵⁾		March 28, 2020			December 31, 2020		Borrowings		Repayments		Other(5)		April 3, 2021
Revolving loans ⁽¹⁾	Revolving loans ⁽¹⁾	$	140.0	$	178.7	$	(88.7)	$	—	$	230.0	Revolving loans (1)	$	129.8	$	54.0	$	(80.1)	$	0	$	103.7
Term loan⁽²⁾	Term loan⁽²⁾	248.2		—		—		0.1		248.3		Term loan(2)	248.6		0		(1.5)		0.1		247.2

Trade receivables financing arrangement⁽³⁾	Trade receivables financing arrangement⁽³⁾	—		55.0		(27.0)		—		28.0		Trade receivables financing arrangement(3)	28.0		54.0		(48.0)		0		34.0
Other indebtedness⁽⁴⁾	Other indebtedness⁽⁴⁾	5.3		—		(0.7)		0.6		5.2		Other indebtedness(4)	6.0		0.4		(0.2)		0.4		6.6
Total debt	Total debt	393.5		$	233.7	$	(116.4)	$	0.7	511.5		Total debt	412.4		$	108.4	$	(129.8)	$	0.5	391.5

Less: short-term debt	Less: short-term debt	142.6								260.3		Less: short-term debt	101.2								100.0
Less: current maturities of long-term debt	Less: current maturities of long-term debt	1.0								2.6		Less: current maturities of long-term debt	7.2								8.9
Total long-term debt	Total long-term debt	$	249.9							$	248.6	Total long-term debt	$	304.0							$	282.6

___________________________

⁽¹⁾In March 2020, we borrowed $100.0 against our domestic revolving loan facility to preempt any potential concerns about cash availability in the bank markets as a result of the COVID-19 pandemic. In addition, whileWhile not due for repayment until December 2024 under the terms of our senior credit agreement, we have classified within current liabilities the portion of the outstanding ~~balances for the revolving loans as a current liability in our condensed consolidated~~ balance ~~sheets, as it is reasonably expected~~ that ~~such balances~~we believe will be repaid ~~within one~~over the next year, with ~~available cash and~~such amount based on an estimate of cash that is expected to be generated ~~from operations.~~over such period.

(2)The term loan is repayable in quarterly installments beginning in the first quarter of 2021, with the quarterly installments equal to 0.625% of the initial term loan balance of $250.0 during 2021, 1.25% in each of the four quarters of 2022 and 2023, and 1.25% during the first three quarters of 2024. The remaining balance is payable in full on December 17, 2024. Balances are net of unamortized debt issuance costs of ~~$1.7~~$1.3 and ~~$1.8~~$1.4 at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively.

⁽³⁾Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. At ~~March 28, 2020,~~April 3, 2021, we had ~~$0.8~~$16.0 of available borrowing capacity under this facility after giving effect to outstanding borrowings of ~~$28.0.~~$34.0. Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses.

⁽⁴⁾~~Includes~~Primarily includes balances under a purchase card program of ~~$2.3~~$2.1 and ~~$2.6~~$1.7 and ~~capital~~finance lease obligations of ~~$2.9~~ $2.8 and $2.6~~and $2.7,~~ at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively. The purchase card program allows for payment beyond the normal payment

terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

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

Senior Credit Facilities

A detailed description of our senior credit facilities is included in our ~~2019~~2020 Annual Report on Form 10-K.

At ~~March 28, 2020,~~April 3, 2021, we had ~~$202.7~~$334.1 of available borrowing capacity under our revolving credit facilities after giving effect to borrowings under the domestic revolving loan facility of ~~$230.0~~$103.7 and ~~$17.3~~$12.2 reserved for domestic letters of credit. In addition, at ~~March 28, 2020,~~April 3, 2021, we had ~~$18.6~~$34.4 of available issuance capacity under our foreign credit instrument facilities after giving effect to ~~$81.4~~$65.6 reserved for outstanding letters of credit.

The weighted-average interest rate of outstanding borrowings under our senior credit agreement was approximately ~~2.7%~~1.5% at ~~March 28, 2020.~~April 3, 2021.

At ~~March 28, 2020,~~April 3, 2021, we were in compliance with all covenants of our senior credit agreement.

(13) DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swaps

~~In March 2018, we entered into~~We previously maintained interest rate s~~wap~~swap agreements ~~(“Initial Swaps”)~~ that ~~had an initial notional amount of $260.0 and maturities through~~matured in March 2021 and effectively ~~convert a portion of the~~converted borrowings under our senior credit facilities to a fixed rate of 2.535%, plus the applicable margin. ~~The aggregate notional amount of the Initial Swaps was $247.0 as of March 28, 2020.~~

In February 2020, and as a result of a December 2019 amendment that extended the maturity date of our senior credit facilities to December 17, 2024, we entered into additional interest swap agreements (“~~Additional~~ Swaps”). The ~~Additional~~ Swaps have a notional amount of $248.4, cover the period from March 2021 to November ~~2024,~~2024, and ~~will~~ effectively convert borrowings under our senior credit facilities to a fixed rate of 1.061%, plus the applicable margin.

We have designated and are accounting for our interest rate swap agreements as cash flow hedges. As of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, the unrealized loss, net of tax, recorded in ~~Accumulated Other Comprehensive Income (“AOCI”) for our interest rate swap agreements~~AOCI was ~~$6.6~~$2.5 and ~~$1.9,~~$5.9, respectively. In addition, as of ~~March 28, 2020 and December 31, 2019,~~April 3, 2021, the fair value of our interest rate swap agreements ~~was~~totaled $3.4, with $2.2 recorded as a current liability and the remainder in long-term liabilities, and $7.8 at December 31, 2020 (with $1.4 recorded as a current liability ~~of $8.8~~ and ~~$2.5, respectively.~~the remainder in long-term liabilities). Changes in ~~the~~ fair value of our interest rate swap agreements are reclassified into earnings as a component of interest expense, when the forecasted transaction impacts earnings.

Currency Forward Contracts

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

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

We had FX forward contracts with an aggregate notional amount of ~~$8.5~~$12.4 and ~~$26.0~~$6.3 outstanding as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively, with all of the ~~$8.5~~$12.4 scheduled tomature within one year.

Commodity Contracts

From time to time, we enter into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials. At ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, the outstanding notional amount of commodity ~~contracts w~~con~~ere 3.5 and 3.4~~tracts were 3.1 and 3.2 pounds of copper, respectively. We designate and account for these contracts as cash flow hedges and, to the extent the 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 ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, the fair value of these contracts were ~~$1.8 (current liability)~~current assets of $1.5 and ~~$0.4 (current asset),~~$2.4, respectively. The unrealized ~~gain (loss),~~gains, net of taxes, recorded in AOCI were ~~$(1.4) and $0.3~~$1.1 and $1.5 as of ~~March 28, 2020~~April 3, 2021 and

December 31, ~~2019,~~2020, respectively. We anticipate reclassifying the unrealized ~~loss~~gains as of ~~March 28, 2020~~April 3, 2021 to earnings over the next 12 months.

(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				Three months ended
		March 28, 2020	March 30, 2019		April 3, 2021	March 28, 2020
Weighted-average number of common shares used in basic income per share	Weighted-average number of common shares used in basic income per share	44.309	43.618	Weighted-average number of common shares used in basic income per share	45.132	44.309
Dilutive securities — Employee stock options and restricted stock units	Dilutive securities — Employee stock options and restricted stock units	1.218	1.262	Dilutive securities — Employee stock options and restricted stock units	1.187	1.218
Weighted-average number of common shares and dilutive securities used in diluted income per share	Weighted-average number of common shares and dilutive securities used in diluted income per share	45.527	44.880	Weighted-average number of common shares and dilutive securities used in diluted income per share	46.319	45.527

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period were 0.234 and 0.627, respectively, for the three months ended April 3, 2021, and 0.280 and 0.756, respectively, for the three months ended March 28, ~~2020, and 0.301 and 0.973, respectively, for the three months ended March 30, 2019.~~2020.

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 ~~2020~~2021 is included in our ~~2019~~2020 Annual Report on Form 10-K.

Awards granted on ~~February 20, 2020~~March 1, 2021 to executive officers and other members of senior management were comprised of performance stock units (“PSU’s”), stock options, and time-based restricted stock units (“RSU’s”), while other eligible employees were granted PSU’s and RSU’s. The PSU’s are eligible to vest at the end of a ~~three-year~~three-year performance period, with performance based on the total return of our stock over the ~~three-year~~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~~three-year period subsequent to the date of grant.

Non-employee directors receive annual long-term incentive awards at the time of our annual meeting of stockholders, with the ~~2020~~2021 meeting scheduled for May ~~14, 2020.~~11, 2021.

Compensation expense within income from continuing operations related to long-term incentive awards totaled $3.0 and $3.5 for the three months ended April 3, 2021 and March 28, 2020, ~~and March 30, 2019.~~respectively. The related tax benefit was $0.5 and $0.9 for the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019.~~2020.

PSU’s and RSU’s

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

The following table summarizes the PSU and RSU activity from December 31, ~~2019~~2020 through ~~March 28, 2020:~~April 3, 2021:


		Unvested PSU's and RSU's	Weighted-Average Grant-Date Fair Value Per Share			Unvested PSU's and RSU's	Weighted-Average Grant-Date Fair Value Per Share
Outstanding at December 31, 2019		0.606	$	36.17
Outstanding at December 31, 2020					Outstanding at December 31, 2020	0.644	$	42.32
Granted	Granted	0.238	48.24		Granted	0.225	56.80
Vested	Vested	(0.213)	31.36		Vested	(0.189)	37.31
Forfeited	Forfeited	(0.002)	38.33		Forfeited	(0.006)	43.59
Outstanding at March 28, 2020		0.629	42.36
Outstanding at April 3, 2021					Outstanding at April 3, 2021	0.674	$	48.55

As of ~~March 28, 2020,~~April 3, 2021, there was ~~$17.9~~$19.7 of unrecognized compensation cost related to PSU’s and RSU’s. We expect this cost to be recognized over a weighted-average period of 2.4 years.

Stock Options

On ~~February 20, 2020,~~March 1, 2021, we granted ~~0.125~~0.105 stock options, all of which were outstanding (but not exercisable) as of ~~March 28, 2020.~~April 3, 2021. The exercise price per share of these options is ~~$50.09~~$58.34 and the maximum contractual term of these options is 10 years.

The fair value per share of the stock options granted on ~~February 20, 2020~~March 1, 2021 was ~~$17.40.~~$23.49. 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	~~33.48~~41.15	%
Annual expected dividend yield	—0	%
Risk-free interest rate	~~1.41~~0.91	%
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~~three-year pro-rata vesting schedule and represents the period of time that awards are expected to be outstanding.

As of ~~March 28, 2020,~~April 3, 2021, there was ~~$3.1~~$3.4 of unrecognized compensation cost related to stock options. We expect this cost to be recognized over a weighted-average period of ~~2.5~~2.6 years.

Accumulated Other Comprehensive Income

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended ~~March 28, 2020~~April 3, 2021 were as follows:


		Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges⁽¹⁾		Pension and Postretirement Liability Adjustment⁽²⁾		Total			Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total
Balance at beginning of period	Balance at beginning of period	$	228.0	$	(1.6)	$	17.9	$	244.3	Balance at beginning of period	$	238.6	$	(4.4)	$	14.3	$	248.5
Other comprehensive income (loss) before reclassifications		(5.7)		(6.8)		0.1		(12.4)
Other comprehensive income before reclassifications										Other comprehensive income before reclassifications	0.6		3.3		0		3.9
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		0.4		(0.9)		(0.5)		Amounts reclassified from accumulated other comprehensive income (loss)	0		(0.3)		(0.9)		(1.2)
Current-period other comprehensive loss		(5.7)		(6.4)		(0.8)		(12.9)
Current-period other comprehensive income (loss)										Current-period other comprehensive income (loss)	0.6		3.0		(0.9)		2.7
Balance at end of period	Balance at end of period	$	222.3	$	(8.0)	$	17.1	$	231.4	Balance at end of period	$	239.2	$	(1.4)	$	13.4	$	251.2

__________________________

⁽¹⁾Net of tax benefit of $~~2.7~~$0.4 and ~~$0.5~~$1.4 as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively.

⁽²⁾Net of tax provision of $~~5.8~~$4.6 and ~~$6.1~~$4.9 as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively. The balances as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019~~2020 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended March ~~30, 2019~~28, 2020 were as follows:


		Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges⁽¹⁾		Pension and Postretirement Liability Adjustment⁽²⁾		Total			Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total
Balance at beginning of period	Balance at beginning of period	$	225.8	$	(0.6)	$	19.7	$	244.9	Balance at beginning of period	$	228.0	$	(1.6)	$	17.9	$	244.3
Other comprehensive loss before reclassifications		—		(0.1)		—		(0.1)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	(5.7)		(6.8)		0.1		(12.4)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	2.4		0.2		(0.8)		1.8		Amounts reclassified from accumulated other comprehensive income (loss)	0		0.4		(0.9)		(0.5)
Current-period other comprehensive loss	Current-period other comprehensive loss	2.4		0.1		(0.8)		1.7		Current-period other comprehensive loss	(5.7)		(6.4)		(0.8)		(12.9)
Balance at end of period	Balance at end of period	$	228.2	$	(0.5)	$	18.9	$	246.6	Balance at end of period	$	222.3	$	(8.0)	$	17.1	$	231.4

__________________________

⁽¹⁾Net of tax benefit of ~~$0.1~~$2.7 and ~~$0.2~~$0.5 as of March ~~30, 2019~~28, 2020 and December 31, ~~2018.~~2019, respectively.

⁽²⁾Net of tax provision of ~~$6.4~~$5.8 and ~~$6.6~~$6.1 as of March ~~30, 2019~~28, 2020 and December 31, ~~2018.~~2019, respectively. The balances as of March ~~30, 2019~~28, 2020 and December 31, ~~2018~~2019 include unamortized prior service credits.

The following summarizes amounts reclassified from each component of accumulated comprehensive income for the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019:~~2020:


		Amount Reclassified from AOCI								Amount Reclassified from AOCI
		Three months ended								Three months ended
		March 28, 2020		March 30, 2019		Affected Line Item in the Condensed Consolidated Statements of Operations		April 3, 2021		March 28, 2020		Affected Line Item in the Condensed Consolidated Statements of Operations
Losses on qualifying cash flow hedges:
(Gains) losses on qualifying cash flow hedges:							(Gains) losses on qualifying cash flow hedges:

Commodity contracts	Commodity contracts	$	—	$	0.3	Cost of products sold	Commodity contracts	$	(1.8)	$	0	Cost of products sold
Swaps	Swaps	0.5		—		Interest expense	Swaps	1.4		0.5		Interest expense
Pre-tax	Pre-tax	0.5		0.3			Pre-tax	(0.4)		0.5
Income taxes	Income taxes	(0.1)		(0.1)			Income taxes	0.1		(0.1)
		$	0.4	$	0.2			$	(0.3)	$	0.4

Gains on pension and postretirement items:	Gains on pension and postretirement items:						Gains on pension and postretirement items:
Amortization of unrecognized prior service credits - Pre-tax	Amortization of unrecognized prior service credits - Pre-tax	$	(1.2)	$	(1.0)	Other income (expense), net	Amortization of unrecognized prior service credits - Pre-tax	$	(1.2)	$	(1.2)	Other income, net

Income taxes	Income taxes	0.3		0.2			Income taxes	0.3		0.3
		$	(0.9)	$	(0.8)			$	(0.9)	$	(0.9)

(15) CONTINGENT LIABILITIES AND OTHER MATTERS

General

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

Our recorded liabilities related to these matters ttotaled $~~otaled $580.4 (including $540.6 for asbestos product liability matters)~~563.3 and ~~$592.4 (including $552.2 for asbestos product liability matters)~~$575.7 at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively. Of these amounts, ~~$505.4~~$487.6 and ~~$517.6~~$499.8 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these ~~claims~~matters are based on a number of assumptions, including historical claims and payment ~~experience and, with respect to asbestos claims, actuarial estimates of the future period during which additional claims are reasonably foreseeable.~~experience. While we base our assumptions on facts currently known to us, they entail inherently subjective judgments

and uncertainties. As a result, our current assumptions for estimating these liabilities may not prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations.

Our asbestos-related claims are typical in certain of the industries in which we operate or pertain to legacy businesses we no longer operate. It is not unusual in these cases for 50 or more corporate entities to be named as defendants. We vigorously defend these claims, many of which are dismissed without payment, and the significant majority of costs related to these claims have historically been paid pursuant to our insurance arrangements. ~~During~~Our recorded assets and liabilities related to asbestos-related claims were as follows at April 3, 2021 and December 31, 2020:


	April 3, 2021		December 31, 2020
Insurance recovery assets (1)	$	488.4	$	496.4
Liabilities for claims (2)	523.7		535.2

__________________________

(1)Of these amounts, $438.4 and $446.4 are included in "Other assets" at April 3, 2021 and December 31, 2020, respectively, while the remainder is included in “Other current assets.”

(2)Of these amounts, $471.5 and $479.9 are included in “Other long-term liabilities" at April 3, 2021 and December 31, 2020, respectively, while the remainder is included in “Accrued expenses.”

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

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

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

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

◦ Average claim settlement amounts.

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

The following table presents information regarding activity for the asbestos-related claims for the three months ended April 3, 2021 and March 28, 2020:


	Three months ended April 3,	Three months ended March 28,
	2021	2020
Pending claims, beginning of period	9,782	11,079
Claims filed	514	654
Claims resolved	(167)	(1,207)
Pending claims, end of period	10,129	10,526

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

During the periods ended April 3, 2021 and March 28, 2020, our payments for asbestos-related ~~matters,~~claims, net of respective insurance recoveries of $~~7.8~~8.0 and ,$7.8, were $~~4.2~~3.8 and $~~. During the three months ended March 30, 2019, our payments for asbestos-related matters, net of insurance recoveries of $11.2, were $2.8.~~4.2, respectively. A significant increase in claims, costs and/or issues with existing insurance coverage (e.g., dispute with or insolvency of insurer(s)) could have a material adverse impact on our share of future payments related to these matters, and, as ~~such,~~a result, have a material impact on our financial position, results of operations and cash flows.

~~We have recorded insurance recovery assets associated with the asbestos product liability matters, with such amounts totaling~~ ~~$503.6~~ ~~and $509.6 at March 28, 2020 and December 31, 2019, respectively. Of these amounts,~~ ~~$453.6~~ and $459.6 are included in “Other assets” within our condensed consolidated balance sheets as of March 28, 2020 and December 31, 2019, respectively, with the remainder included in “Other current assets.” These assets represent amounts that we believe we are or will be entitled to recover under agreements we have with insurance companies. The assets we record for these insurance recoveries are based on a number of assumptions, including the continued solvency of the insurers, and are subject to a variety of uncertainties. Our current assumptions for estimating these assets may not prove accurate, and we may be required to adjust these assets in the future, which could result in additional charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations.

During the three months ended April 3, 2021 and March 28, 2020, ~~and March 30, 2019,~~ there were no changes in estimates associated with ~~the~~our assets and liabilities ~~and assets~~ related to our asbestos product liability matters.

Large Power Projects in South Africa

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

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

Claims by DBT - DBT has ~~made numerous~~asserted claims against ~~MHPSA, including claims totaling~~MHI of approximately South African Rand ~~1,133.3~~1,100.0 (or $~~65.1~~)$74.6). As we prepare these claims for dispute resolution processes, the amounts, along with the characterization, of the claims could change. Of these claims, South African Rand 533.9 (or $36.2) are currently proceeding through contractual dispute resolution processes and DBT is likely to initiate additional dispute resolution processes in 2021. DBT is also pursuing several claims to force MHI to abide by its contractual obligations and provide DBT with certain benefits that MHI may have ~~been submitted to dispute adjudication processes as required under~~received from its customer on the ~~relevant contracts, with such amount subject to change as DBT progresses through these processes. Certain of these processes are expected to occur in 2020.~~projects. In addition to existing asserted claims, DBT ~~may have~~believes it has additional claims and rights to recovery based on its performance under the contracts with, and actions taken by, ~~MHPSA.~~MHI. DBT is continuing to evaluate the claims and the amounts owed to it under the contracts based on MHI's failure to comply with its contractual obligations. The amounts DBT may recover for current and potential future claims against ~~MHPSA~~MHI are not currently known given (i) the extent of current and potential future claims by ~~MHPSA~~MHI against DBT (see below for further discussion) and (ii) the unpredictable nature of any dispute resolution processes that may occur in connection with these current and potential future claims. No revenue has been recorded in the accompanying condensed consolidated financial statements with respect to current or potential future claims against ~~MHPSA.~~MHI.

On February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on 2 units of the Kusile project. In connection with the ruling, MHI paid DBT South African Rand 126.6 (or $8.6 at the time of the payment). This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our condensed consolidated statement of operations for the three months ended April 3, 2021.

On April 28, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on two units of the Medupi project. The panel ruled that MHI is obligated to pay DBT South African Rand 75.8, plus interest from June 2020 (or $5.1, plus interest). This ruling is subject to MHI’s rights to seek further arbitration in the matter. No amount has been reflected in our condensed consolidated financial statements for this matter.

Claims by ~~MHPSA~~MHI - On February 26, 2019, DBT received notification of an interim claim consisting of both direct and consequential damages from ~~MHPSA~~MHI 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 the majority of 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 $~~54.5~~)$64.3), DBT has numerous defenses and, thus, we do not believe that DBT has a probable loss associated with these claims. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims. In September 2020, MHI made a demand on certain bonds issued in its favor by DBT, based solely on these alleged defects, but without further substantiation or other justification (see further discussion below). On December 30, 2020, MHI notified DBT of its intent to take these claims to binding arbitration. DBT intends to vigorously defend itself against these claims. Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by ~~MHPSA~~MHI for these claims; (ii) complexity of contractual relationships between the end customer, ~~MHPSA,~~MHI, and 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.

In April and July 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 407.2 (or $~~23.4~~)$27.6) from ~~MHPSA~~MHI alleging that DBT failed to meet certain project milestones related to the construction of the filters for both the Kusile and Medupi projects. DBT has numerous defenses against these claims and, thus, we do not believe that

DBT has a probable loss associated with these claims. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims. Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss.

~~MHPSA~~MHI has made other claims against DBT totaling South African Rand 176.2 (or ~~$10.1~~)$11.9). DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a probable loss associated with these claims. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims.

On July 23, 2020, a dispute adjudication panel issued a ruling in favor of DBT on certain matters related to the Kusile and Medupi projects. The panel (i) ruled that DBT had achieved takeover on 9 of the units; (ii) ordered MHI to return $2.3 of bonds (which have been subsequently returned by MHI); (iii) ruled that DBT is entitled to the return of an additional $4.6 of bonds upon the completion of certain administrative milestones; and (iv) ordered MHI to pay South African Rand 18.4 (or $1.1 at the time of the ruling) in incentive payments for work performed by DBT (which MHI has subsequently paid), and ruled that MHI waived its rights to assert delay damages against DBT on one of the units of the Kusile project. The ruling is subject to MHI’s rights to seek further arbitration in the matter, as provided in the contracts. As such, the incentive payments noted above have not been recorded in our condensed consolidated statements of operations.

~~In favor~~Bonds Issued in Favor of ~~MHPSA, we~~MHI - We are obligated with respect to bonds issued by banks ~~totaling $52.4~~ ~~(including $18.8~~ ~~with more stringent~~in favor of MHI. In September of 2020, MHI made a demand, and received payment ~~terms). We believe a portion~~of South African Rand 239.6 (or $14.3 at the time of payment), on certain of these bonds, ~~should~~which we funded as required under the terms of the bonds and our senior credit agreement. In its demand, MHI purported that DBT failed to carry out its obligations to rectify certain alleged product defects identified in its February 2019 interim claims notice (see above). DBT denies liability for such alleged product defects and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand 239.6 (or $16.2) that has been paid. However, given the extent and complexities of the claims between DBT and MHI, reimbursement of the South African Rand 239.6 (or $16.2) is unlikely to occur over the next twelve months. As such, we have reflected the South African Rand 239.6 (or $16.2) as a non-current asset within our condensed consolidated balance sheets as of April 3, 2021 and December 31, 2020.

After the cancellation of a bond issued in favor of MHI totaling $22.2 in April 2021, the remaining amount of outstanding bonds that have been issued to MHI include $16.1 of performance and retention money guarantees, which could be ~~reduced based on project milestones achieved~~exercised by ~~DBT.~~MHI for alleged defects or other alleged breaches of DBT's obligations. In the event that ~~MHPSA~~MHI were to receive payment on a portion, or all, of ~~these~~the remaining bonds, we would be required to reimburse the respective issuing bank.

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

Claim against Surety - On February 5, 2021, DBT received payment of $6.7 on bonds issued in support of performance by one of DBT's sub-contractors. The sub-contractor maintains a right to seek recovery of such amount and, thus, the amount received by DBT has not been reflected in our condensed consolidated statement of operations for the three months ended April 3, 2021.

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.

2223

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 ~~March 28, 2020,~~April 3, 2021, we had liabilities for site investigation and/or remediation at 2925 sites ~~(29~~(25 sites at December 31, ~~2019)~~2020) 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 ~~March 28, 2020,~~April 3, 2021, we have been notified that we are potentially responsible and have received other notices of potential liability pursuant to various ~~environmental~~environmental laws at 1411 sites at which the liability has not been settled, of which 119 sites have been active in the past few years. These laws ~~may~~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.

2324

(16) INCOME AND OTHER TAXES

Uncertain Tax Benefits

As of ~~March 28, 2020,~~April 3, 2021, we had gross unrecognized tax benefits of ~~$17.2~~$13.6 (net unrecognized tax benefits of ~~$13.9~~)$11.0). Of these net unrecognized tax benefits, ~~$9.8~~$7.0 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 ~~March 28, 2020,~~April 3, 2021, gross accrued interest ~~totaled $4.3~~totaled $3.7 (net accrued interest of ~~$3.4)~~$2.9). As of ~~March 28, 2020,~~April 3, 2021, we had 0 ac~~crual~~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 ~~belie~~vebelieve that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to ~~$10.0. The~~$5.0. The previously unrecognized tax benefits relate to a variety of tax matters including transfer pricing andand various state matters.

Other Tax Matters

For the three months ended ~~March 28, 2020,~~April 3, 2021, we recorded an income tax provision ~~of $6.0~~of $7.0 on ~~$28.7~~$34.6 of pre-tax income from continuing operations, resulting in an effective rate of ~~20.9%~~20.2%. This compares to an income tax provision for the three months ended March ~~30, 2019~~28, 2020 of ~~$4.6~~$6.0 on ~~$5.2~~$28.3 of pre-tax income from continuing operations, resulting in an effective rate of ~~88.5%~~21.2%. The most significant item impacting the income tax ~~provision~~provisions for the first ~~quarter~~quarters of 2021 and 2020 was ~~$1.2~~$0.9 and $1.2, respectively, of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the quarter. The most significant items impacting the income tax provision for the first quarter of 2019 were (i) foreign losses for which no tax benefit was recognized as the 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 that vested during the quarter.periods.

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

The Internal Revenue Service (“IRS”) currently is performing an audit of our 2013, 2014, 2015, 2016 and 2017 federal income tax 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 is in Germany for the 2010 through 2014 tax years. We believe that any uncertain tax positions related to these examinations have been adequately provided for.

An unfavorable resolution of one or more of the above matters could have a material impact on our results of operations or cash flows in the quarter and year in which an adjustment is recorded or the tax is due or paid. As audits and examinations are still in process, the timing of the ultimate resolution and any payments that may be required for the above matters cannot be determined at this time.

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

On March 27, 2020, the CARES Act was enacted into law and provides for changes to various tax laws that impact businesses. We do not believe these changes impact our current and deferred income tax balances; therefore, no resulting adjustments have been recorded to such balances as of March 28, 2020. As further guidance is released regarding the CARES Act, we will record adjustments to our current and deferred income tax balances, as necessary.

(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.~~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, remained in place at the time of ~~sale (and Euro~~sale. ~~31.7~~ ~~and Euro~~ ~~8.7, respectively, at March 28, 2020) will remain in place through each instrument’s expiration date, with such expiration dates occurring through 2022.~~ These guarantees and bonds ~~provide~~provided protections for Balcke Dürr customers in regard to advance payments, performance, and warranties on projects in existence at the time of sale. In addition, certain bonds ~~relate~~related to lease obligations and foreign tax matters in existence at the time of sale. Balcke Dürr and the acquirer of Balcke Dürr ~~have~~ provided us an indemnity in the event that any ~~bank guarantees~~of the bonds were called or ~~bonds are called.~~payments were made under the guarantees. Also, at the time of sale, Balcke Dürr provided cash collateral of Euro 4.0 and ~~mutares AG, an affiliate~~the parent company of the ~~acquirer of Balcke Dürr,~~buyer provided a guarantee of Euro 5.0 as a security for the above indemnifications (Euro~~1.0~~ 0.0 and Euro ~~2.5~~1.0, respectively, at ~~March 28, 2020)~~April 3, 2021). In connection with the sale, we recorded a liability for the estimated fair value of the guarantees and bonds and an asset for the estimated fair value of the cash collateral and indemnities provided. Since the sale of Balcke Dürr, the guarantees expired and bonds have been periodically returned.During the three months ended April 3, 2021, all remaining bonds were returned. Summarized below are changes in the liability and asset during the three months ended April 3, 2021 and March 28, ~~2020, and March 30, 2019.~~2020.


		Three months ended															Three months ended
		March 28, 2020						March 30, 2019							April 3, 2021				March 28, 2020
		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	Balance at beginning of year	$	2.0	$	0.3	$	4.4	$	1.2	Balance at beginning of year	$	1.8	$	0	$	2.0	$	0.3
Reduction/Amortization for the period ⁽²⁾	Reduction/Amortization for the period ⁽²⁾	(0.3)		(0.1)		(1.3)		(0.2)		Reduction/Amortization for the period (2)	(1.7)		0		(0.3)		(0.1)
Impact of changes in foreign currency rates	Impact of changes in foreign currency rates	—		—		(0.1)		—		Impact of changes in foreign currency rates	(0.1)		0		0		0
Balance at end of period ⁽³⁾	Balance at end of period ⁽³⁾	$	1.7	$	0.2	$	3.0	$	1.0	Balance at end of period ⁽³⁾	$	0	$	0	$	1.7	$	0.2

___________________________

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

⁽³⁾~~The balance associated~~

Contingent Consideration for ULC and Sensors & Software Acquisitions - In connection with the ~~guarantees~~acquisition of ULC and ~~bonds~~Sensors & Software, the respective sellers are eligible for additional cash consideration of up to $45.0 and $4.0, respectively, with payment of such contingent consideration dependent upon the achievement of certain milestones. The estimated fair value of such contingent consideration is $24.3 and $0.7, respectively, with such amounts reflected as liabilities within ~~“Other long-term liabilities,” while~~our condensed consolidated balance sheets as of April 3, 2021 and December 31, 2020. We estimated the ~~balance associated with~~fair value of the ~~indemnification assets is reflected within “Other assets.”~~ contingent consideration for these acquisitions based on the probability of ULC and Sensors & Software achieving these milestones.

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

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

As of ~~March 28, 2020,~~April 3, 2021, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities. Similarly, there has been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risks.

Equity Security —We estimate the fair value of an equity security that we hold utilizing a practical expedient under existing guidance, with such estimated fair value based on our ownership percentage applied to the net asset value of the investee as presented in the investee’s most recent audited financial statements. During the three months ended April 3, 2021, we recorded a gain of $5.2 to “Other income, net” to reflect an increase in the estimated fair value of the equity security. During the three months ended March 28, 2020, there was no change in the estimated fair value of the equity security. As of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, the equity security had an estimated fair value of $21.9. The COVID-19 pandemic has recently had an adverse impact on the global financial markets. A prolonged adverse impact of the COVID-19 pandemic could result in a decline in the equity security’s estimated fair value$32.2 and ~~thus, a resulting charge to earnings in a future period.~~$27.0, respectively.

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. In addition, during the three months ended March 30, 2019, we received a distribution of $2.6, which is included within “Cash flows from operating activities” in our condensed consolidated statement cash flows. We are restricted from transferring this investment without approval of the manager of the investee.

Indebtedness and Other — The estimated fair value of our debt instruments as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019~~2020 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments. See Note 12 for further details.

(18) SUBSEQUENT EVENT

On April 19, 2021, we completed the acquisition of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, “Sealite”). Sealite is a leader in the design and manufacture of marine and aviation Aids to Navigation products. We purchased Sealite for cash proceeds of approximately $82.0. The post-acquisition results of Sealite will be reflected within our Detection and Measurement Reportable segment.

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, as well as the impacts of the coronavirus disease (the “COVID-19 pandemic”) and governmental responses to stem further outbreaks of the COVID-19 pandemic, which is further discussed below and in other sections of this document. 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 ~~2019~~2020 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.

IMPACT OF THE COVID-19 PANDEMIC

~~As further discussed below, the~~The COVID-19 pandemic had ~~a modest~~an adverse impact on our consolidated ~~financial~~ results ~~for~~of operations in the first quarter of ~~2020. These adverse impacts are expected to continue in~~2020 and into the second quarter of 2020, ~~and possibly longer, but~~with a diminishing impact during the second half of 2020. Any impacts of the pandemic on the first quarter of 2021 operating results were relatively minimal. However, we ~~are unable to determine~~could experience an increase in adverse impacts during the ~~extent, duration, or nature at this time.~~remainder of 2021 if incidents of COVID-19 increase from current levels. Although certain of our businesses ~~(e.g., shorter-cycle businesses within our HVAC~~have been, and ~~Detection and Measurement reportable segments) are likely to~~could be, impacted more than others in our portfolio, we believe that our diverse set of businesses, along with our strong balance sheet and available liquidity, position us well to manage the potential adverse impacts of the COVID-19 pandemic. For example, the products we manufacture and services we provide fall inunder the definition of “critical” or “essential” under various federal guidelines and state/local governmental orders that otherwise restrict business activities. These include products and services that enable the operation and maintenance of communication networks, the electrical grid, water and wastewater systems, and other key elements of infrastructure. Our manufacturing facilities have not experienced material interruptions in operations. If incidents of the COVID-19 pandemic increase, we may temporarily close facilities, if necessary, to address employee safety matters. In terms of liquidity, we generated $63.7 of cash flows from operating activities associated with continuing operations during the three months ended April 3, 2021 and have experienced no consequential delays in collecting outstanding amounts due from our customers. In addition, as of ~~March 28, 2020,~~April 3, 2021, we had over ~~$350.0~~$450.0 of availability from cash on-hand and aggregate borrowing capacity under our senior credit facilities and trade receivable financing arrangement. ~~In addition,~~Lastly, scheduled repayments over the next ~~year~~twelve months for our long-term debt arrangements totaled ~~only $2.6~~$8.9 as ~~of March 28, 2020.~~of April 3, 2021. We also have taken actions to manage near-term costs and cash flows ~~including reducing discretionary expenses and capital expenditures,~~ and implemented actions to address potential material sourcing ~~challenges we could face over the near-term. Lastly, we~~challenges. We will continue to assess the actual and expected impacts of the COVID-19 pandemic and the need for further actions.

See Notes 1 ~~9, 12, 16,~~ and 179 to our condensed consolidated financial statements ~~and “Risk Factors”~~ for additional considerations regarding the current and potential impacts of the COVID-19 pandemic.

OVERVIEW OF OPERATING RESULTS

Revenues for the three months ended ~~March 28, 2020~~ April 3, 2021 totaled~~$369.3~~, $398.5, compared to ~~$343.6~~$367.4 during the comparable period in ~~2019.~~ 2020. The increase in revenues during the three months ended ~~March 28,~~April 3, 2021, compared to the respective period in 2020, ~~over the prior-year period,~~ was due primarily to ~~(i)~~ an ~~adjustment recorded during the first quarter of 2019~~increase in organic revenue and, to ~~the amount of cumulative revenue associated with the variable consideration on the large power projects in South Africa of $17.5 and (ii)~~a lesser extent, the impact of the ~~acquisitions of Sabik~~ULC Robotics (

~~Marine (“Sabik”~~“ULC”) ~~on February 1, 2019, SGS Refrigeration~~and Sensors & Software, Inc. (“~~SGS”~~Sensors & Software”) ~~on July 3, 2019, and Patterson-Kelley, LLC (“Patterson-Kelley”) on November 12, 2019, partially offset by a decline in organic revenue.~~acquisitions. The ~~decline~~increase in organic revenue was due primarily to ~~lower~~higher sales ~~related to heating~~of HVAC products and location and inspection equipment, partially offset by a decline in sales of process cooling products within our Engineered Solutions reportable segment. Sales of HVAC cooling products in the first quarter of 2020, particularly in the Asia Pacific region, were negatively impacted by the COVID-19 pandemic. In addition, during the first quarter of 2021, sales of HVAC heating products were favorably impacted by higher winter heating demand. Lastly, sales of process cooling products declined during the first quarter of 2021, compared to the first quarter of 2020, as the business generated a significant amount of revenues from a number of large projects during the first quarter of 2020.

During the three months ended April 3, 2021, we generated operating income of $31.7, compared to $32.3 for the comparable period in 2020. Operating income during the three months ended April 3, 2021, compared to the respective period in 2020, was favorably impacted by increases in profitability within our HVAC and Detection and Measurement reportable ~~segment, partially~~segments, offset by ~~an increase~~a decline in ~~sales~~profitability within our Engineered Solutions reportable segment ~~primarily~~and additional corporate expense associated with ~~the power transformer business. See “Results of Reportable~~additional investments in connection with continuous improvement and ~~Other Operating Segments” for additional details.~~other strategic initiatives.

~~During the three months ended March 28, 2020, we generated operating income of~~ ~~$32.7, compared to $3.0 for the same period in 2019.~~ The increase in operating income during the three months ended March 28, 2020, over the prior-year period, was due primarily to (i) decreased losses associated with the large power projects in South Africa, with such losses impacted by the reduction in revenues/profits of $~~17.5~~ during the first quarter of 2019, and (ii) additional income within our Engineered Solutions reportable segment associated with organic revenue growth noted above, partially offset by the impact of the organic revenue decline in our HVAC reportable segment noted above. See “Results of Reportable and Other Operating Segments” for additional details.

Cash flows from operating activities associated with continuing operations totaled $~~2.7~~63.7 for the three months ended ~~March 28, 2020,~~April 3, 2021, compared to ~~$11.5~~$2.5 during the three months ended March ~~30, 2019.~~ 28, 2020. The ~~decrease~~increase in cash flows from operating activities was due primarily to ~~an increase~~(i) increases in ~~2019 short-term incentive compensation expense, which was paid~~cash flows at certain of our project-related businesses during the first quarter of 2021, as cash receipts for these project-related businesses are often subject to contract milestones that can impact the timing of cash flows from period-to-period, and (ii) cash receipts during the quarter of $15.3 related to claims matters in ~~March 2020, versus 2018 short-term incentive compensation expense, which was paid in March 2019.~~South Africa.

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 ~~2019~~2020 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 ~~2020~~2021 are April 3, July 3 and October 2, compared to the respective March 28, June 27 and September 26, ~~compared to the respective March 30, June 29 and September 28, 2019~~2020 dates. We had ~~one less day~~five more days in the first quarter of ~~2020~~2021 and will have ~~two more~~six fewer days in the fourth quarter of ~~2020~~2021 than in the respective ~~2019~~2020 periods. ~~We do~~It is not ~~believe~~practicable to estimate the ~~one less day during~~impact of the ~~first quarter of 2020 had a material impact~~five additional days on our consolidated operating results for the ~~first quarter of 2020,~~three months ended April 3, 2021, when compared to the consolidated operating results for the ~~first quarter of 2019.~~2020 respective period.

Cyclicality of End Markets, Seasonality and Competition — The financial results of our businesses closely follow changes in the industries in which they operate and end markets in which they serve. In addition, certain of our businesses have seasonal fluctuations. For example, our ~~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 the reduction to revenues on the large power projects in South Africa during the three months ended March 30, 2019 of $17.5.~~ acquisitions/divestitures. 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.

2829

The following table provides selected financial information for the three months ended April 3, 2021 and March 28, 2020, ~~and March 30, 2019,~~respectively, including the reconciliation of organic revenue ~~decline~~increase to the net revenue increase:


		Three months ended														Three months ended
		March 28, 2020			March 30, 2019			% Change		April 3, 2021			March 28, 2020			% Change
Revenues	Revenues	$	369.3		$	343.6		7.5	Revenues	$	398.5		$	367.4		8.5
Gross profit	Gross profit	114.1			83.2			37.1	Gross profit	125.2			113.7			10.1
% of revenues	% of revenues	30.9		%	24.2		%		% of revenues	31.4		%	30.9		%
Selling, general and administrative expense	Selling, general and administrative expense	78.9			76.7			2.9	Selling, general and administrative expense	88.8			78.9			12.5
% of revenues	% of revenues	21.4		%	22.3		%		% of revenues	22.3		%	21.5		%
Intangible amortization	Intangible amortization	2.6			1.6			62.5	Intangible amortization	4.0			2.6			53.8
Special charges, net	Special charges, net	0.3			0.1			200.0	Special charges, net	0.7			0.3			*
Other operating (income) expense		(0.4)			1.8			*
Other operating income									Other operating income	—			(0.4)			*

Other income, net	Other income, net	0.7			7.2			(90.3)	Other income, net	7.0			0.7			*
Interest expense, net	Interest expense, net	(4.7)			(5.0)			(6.0)	Interest expense, net	(4.1)			(4.7)			(12.8)

Income from continuing operations before income taxes	Income from continuing operations before income taxes	28.7			5.2			451.9	Income from continuing operations before income taxes	34.6			28.3			22.3
Income tax provision	Income tax provision	(6.0)			(4.6)			30.4	Income tax provision	(7.0)			(6.0)			16.7
Income from continuing operations	Income from continuing operations	22.7			0.6			3,683.3	Income from continuing operations	27.6			22.3			23.8

Components of revenue increase:	Components of revenue increase:								Components of revenue increase:
Organic	Organic							(1.6)	Organic							4.6
Foreign currency	Foreign currency							0.2	Foreign currency							0.7
South Africa revenue adjustment								5.1
Acquisitions	Acquisitions							3.8	Acquisitions							3.2

Net revenue increase	Net revenue increase							7.5	Net revenue increase							8.5

* Not meaningful for comparison purposes.

Revenues — For the three months ended ~~March 28, 2020, t~~heApril 3, 2021, the increase in revenues, compared to the ~~respective~~respective period in ~~2019~~,2020, was primarily due to ~~was due primarily~~an increase in organic revenue and, to ~~(i) an adjustment recorded during the first quarter of 2019 to the amount of cumulative revenue associated with the variable consideration on the large power projects in South Africa of $17.5 and (ii)~~a lesser extent, the impact of the ~~acquisitions of Sabik on February 1, 2019, SGS on July 3, 2019,~~ULC and ~~Patterson-Kelley on November 12, 2019, partially offset by a decline in organic revenue.~~Sensors & Software acquisitions. The ~~decline~~increase in organic revenue was due primarily to ~~lower~~higher sales ~~related to heating~~of HVAC products ~~within our HVAC reportable segment,~~and location and inspection equipment, partially offset by ~~an increase~~a decline in sales of process cooling products within our Engineered Solutions reportable ~~segment primarily associated with~~segment. Sales of HVAC cooling products in the ~~power transformer business.~~ first quarter of 2020, particularly in the Asia Pacific region, were negatively impacted by the COVID-19 pandemic. In addition, during the first quarter of 2021, sales of HVAC heating products were favorably impacted by higher winter heating demand. Lastly, sales of process cooling products declined during the first quarter of 2021, compared to the first quarter of 2020, as the business generated a significant amount of revenues from a number of large projects during the first quarter of 2020.

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

Gross Profit — For the three months ended ~~March 28, 2020,~~April 3, 2021, the increase in gross profit and gross profit as a percentage of revenues, compared to the respective period in ~~2019,~~2020, was due primarily to ~~(i)~~ the ~~reduction~~increase in ~~revenue of $17.5~~revenues noted above, including the impact of the additional absorption of fixed costs associated with the large power projects in South Africa recorded during the first quarter of 2019 and (ii) an increase in profitability at our power transformer business associated with improved throughput at the business’s manufacturing facilities.such revenue increase.

Selling, General and Administrative (“SG&A”) Expense — For the three months ended ~~March 28, 2020,~~April 3, 2021, the increase in SG&A expense, compared to the respective period in ~~2019,~~2020, was due ~~primarily~~ to the ~~impact of~~incremental SG&A resulting from the acquisitions noted ~~above.~~above and the increase in corporate expense related to additional investments in connection with continuous improvement and other strategic initiatives.

Intangible Amortization — For the three months ended ~~March 28, 2020,~~April 3, 2021, the ~~the~~ increase in intangible amortization, compared to the respective period in ~~2019,~~2020, was due to the impact of the acquisitions noted ~~above.~~above, including $1.6 of intangible amortization during the three months ended April 3, 2021 related to ULC and Sensors & Software.

Special Charges, net — Special charges, net, related primarily to restructuring initiatives to reduce workforce. See Note 7 to our condensed consolidated financial statements for the details of actions taken in the first three months of ~~2020~~2021 and ~~2019.~~2020.

Other Operating ~~(Income) Expense~~Income — Other operating ~~(income) expense~~income for the three months ended March 28, 2020 ~~and March 30, 2019~~ related to revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

Other Income, net — Other income, net, for the three months ended April 3, 2021 was composed primarily of a gain of $5.2 related to changes in the estimated fair value of an equity security we hold, income of $1.7 related to a reduction of the parent company guarantees and bank surety bonds liability that were outstanding in connection with the 2016 sale of Balcke Dürr, and pension and postretirement income of $1.6, partially offset by currency transaction losses of $0.9.

Other income, net, for the three months ended March 28, 2020 was composed primarily of pension and post retirement income of $1.0.

~~Other income, net, for the three months ended March 30, 2019 was composed primarily of (i) a ga~~in 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.

Interest Expense, ~~net~~net — Interest expense, net, includes both interest expense and interest ~~income.~~ income. The decrease in interest expense, net, during the three months ended ~~March 28, 2020,~~April 3, 2021, compared to the ~~same~~respective period in ~~2019,~~2020, was the result of lower average interest rates and debt balances during the ~~three months ended March 28, 2020.~~2021 period.

Income Tax Provision — For the three months ended ~~March 28, 2020,~~April 3, 2021, we recorded an income tax provision of $~~6.0~~$7.0 on $~~28.7~~$34.6 of pre-tax income from continuing operations, resulting in an effective rate of ~~20.9%~~20.2%. This compares to an income tax provision for the three months ended March ~~30, 2019~~28, 2020 of ~~$4.6~~$6.0 on ~~$5.2~~$28.3 of a pre-tax income from continuing operations, resulting in an effective tax rate of ~~88.5%~~21.2%. The most significant item impacting the income tax ~~provision~~provisions for the first ~~quarter~~quarters of 2021 and 2020 was ~~$1.2~~$0.9 and $1.2, respectively, of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the quarter. The most significant items impacting the income tax provision for the first quarter of 2019 were (i) foreign losses for which no tax benefit was recognized as the 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 that vested during the quarter.periods.

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

The following information should be read in conjunction with our condensed consolidated financial statements and related notes. These results exclude the operating results of discontinued operations for all periods presented. See Note 6 to our condensed consolidated financial statements for a description of 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														Three months ended
		March 28, 2020			March 30, 2019			% Change		April 3, 2021			March 28, 2020			% Change
Revenues	Revenues	$	118.5		$	128.4		(7.7)	Revenues	$	146.5		$	118.5		23.6
Income	Income	15.0			18.4			(18.5)	Income	24.2			15.0			61.3
% of revenues	% of revenues	12.7		%	14.3		%		% of revenues	16.5		%	12.7		%
Components of revenue decrease:
Components of revenue increase:									Components of revenue increase:
Organic	Organic							(15.7)	Organic							22.9
Foreign currency	Foreign currency							(0.5)	Foreign currency							0.7
Acquisitions								8.5
Net revenue decrease:								(7.7)

Net revenue increase									Net revenue increase							23.6

Revenues — For the three months ended ~~March 28, 2020,~~April 3, 2021, the ~~decrease~~ increase in revenues, compared to the respective period in ~~2019,~~2020, was due ~~to a decrease~~primarily to an increase in organic revenue ~~partially offset by~~for both the ~~impact of the SGS~~segment's cooling and ~~Patterson-Kelley acquisitions. The decrease in organic revenue was due to lower sales of~~ heating products resulting from (i) a warmer than normal winter throughout the United States during the three months ended March 28, 2020 and (ii) stronger than typical demand during the three months ended March 30, 2019. In addition, the segment had lower salesproduct lines. Sales of cooling products in the first quarter of 2020, particularly in the Asia Pacific region, ~~due to the impacts of~~were negatively impacted by the COVID-19 pandemic. In addition, during the first quarter of 2021, sales of heating products were favorably impacted by higher winter heating demand.

Income — For the three months ended ~~March 28, 2020,~~April 3, 2021, the~~decrease~~ increase in income and margin, compared to the respective period in ~~2019, was due primarily to the decrease in revenues noted above.~~

~~Backlog~~ ~~— The segment had backlog of~~ ~~$88.9~~ ~~and $58.5 as of March 28,~~ 2020, ~~and March 30, 2019, respectively. Aggregate backlog related to SGS and Patterson-Kelley totaled $9.4~~ ~~as of March 28, 2020.~~

~~Detection and Measurement Reportable Segment~~

Three months ended
March 28, 2020 March 30, 2019 % Change
Revenues $ 91.9 $ 85.1 8.0
Income 18.2 17.0 7.1
% of revenues 19.8 % 20.0 %
Components of revenue increase:
Organic 6.4
Foreign currency (0.9)
Acquisition 2.5
Net revenue increase 8.0

~~Revenues~~ — For the three months ended March 28, 2020, the increase in revenues, compared to the respective period in 2019, was due to an increase in organic revenue and the impact of the Sabik acquisition. The increase in organic revenue was primarily the result of additional sales of bus fare collection systems, partially offset by lower sales of underground pipe and cable locators due to the impacts of the COVID-19 pandemic.

~~Income~~ — ~~For the three months ended March 28, 2020, the increase in income, compared to the respective period in 2019,~~ was due primarily to the increase in revenues noted ~~above, while the decrease in margin was primarily the result of a less profitable sales mix during the three months ended March 28, 2020.~~above.

Backlog — The segment had backlog of $~~75.9~~95.2 and ~~$87.4~~$88.9 as of April 3, 2021 and March 28, 2020, ~~and March 30, 2019,~~ respectively.

~~Engineered Solutions~~

Detection and Measurement Reportable Segment


		Three months ended														Three months ended
		March 28, 2020			March 30, 2019			% Change		April 3, 2021			March 28, 2020			% Change
Revenues	Revenues	$	154.9		$	138.0		12.2	Revenues	$	111.6		$	91.9		21.4
Income	Income	17.9			8.0			123.8	Income	20.0			18.2			9.9
% of revenues	% of revenues	11.6		%	5.8		%		% of revenues	17.9		%	19.8		%
Components of revenue increase:	Components of revenue increase:								Components of revenue increase:
Organic	Organic							12.2	Organic							6.7
Foreign currency	Foreign currency							—	Foreign currency							1.8

Acquisitions									Acquisitions							12.9
Net revenue increase	Net revenue increase							12.2	Net revenue increase							21.4

Revenues — For the three months ended ~~March 28, 2020,~~April 3, 2021, the increase in revenues, compared to the respective period in ~~2019,~~2020, was due primarily to the impact of the acquisitions of ULC and Sensors & Software and, to a lesser extent, an increase in organic revenue. The increase in organic revenue for the three months ended April 3, 2021 was primarily ~~within~~ the ~~segment's power transformer business associated with~~result of higher ~~throughput at the business's manufacturing facilities resulting from improved execution.~~sales of location and inspection equipment.

Income — For the three months ended April 3, 2021, the increase in income, compared to the respective period in 2020, was due to the impact of the revenue increase noted above, with the decline in margin resulting primarily from the incremental amortization expense associated with the acquisitions of ULC and Sensors & Software.

Backlog — The segment had backlog of $109.0 and $75.9 as of April 3, 2021 and March 28, 2020, respectively. Aggregate backlog related to ULC and Sensors and Software totaled $8.5 as of April 3, 2021.

Engineered Solutions Reportable Segment


	Three months ended
	April 3, 2021			March 28, 2020			% Change
Revenues	$	139.7		$	154.9		(9.8)
Income	10.0			17.9			(44.1)
% of revenues	7.2		%	11.6		%
Components of revenue decrease:
Organic							(9.8)
Foreign currency							—


Net revenue decrease							(9.8)

Revenues — For the three months ended April 3, 2021, the ~~increase~~decrease in revenues, compared to the respective period in 2020, was due to a decrease in organic revenue, associated with lower sales of process cooling products, as the business generated a significant amount of revenue from a number of large projects during the first quarter of 2020.

Income — For the three months ended April 3, 2021, the decrease in income and margin, compared to the respective period in ~~2019,~~2020, was due primarily to the ~~increase~~decrease in revenues noted ~~above.~~above and less favorable throughput and sales mix related to the segment's power transformer business.

Backlog — The segment had backlog of ~~$363.2~~$380.4 and ~~$296.3~~$363.2 as of ~~March 28, 2020~~April 3, 2021 and March ~~30, 2019,~~28, 2020, respectively. Portions of the segment’s backlog are long-term in nature, with the related revenues expected to be recorded through ~~2020~~2021 and into ~~2021.~~2022.

~~All~~ Other

Three months ended
March 28, 2020 March 30, 2019 % Change
Revenues $ 4.0 $ (7.9) 150.6
Loss (3.9) (22.6) (82.7)
% of revenues * *
Components of revenue increase:
Organic (97.5)
Foreign currency 26.6
South Africa revenue adjustment 221.5
Net revenue increase 150.6


	Three months ended
	April 3, 2021		March 28, 2020
Revenues	$	0.7	$	2.1
Loss	(4.6)		(4.3)
% of revenues	*		*

* Not meaningful for comparison purposes.

Revenues — For the three months ended ~~March 28, 2020,~~April 3, 2021, the ~~increase~~ decrease in revenues, compared to the respective period in ~~2019,~~2020, was due ~~primarily~~ to an adjustment, during the first quarter of 2019, to the amount of cumulative revenue associated with variable consideration on the large power projects in South Africa of $17.5. This increase in revenues was partially offset by a decline in organic revenue ~~which was the result of~~resulting from lower sales related to ~~(i)~~ the large power projects in South Africa, as these projects are in the latter stages of ~~completion, and (ii) the impact of the wind-down of the Heat Transfer business.~~completion.

Loss — For the three months ended ~~March 28, 202~~0,April 3, 2021, the loss ~~decreased,~~increased, compared to the respective period in ~~2019,~~2020, as ~~operating results for~~a result of higher professional fees during the ~~three months ended March 30, 2019 included the $17.5 charge noted above.~~2021 period.

Backlog — ~~These~~The operating ~~segments~~segment had a backlog of $~~6.1~~3.1 and ~~$30.2~~$4.3 as of April 3, 2021 and March 28, 2020, ~~and March 30, 2019,~~ respectively.

CORPORATE AND OTHER EXPENSES


		Three months ended														Three months ended
		March 28, 2020			March 30, 2019			% Change		April 3, 2021			March 28, 2020			% Change
Total consolidated revenues	Total consolidated revenues	$	369.3		$	343.6		7.5	Total consolidated revenues	$	398.5		$	367.4		8.5
Corporate expense	Corporate expense	11.1			12.4			(10.5)	Corporate expense	14.2			11.1			27.9
% of revenues	% of revenues	3.0		%	3.6		%		% of revenues	3.6		%	3.0		%
Long-term incentive compensation expense	Long-term incentive compensation expense	3.5			3.5			—	Long-term incentive compensation expense	3.0			3.5			(14.3)

Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, NCNorth Carolina corporate headquarters. The~~decrease~~ increase in corporate expense during the three months ended ~~March 28, 2020,~~April 3, 2021 compared to the respective period in ~~2019,~~2020, was due primarily to ~~a decline~~increased investments in ~~acquisition-related costs.~~continuous improvement and other strategic initiatives.

Long-Term Incentive Compensation Expense — ~~Long-term~~Long-term incentive compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes. The decrease in long-term incentive compensation during the three months ended April 3, 2021, compared to the respective period in 2020, was due to (i) revisions to/finalization of the liability associated with the 2018 long-term cash awards and (ii) the impact of awards that were forfeited in connection with the departure of certain employees. See Note 14 to our condensed consolidated financial statements for additional details.

3233

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 three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019.~~2020.


		Three months ended							Three months ended
		March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
Continuing operations:	Continuing operations:					Continuing operations:
Cash flows from operating activities	Cash flows from operating activities	$	2.7	$	11.5	Cash flows from operating activities	$	63.7	$	2.5
Cash flows used in investing activities		(2.5)		(74.7)
Cash flows from financing activities		113.0		32.7
Cash flows from (used in) investing activities						Cash flows from (used in) investing activities	0.9		(2.5)
Cash flows from (used in) financing activities						Cash flows from (used in) financing activities	(25.6)		113.0
Cash flows used in discontinued operations	Cash flows used in discontinued operations	(3.1)		(0.9)		Cash flows used in discontinued operations	(3.5)		(2.9)
Change in cash and equivalents due to changes in foreign currency exchange rates	Change in cash and equivalents due to changes in foreign currency exchange rates	(1.7)		1.6		Change in cash and equivalents due to changes in foreign currency exchange rates	3.1		(1.7)
Net change in cash and equivalents	Net change in cash and equivalents	$	108.4	$	(29.8)	Net change in cash and equivalents	$	38.6	$	108.4

Operating Activities — The ~~decrease~~increase in cash flows from operating activities during the three months ended ~~March 28, 2020,~~April 3, 2021, compared to the ~~same~~respective period in ~~2019,~~2020, was due primarily to ~~an increase~~(i) increases in ~~2019 short-term incentive compensation expense, which was paid~~cash flows at certain of our project-related businesses during the first quarter of 2021, as cash receipts for these businesses are often subject to contract milestones that can impact the timing of cash flows from period-to-period, and (ii) cash receipts during the quarter of $15.3 related to claims matters in ~~March 2020, versus 2018 short-term incentive compensation expense, which was paid in March 2019.~~South Africa.

Investing Activities — Cash flows from investing activities for the three months ended April 3, 2021 were comprised of proceeds from company-owned life insurance policies of $3.5, partially offset by capital expenditures of $2.6.

Cash flows used in investing activities for the three months ended March 28, 2020 were comprised ~~primarily~~ of capital expenditures of $3.6, partially offset by proceeds from company-owned life insurance policies of $1.1.

Cash flows used in investing activities for the three months ended March 30, 2019 were comprised primarily of cash utilized for the acquisition of Sabik of $77.0 and capital expenditures of $3.7, partially offset by proceeds of $5.5 received in connection with the sale of Heat Transfer’s manufacturing facility.

Financing Activities — Cash flows used in financing activities for the three months ended April 3, 2021 were comprised of net repayments under our various debt instruments of $21.4 and minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $4.2.

Cash flows from financing activities for the three months ended March 28, 2020 were comprised of net borrowings under our various debt instruments of $117.3, partially offset by (i) minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $2.8 and (ii) $1.5 related to contingent consideration paid in connection with the SGS ~~acquisition~~.

Cash flows from financing activities for the three months ended March 30, 2019 were comprised primarily of net borrowings of $38.6, which resulted primarily from the Sabik acquisition, partially offset by minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $5.9.acquisition.

Discontinued Operations — Cash flows used in discontinued operations for the three months ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019~~ related primarily to disbursements for liabilities retained in connection with dispositions.

Change in Cash and ~~Equivalents~~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 three months of ~~2020~~2021 and ~~2019.~~2020.

Borrowings and Availability

Borrowings — The following summarizes our debt activity (both current and non-current) for the three months ended ~~March 28, 2020.~~April 3, 2021.


		December 31, 2019		Borrowings		Repayments		Other⁽⁵⁾		March 28, 2020			December 31, 2020		Borrowings		Repayments		Other(5)		April 3, 2021
Revolving loans⁽¹⁾	Revolving loans⁽¹⁾	$	140.0	$	178.7	$	(88.7)	$	—	$	230.0	Revolving loans (1)	$	129.8	$	54.0	$	(80.1)	$	—	$	103.7
Term loan⁽²⁾	Term loan⁽²⁾	248.2		—		—		0.1		248.3		Term loan(2)	248.6		—		(1.5)		0.1		247.2

Trade receivables financing arrangement⁽³⁾	Trade receivables financing arrangement⁽³⁾	—		55.0		(27.0)		—		28.0		Trade receivables financing arrangement(3)	28.0		54.0		(48.0)		—		34.0
Other indebtedness⁽⁴⁾	Other indebtedness⁽⁴⁾	5.3		—		(0.7)		0.6		5.2		Other indebtedness(4)	6.0		0.4		(0.2)		0.4		6.6
Total debt	Total debt	393.5		$	233.7	$	(116.4)	$	0.7	511.5		Total debt	412.4		$	108.4	$	(129.8)	$	0.5	391.5

Less: short-term debt	Less: short-term debt	142.6								260.3		Less: short-term debt	101.2								100.0
Less: current maturities of long-term debt	Less: current maturities of long-term debt	1.0								2.6		Less: current maturities of long-term debt	7.2								8.9
Total long-term debt	Total long-term debt	$	249.9							$	248.6	Total long-term debt	$	304.0							$	282.6

___________________________

2024 under the terms of our senior credit agreement, we have classified within current liabilities the portion of the outstanding ~~balances for the revolving loans as a current liability in our condensed consolidated~~ balance ~~sheets, as it is reasonably expected~~ that ~~such balances~~we believe will be repaid ~~within one~~over the next year, with ~~available cash and~~such amount based on an estimate of cash that is expected to be generated ~~from operations.~~over such period.

⁽²⁾The term loan is repayable in quarterly installments beginning in the first quarter of 2021, with the quarterly installments equal to 0.625% of the initial term loan balance of $250.0 during 2021, 1.25% in each of the four quarters of 2022 and 2023, and 1.25% during the first three quarters of 2024. The remaining balance is payable in full on December 17, 2024. Balances are net of unamortized debt issuance ~~costs~~costs of ~~$1.7~~$1.3 and ~~$1.8~~$1.4 at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively.

⁽⁴⁾~~Includes~~Primarily includes balances under a purchase card program of ~~$2.3~~$2.1 and ~~$2.6~~$1.7 and ~~capital~~finance lease obligations of ~~$2.9~~ $2.8 and ~~$2.7, at March 28, 2020~~$2.6 at April 3, 2021 and December 31, ~~2019,~~2020, respectively. The purchase card program allows for payment beyond the ~~normal~~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.

At ~~March 28, 2020,~~April 3, 2021, we were in compliance with all covenants of our senior credit agreement.

Availability — At ~~March 28, 2020,~~April 3, 2021, we had ~~$202.7~~$334.1 of available borrowing capacity under our revolving credit facilities after giving effect to borrowings under the domestic revolving loan facility of ~~$230.0~~$103.7 and ~~$17.3~~$12.2 reserved for domestic letters of credit. In addition, at ~~March 28, 2020,~~April 3, 2021, we had ~~$18.6~~$34.4 of available issuance capacity under our foreign credit instrument facilities after giving effect to ~~$81.4~~$65.6 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~~finance leases and securitizations. We expect that we will continue to access these markets as appropriate to maintain liquidity and to provide sources of funds for general corporate purposes, acquisitions or to refinance existing debt.

Concentrations of Credit Risk

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

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

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

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

Concentrations of credit risk arising from trade accounts receivable are due to selling to customers in a particular industry. Credit risks are mitigated by performing ongoing credit evaluations of our customers’ financial conditions and obtaining collateral, advance payments, or other security when appropriate. No one customer, or group of customers that to our knowledge are under common control, accounted for more than ~~10%~~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 ~~2019~~2020 Annual Report on Form ~~10-K, except as detailed in~~ ~~Note 5~~ ~~to our condensed consolidated financial statements.~~10-K. Our total net liabilities for unrecognized tax benefits including interest were $~~17.3~~13.9 as of ~~March 28, 2020.~~April 3, 2021. 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 t~~$10.0~~o $5.0..

Contingencies and Other Matters — Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., ~~class actions and~~ contracts, intellectual property, and competitive claims), 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 15 to the condensed consolidated financial statements for a further discussion of contingencies and other matters.

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

In addition, you should read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Other Matters” and “Risk Factors” in our ~~2019~~2020 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 ~~2019~~2020 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 ~~2019~~2020 Annual Report on Form 10-K.

3536

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Management does not believe our exposure to market risk has significantly changed since December 31, ~~2019~~2020 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 ~~March 28, 2020.~~April 3, 2021. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~March 28, 2020.~~April 3, 2021.

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 ~~March 28, 2020~~April 3, 2021 were identified that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3637

PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings

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

ITEM 1A. Risk Factors

~~The COVID-19 pandemic has had, and is expected to continue to have, an adverse impact on our business.~~

During the first quarter of 2020, our business began to experience the adverse impacts of the COVID-19 pandemic, including a modest impact on first quarter 2020 consolidated financial results. In response, we have taken a number steps to protect our employees, customers, and business, including:

•~~The implementation of a COVID-19 task force, which, among other things, is monitoring the impacts of the COVID-19 pandemic on a daily basis;~~

•The adoption of practices that promote social distancing and prevent the spread of the COVID-19 pandemic (e.g., visitor access restrictions at our facilities, the use of masks and temperature checks at certain of our facilities, remote work arrangements where feasible, staggered work shifts, travel restrictions, etc.);

•~~Enhanced workplace hygiene and sanitary processes at our facilities; and~~

•~~Modified/enhanced employee benefits to better support employee needs in the current environment.~~

The COVID-19 pandemic is expected to have a more significant adverse impact on our business and consolidated financial results during the second quarter of 2020, and possibly longer, but we are unable to determine the extent, duration, or nature at this time. The intensity, duration and governmental response to the pandemic are all highly uncertain and could contribute to the ultimate impact on our business. Specifically, the COVID-19 pandemic could impact:

•~~Our customers’ ability to access credit and to pay amounts due to us;~~

•~~Our distributors’ ability to perform;~~

•~~Our suppliers’ ability to perform and the availability of materials and subcontractors’ services; and~~

•~~Our ability to:~~

◦~~Access credit;~~

◦~~Meet contractual deadlines with customers, which could result in delays in payments from customers and customers possibly seeking delay damages;~~

◦~~Complete acquisitions due to potential adverse impacts on targeted businesses or product lines; and~~

◦~~Meet the financial covenants under our senior credit and other debt agreements.~~

~~The impact of the COVID-19 pandemic could also result in:~~

•~~A reduction in the demand for certain of our products or a general weakening of the global economy;~~

•~~A prolonged shut-down of one or more of our facilities either due to COVID-19 exposure or to further restrictive government orders;~~

•~~Disruptions in our supply chain;~~

•~~Asset impairment charges;~~

•~~A loss of productivity, greater cybersecurity risk and other fraud risks, and difficulties in maintaining internal controls over financial reporting due to the impact of employees working remotely;~~

•An adverse impact to the funded status of our defined benefit pension plans, which could result in (i) a material charge during the fourth quarter of 2020 and (ii) on a longer-term, additional funding requirements for the plans;

•~~The diversion of management’s attention from core business operations; and~~

•~~Restructuring charges if we decide to reduce headcount as a result of a decline in customer demand.~~

~~Any of the above risks could have a material adverse impact on our business and consolidated financial results.~~

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 ~~2019~~20 20 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results.

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

None.

ITEM 6. Exhibits



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 ~~March 28, 2020,~~April 3, 2021, formatted in Inline XBRL, including: (i) Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019;~~2020; (ii) Condensed Consolidated Balance Sheets at ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019;~~2020; (iii) Condensed Consolidated Statements of Equity for the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019;~~2020; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019;~~2020; and (v) Notes to Condensed Consolidated Financial Statements.
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101.1)

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: ~~April 30, 2020~~May 6, 2021

/s/ Eugene J. Lowe, III

President and Chief Executive Officer

Date: ~~April 30, 2020~~May 6, 2021

/s/ ~~Scott W. Sproule~~James E. Harris

Vice President, Chief Financial Officer and Treasurer



PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements
Condensed Consolidated Statements of Operations and Comprehensive Income						3
Condensed Consolidated Balance Sheets						4
Condensed Consolidated Statements of Equity						5
Condensed Consolidated Statements of Cash Flows						6
Notes to Condensed Consolidated Financial Statements						7
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations						2728
Item 3 – Quantitative and Qualitative Disclosures About Market Risk						3637
Item 4 – Controls and Procedures						3637

PART 2 – OTHER INFORMATION
Item 1 – Legal Proceedings						3738
Item 1A – Risk Factors						3738
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds						38
Item 6 – Exhibits						38

SIGNATURES						39


	Three months ended March 30, 2019
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at December 31, 2018	$	0.5	$	1,295.4	$	(650.1)	$	244.9	$	(475.8)	$	414.9
Net loss	—		—		(0.8)		—		—		(0.8)
Other comprehensive income, net	—		—		—		1.7		—		1.7
Incentive plan activity	—		3.4		—		—		—		3.4
Long-term incentive compensation expense	—		2.6		—		—		—		2.6
Restricted stock and restricted stock unit vesting	—		(21.5)		—		—		15.0		(6.5)



Balance at March 30, 2019	$	0.5	$	1,279.9	$	(650.9)	$	246.6	$	(460.8)	$	415.3


	Three months ended March 28, 2020
Reportable Segments and All Other	HVAC		Detection and Measurement		Engineered Solutions		All Other		Total

Major product lines
Cooling	$	57.9	$	—	$	—	$	—	$	57.9
Boilers, comfort heating, and ventilation	60.6		—		—		—		60.6
Underground locators and inspection and rehabilitation equipment	—		48.7		—		—		48.7
Signal monitoring, obstruction lighting, and bus fare collection systems	—		43.2		—		—		43.2
Power transformers	—		—		110.6		—		110.6
Process cooling equipment and services, and heat exchangers	—		—		44.3		1.9		46.2
South African projects	—		—		—		2.1		2.1
	$	118.5	$	91.9	$	154.9	$	4.0	$	369.3

Timing of Revenue Recognition
Revenues recognized at a point in time	$	118.5	$	83.5	$	11.6	$	1.3	$	214.9
Revenues recognized over time	—		8.4		143.3		2.7		154.4
	$	118.5	$	91.9	$	154.9	$	4.0	$	369.3