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 ~~September 26, 2020~~October 2, 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.)

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

(Address of principal executive offices) (Zip Code)

(980) 474-3700

(Registrant’s telephone number, including area code)

NOT APPLICABLE

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

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


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

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Common shares outstanding October ~~23, 2020,~~29, 2021, ~~44,783,275~~45,413,380

SPX CORPORATION AND SUBSIDIARIES

FORM 10-Q INDEX

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited; in millions, except per share amounts)

Three months ended Nine months ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Revenues $ 363.4 $ 364.8 $ 1,105.9 $ 1,080.8
Costs and expenses:
Cost of products sold 255.1 258.6 769.5 783.2
Selling, general and administrative 74.6 74.6 229.3 229.5
Intangible amortization 3.3 2.0 8.3 6.0
Special charges, net 0.4 2.0 2.1 3.4
Other operating (income) expense 0 0 (0.4) 1.8
Operating income 30.0 27.6 97.1 56.9
Other income, net 2.9 1.0 9.4 10.1
Interest expense (4.5) (5.0) (14.0) (15.6)
Interest income 0.1 0.4 0.2 1.3
Income from continuing operations before income taxes 28.5 24.0 92.7 52.7
Income tax provision (5.8) (2.8) (18.9) (11.5)
Income from continuing operations 22.7 21.2 73.8 41.2
Income (loss) from discontinued operations, net of tax 0 0 0 0
Gain (loss) on disposition of discontinued operations, net of tax 0.1 0.3 (1.2) (1.3)
Income (loss) from discontinued operations, net of tax 0.1 0.3 (1.2) (1.3)
Net income $ 22.8 $ 21.5 $ 72.6 $ 39.9
Basic income per share of common stock:
Income from continuing operations $ 0.51 $ 0.48 $ 1.66 $ 0.94
Income (loss) from discontinued operations 0 0.01 (0.03) (0.03)
Net income per share $ 0.51 $ 0.49 $ 1.63 $ 0.91
Weighted-average number of common shares outstanding — basic 44.708 44.072 44.538 43.870
Diluted income per share of common stock:
Income from continuing operations $ 0.49 $ 0.47 $ 1.62 $ 0.92
Income (loss) from discontinued operations 0.01 0.01 (0.03) (0.03)
Net income per share $ 0.50 $ 0.48 $ 1.59 $ 0.89
Weighted-average number of common shares outstanding — diluted 45.894 45.176 45.694 44.861
Comprehensive income $ 24.7 $ 18.7 $ 65.5 $ 34.9


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues	$	285.8	$	268.3	$	870.4	$	783.1
Costs and expenses:
Cost of products sold	191.8		176.6		570.4		513.4
Selling, general and administrative	76.2		67.7		234.7		206.2
Intangible amortization	5.5		3.3		16.0		8.3
Special charges, net	0.5		0.3		1.9		1.6

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

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


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

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

Net income	$	331.1	$	22.8	$	419.4	$	72.6

Basic income per share of common stock:
Income from continuing operations	$	0.17	$	0.35	$	0.92	$	0.90
Income from discontinued operations	7.13		0.16		8.35		0.73
Net income per share	$	7.30	$	0.51	$	9.27	$	1.63

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

Diluted income per share of common stock:
Income from continuing operations	$	0.17	$	0.34	$	0.89	$	0.88
Income from discontinued operations	6.93		0.16		8.14		0.71
Net income per share	$	7.10	$	0.50	$	9.03	$	1.59

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

Comprehensive income	$	325.0	$	24.7	$	415.4	$	65.5

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share data)

September 26,
2020 December 31,
2019
ASSETS
Current assets:
Cash and equivalents $ 70.7 $ 54.7
Accounts receivable, net 232.0 265.9
Contract assets 70.3 63.4
Inventories, net 179.3 154.9
Other current assets (includes income taxes receivable of $24.9 and $23.0 at September 26, 2020 and December 31, 2019, respectively) 96.3 93.2
Total current assets 648.6 632.1
Property, plant and equipment:
Land 19.4 18.7
Buildings and leasehold improvements 125.0 121.9
Machinery and equipment 354.9 342.6
499.3 483.2
Accumulated depreciation (311.7) (304.1)
Property, plant and equipment, net 187.6 179.1
Goodwill 490.3 449.3
Intangibles, net 302.5 251.7
Other assets 615.2 605.9
Deferred income taxes 5.8 16.4
TOTAL ASSETS $ 2,250.0 $ 2,134.5
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 134.5 $ 141.6
Contract liabilities 83.3 100.8
Accrued expenses 228.8 220.4
Income taxes payable 2.0 2.2
Short-term debt 108.0 142.6
Current maturities of long-term debt 5.6 1.0
Total current liabilities 562.2 608.6
Long-term debt 350.3 249.9
Deferred and other income taxes 27.0 26.3
Other long-term liabilities 727.4 747.3
Total long-term liabilities 1,104.7 1,023.5
Commitments and contingent liabilities (Note 15)
Equity:
Common stock (52,419,835 and 44,746,705 issued and outstanding at September 26, 2020, respectively, and 52,017,204 and 44,202,503 issued and outstanding at December 31, 2019, respectively)
0.5 0.5
Paid-in capital 1,309.7 1,302.4
Retained deficit (512.7) (584.8)
Accumulated other comprehensive income 237.2 244.3
Common stock in treasury (7,673,130 and 7,814,701 shares at September 26, 2020 and December 31, 2019, respectively)
(451.6) (460.0)
Total equity 583.1 502.4
TOTAL LIABILITIES AND EQUITY $ 2,250.0 $ 2,134.5


	October 2, 2021		December 31, 2020
ASSETS
Current assets:
Cash and equivalents	$	560.1	$	68.3
Accounts receivable, net	212.1		221.0
Contract assets	23.7		32.5
Inventories, net	170.3		143.1
Other current assets (includes income taxes receivable of $2.6 and $27.3 at October 2, 2021 and December 31, 2020, respectively)	80.3		96.1


Assets of discontinued operations	—		121.6
Total current assets	1,046.5		682.6
Property, plant and equipment:
Land	14.0		12.9
Buildings and leasehold improvements	61.7		64.9
Machinery and equipment	230.2		215.6
	305.9		293.4
Accumulated depreciation	(197.9)		(183.4)
Property, plant and equipment, net	108.0		110.0
Goodwill	404.0		368.6
Intangibles, net	337.2		305.0
Other assets	590.9		609.8
Deferred income taxes	3.2		23.9
Assets of discontinued operations	—		219.1
TOTAL ASSETS	$	2,489.8	$	2,319.0
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	112.3	$	104.6
Contract liabilities	50.7		46.3
Accrued expenses	240.6		209.4
Income taxes payable	60.2		0.4
Short-term debt	2.3		101.2
Current maturities of long-term debt	11.4		7.2

Liabilities of discontinued operations	—		115.8
Total current liabilities	477.5		584.9
Long-term debt	233.9		304.0
Deferred and other income taxes	21.3		23.5
Other long-term liabilities	696.8		746.7
Liabilities of discontinued operations	—		30.7
Total long-term liabilities	952.0		1,104.9
Commitments and contingent liabilities (Note 15)	0		0
Equity:

Common stock (52,921,832 and 45,372,991 issued and outstanding at October 2, 2021, respectively, and 52,704,973 and 45,032,325 issued and outstanding at December 31, 2020, respectively)	0.5		0.5
Paid-in capital	1,328.2		1,319.9
Retained deficit	(68.7)		(488.1)
Accumulated other comprehensive income	244.5		248.5
Common stock in treasury (7,548,841 and 7,672,648 shares at October 2, 2021 and December 31, 2020, respectively)	(444.2)		(451.6)


Total equity	1,060.3		629.2
TOTAL LIABILITIES AND EQUITY	$	2,489.8	$	2,319.0

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 September 26, 2020
Common
Stock Paid-In
Capital Retained
Deficit Accum. Other
Comprehensive
Income Common
Stock In
Treasury SPX
Corporation
Shareholders’
Equity
Balance at June 27, 2020 $ 0.5 $ 1,303.4 $ (535.5) $ 235.3 $ (451.6) $ 552.1
Net income — — 22.8 — — 22.8
Other comprehensive income, net — — — 1.9 — 1.9
Incentive plan activity — 3.1 — — — 3.1
Long-term incentive compensation expense — 3.2 — — — 3.2
Restricted stock and restricted stock unit vesting — — — — — 0
Balance at September 26, 2020 $ 0.5 $ 1,309.7 $ (512.7) $ 237.2 $ (451.6) $ 583.1


	Three months ended October 2, 2021
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at July 3, 2021	$	0.5	$	1,321.2	$	(399.8)	$	250.6	$	(444.3)	$	728.2
Net income	—		—		331.1		—		—		331.1
Other comprehensive loss, net	—		—		—		(6.1)		—		(6.1)
Incentive plan activity	—		3.0		—		—		—		3.0
Long-term incentive compensation expense	—		4.2		—		—		—		4.2
Restricted stock unit vesting	—		(0.2)		—		—		0.1		(0.1)
Balance at October 2, 2021	$	0.5	$	1,328.2	$	(68.7)	$	244.5	$	(444.2)	$	1,060.3


		Nine months ended September 26, 2020													Nine months ended October 2, 2021
		Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity			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)
Balance at December 31, 2020														Balance at December 31, 2020	$	0.5	$	1,319.9	$	(488.1)	$	248.5	$	(451.6)	$	629.2
Net income	Net income	—		—		72.6		—		—		72.6		Net income	—		—		419.4		—		—		419.4
Other comprehensive loss, net	Other comprehensive loss, net	—		—		—		(7.1)		—		(7.1)		Other comprehensive loss, net	—		—		—		(4.0)		—		(4.0)
Incentive plan activity	Incentive plan activity	—		10.7		—		—		—		10.7		Incentive plan activity	—		9.8		—		—		—		9.8
Long-term incentive compensation expense	Long-term incentive compensation expense	—		9.3		—		—		—		9.3		Long-term incentive compensation expense	—		10.8		—		—		—		10.8
Restricted stock and restricted stock unit vesting		—		(12.7)		—		—		8.4		(4.3)

Balance at September 26, 2020		$	0.5	$	1,309.7	$	(512.7)	$	237.2	$	(451.6)	$	583.1
Restricted stock unit vesting														Restricted stock unit vesting	—		(12.3)		—		—		7.4		(4.9)
Balance at October 2, 2021														Balance at October 2, 2021	$	0.5	$	1,328.2	$	(68.7)	$	244.5	$	(444.2)	$	1,060.3

Three months ended September 28, 2019
Common Stock Paid-In Capital Retained Deficit Accum. Other Comprehensive Income Common Stock In Treasury SPX Corporation Shareholders’ Equity
Balance at June 29, 2019 $ 0.5 $ 1,285.3 $ (631.7) $ 242.7 $ (460.1) $ 436.7
Net income — — 21.5 — — 21.5
Other comprehensive loss, net — — — (2.8) — (2.8)
Incentive plan activity — 3.1 — — — 3.1
Long-term incentive compensation expense — 2.8 — — — 2.8
Restricted stock and restricted stock unit vesting — — — — — 0
Balance at September 28, 2019 $ 0.5 $ 1,291.2 $ (610.2) $ 239.9 $ (460.1) $ 461.3


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

Net income	—		—		22.8		—		—		22.8
Other comprehensive income, net	—		—		—		1.9		—		1.9
Incentive plan activity	—		3.1		—		—		—		3.1
Long-term incentive compensation expense	—		3.2		—		—		—		3.2
Restricted stock unit vesting	—		—		—		—		—		—
Balance at September 26, 2020	$	0.5	$	1,309.7	$	(512.7)	$	237.2	$	(451.6)	$	583.1


		Nine months ended September 28, 2019													Nine months ended September 26, 2020
		Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity			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
Balance at December 31, 2019														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														Impact of adoption of ASU 2016-13 - See Note 2	—		—		(0.5)		—		—		(0.5)
Net income	Net income	—		—		39.9		—		—		39.9		Net income	—		—		72.6		—		—		72.6
Other comprehensive loss, net	Other comprehensive loss, net	—		—		—		(5.0)		—		(5.0)		Other comprehensive loss, net	—		—		—		(7.1)		—		(7.1)
Incentive plan activity	Incentive plan activity	—		10.0		—		—		—		10.0		Incentive plan activity	—		10.7		—		—		—		10.7
Long-term incentive compensation expense	Long-term incentive compensation expense	—		8.1		—		—		—		8.1		Long-term incentive compensation expense	—		9.3		—		—		—		9.3
Restricted stock and restricted stock unit vesting		—		(22.3)		—		—		15.7		(6.6)
Balance at June 29, 2019		$	0.5	$	1,291.2	$	(610.2)	$	239.9	$	(460.1)	$	461.3
Restricted stock unit vesting														Restricted stock unit vesting	—		(12.7)		—		—		8.4		(4.3)
Balance at September 26, 2020														Balance at September 26, 2020	$	0.5	$	1,309.7	$	(512.7)	$	237.2	$	(451.6)	$	583.1

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


		Nine months ended					Nine months ended
		September 26, 2020		September 28, 2019			October 2, 2021		September 26, 2020
Cash flows from (used in) operating activities:	Cash flows from (used in) operating activities:					Cash flows from (used in) operating activities:
Net income	Net income	$	72.6	$	39.9	Net income	$	419.4	$	72.6
Less: Loss from discontinued operations, net of tax		(1.2)		(1.3)
Less: Income from discontinued operations, net of tax						Less: Income from discontinued operations, net of tax	378.0		32.3
Income from continuing operations	Income from continuing operations	73.8		41.2		Income from continuing operations	41.4		40.3
Adjustments to reconcile income from continuing operations to net cash from operating activities:	Adjustments to reconcile income from continuing operations to net cash from operating activities:					Adjustments to reconcile income from continuing operations to net cash from operating activities:
Special charges, net	Special charges, net	2.1		3.4		Special charges, net	1.9		1.6
Gain on change in fair value of equity security	Gain on change in fair value of equity security	(7.4)		(7.9)		Gain on change in fair value of equity security	(9.0)		(7.4)

Deferred and other income taxes	Deferred and other income taxes	13.0		8.3		Deferred and other income taxes	1.9		13.0
Depreciation and amortization	Depreciation and amortization	28.6		24.7		Depreciation and amortization	32.1		21.6
Pension and other employee benefits	Pension and other employee benefits	5.3		7.6		Pension and other employee benefits	4.1		5.3
Long-term incentive compensation	Long-term incentive compensation	10.2		10.1		Long-term incentive compensation	9.5		9.6
Other, net	Other, net	3.4		1.2		Other, net	3.6		3.3
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	52.4		94.6		Accounts receivable and other assets	62.5		51.1
Inventories	Inventories	(24.9)		(18.5)		Inventories	(20.1)		(24.1)
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	(93.2)		(88.2)		Accounts payable, accrued expenses and other	(31.5)		(101.0)
Cash spending on restructuring actions	Cash spending on restructuring actions	(2.4)		(3.2)		Cash spending on restructuring actions	(2.4)		(2.3)
Net cash from continuing operations	Net cash from continuing operations	60.9		73.3		Net cash from continuing operations	94.0		11.0
Net cash used in discontinued operations		(4.5)		(3.5)
Net cash from discontinued operations						Net cash from discontinued operations	59.8		45.4
Net cash from operating activities	Net cash from operating activities	56.4		69.8		Net cash from operating activities	153.8		56.4
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		5.9		Proceeds from company-owned life insurance policies, net	8.2		1.1
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	(87.9)		(87.2)		Business acquisitions, net of cash acquired	(120.0)		(87.9)
Net proceeds from sales of assets and other		0		5.3

Capital expenditures	Capital expenditures	(15.0)		(10.7)		Capital expenditures	(7.5)		(12.5)
Net cash used in continuing operations	Net cash used in continuing operations	(101.8)		(86.7)		Net cash used in continuing operations	(119.3)		(99.3)
Net cash from discontinued operations		0		0
Net cash used in investing activities		(101.8)		(86.7)
Net cash from (used in) discontinued operations						Net cash from (used in) discontinued operations	617.9		(2.5)
Net cash from (used in) investing activities						Net cash from (used in) investing activities	498.6		(101.8)
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	183.9		132.4		Borrowings under senior credit facilities	209.1		183.9
Repayments under senior credit facilities	Repayments under senior credit facilities	(118.9)		(127.6)		Repayments under senior credit facilities	(343.6)		(118.9)
Borrowings under trade receivables financing arrangement	Borrowings under trade receivables financing arrangement	65.0		55.0		Borrowings under trade receivables financing arrangement	179.0		65.0
Repayments under trade receivables financing arrangement	Repayments under trade receivables financing arrangement	(60.4)		(64.0)		Repayments under trade receivables financing arrangement	(207.0)		(60.4)
Net borrowings (repayments) under other financing arrangements		(1.8)		3.7
Net repayments under other financing arrangements						Net repayments under other financing arrangements	(0.3)		(1.8)
Payment of contingent consideration	Payment of contingent consideration	(1.5)		0		Payment of contingent consideration	—		(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	(1.8)		(4.2)		Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	(4.0)		(1.8)

Net cash from (used in) continuing operations	Net cash from (used in) continuing operations	64.5		(4.7)		Net cash from (used in) continuing operations	(166.8)		64.5
Net cash from discontinued operations		0		0
Net cash used in discontinued operations						Net cash used in discontinued operations	—		—
Net cash from (used in) financing activities	Net cash from (used in) financing activities	64.5		(4.7)		Net cash from (used in) financing activities	(166.8)		64.5
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	(3.1)		2.1		Change in cash and equivalents due to changes in foreign currency exchange rates	6.2		(3.1)
Net change in cash and equivalents	Net change in cash and equivalents	16.0		(19.5)		Net change in cash and equivalents	491.8		16.0
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	$	70.7	$	49.3	Consolidated cash and equivalents, end of period	$	560.1	$	70.7

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(1) BASIS OF PRESENTATION

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

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

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

~~Acquisition~~Sale of ~~Sabik~~Transformers Solutions Business

On ~~February~~October 1, ~~2019,~~2021, we completed the ~~acquisition~~previously announced sale of ~~Sabik Marine~~SPX Transformer Solutions, Inc. (“~~Sabik”~~Transformer Solutions”)~~, primarily a manufacturer~~ pursuant to the terms of ~~obstruction lighting products,~~the Stock Purchase Agreement dated June 8, 2021 with GE-Prolec Transformers, Inc. (the “Purchaser”) and Prolec GE Internacional, S. de R.L. de C.V. We transferred all of the outstanding common stock of Transformer Solutions to the Purchaser for aan aggregate cash purchase price of ~~$77.2,~~$645.0 (the “Transaction”). The purchase price is subject to potential adjustment based on Transformer Solutions’ cash, debt and working capital on the date the Transaction was consummated, as well as for specified transaction expenses and other specified items, with the net ~~of cash acquired of $0.6. The post-acquisition operating results of Sabik 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 received totaling $620.6. After the sale of ~~$11.5, including contingent consideration~~Transformer Solutions, we have only a limited presence in the power generation markets and are now focusing our efforts and investments on the HVAC and detection and measurement markets. Historically, Transformer Solutions’ operations have had a significant impact on our consolidated financial results, with revenues totaling approximately 25% of ~~$1.5~~our total consolidated revenues. As we no longer have a consequential presence in the power generation markets, and given Transformer Solutions' significance to our historical consolidated financial results, we have concluded that ~~was paid during~~ the ~~first quarter~~sale of ~~2020.~~ Transformer Solutions represents a strategic shift. Accordingly, we have classified the business as a discontinued operation in the accompanying condensed consolidated financial statements for all periods presented. See Note 3 for additional details.

~~The post-acquisition operating results~~

Change in Segment Reporting Structure

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

~~Acquisition~~Wind-Down of ~~Patterson-Kelley~~the SPX Heat Transfer Business

~~On November 12, 2019,~~As a continuation of our strategic shift away from power-generation markets, during the fourth quarter of 2020, we completed the ~~acquisition~~wind-down of ~~Patterson-Kelley, LLC~~the SPX Heat Transfer business (“~~Patterson-Kelley”~~Heat Transfer”), which included providing all products and services on the business’s remaining contracts with customers. As a ~~manufacturer and distributor of commercial boilers and water heaters,~~result, we are reporting Heat Transfer as a discontinued operation in the accompanying condensed consolidated financial statements for cash proceeds of $59.9. The assets acquired and liabilities assumed have been recorded at estimates of fair value as determined by management, based on information available and on assumptions as to future operations and are subject to change upon completion of acquisition accounting. The post-acquisition operating results of Patterson-Kelley are reflected within our HVAC reportable segment.all periods presented. See Note 3 for additional details.

Acquisition of ULC

On September 2, 2020, we completed the acquisition of ULC Robotics (“ULC”), a leading developer of robotic systems, machine learning applications, and inspection technology for the energy, utility, and industrial markets, for cash proceeds of ~~$87.9,~~$89.2, net of cash acquired of ~~$4.3.~~$4.0. Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $45.0, with payments scheduled to be made upon successful achievement of certain operational and financial performance milestones. At the time of the acquisition, we recorded a liability of $24.3, which

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

Acquisition of Sensors & Software

On November 11, 2020, we completed the acquisition of Sensors & Software Inc. (“Sensors & Software”), a leading manufacturer and distributor of ground penetrating radar products used for locating underground utilities, detecting unexploded ordinances, and geotechnical and geological investigations, for cash proceeds of $15.5, net of cash acquired of $0.3. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to ~~$45.0,~~$3.9, with ~~payments~~payment scheduled to be made upon successful achievement of a financial performance milestone during the twelve months following the date of acquisition. The estimated fair value of such contingent consideration is $0.7, which is reflected as a liability in our condensed consolidated balance sheets as of October 2, 2021 and December 31, 2020. The post-acquisition operating results of Sensors & Software are reflected within our Detection and Measurement reportable segment.

Acquisition of Sealite

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

Acquisition of ECS

On August 2, 2021, we completed the acquisition of Enterprise Control Systems Ltd (“ECS”), a leader in the design and manufacture of highly-engineered tactical datalinks and radio frequency (“RF”) countermeasures, including counter-drone and counter-IED RF jammers. We purchased ECS for cash proceeds of $39.4, net of cash acquired of $5.1. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $16.8, with payment to be made in 2022 upon successful achievement of certain ~~operational and~~ financial performance milestones. The estimated fair value of such contingent consideration is ~~$24.3,~~$8.2, which is reflected as a liability in our condensed consolidated balance sheet as of ~~September 26, 2020. In addition, the purchase price is subject to adjustment based on the final calculation~~October 2, 2021. The post-acquisition operating results of ~~working capital, cash,~~ECS are reflected within our Detection and ~~debt as of the date of the acquisition.~~ Measurement reportable segment.

The assets acquired and liabilities assumed in the Sensors & Software, Sealite and ECS transactions have been recorded at estimates of fair value as determined by management, based on information available and assumptions as to future operations and are subject to change, ~~upon completion of acquisition accounting. The post-acquisition operating results of ULC are reflected in our Detection and Measurement reportable segment.~~

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

We have experienced modest adverse impacts of the COVID-19 pandemic since March of 2020 and these adverse impacts could continue during the fourth quarter of 2020, and possibly longer. 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 September 26, 2020. 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 madeprimarily for the final assessment and valuation of ~~assets and contingent~~certain income tax 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 nine months ended ~~September 26, 2020,~~October 2, 2021, when compared to the consolidated operating results for the ~~nine months ended September 28, 2019.~~2020 respective period.

(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, which entails recognizing the initial effect of adoption in 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 guidance 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, November 12, 2019 and~~ September 2, 2020, November 11, 2020, April 19, 2021 and August 2, 2021, we completed the acquisitions of ~~Sabik, SGS, Patterson-Kelley~~ULC, Sensors & Software, Sealite and ~~ULC,~~ECS, respectively. The pro forma effects of these acquisitions, to the applicable periods, are not material to the accompanying condensed consolidated results of operations.

Sale of Transformer Solutions Business

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

The final sales price for Transformer Solutions is subject to adjustment based on cash, debt and working capital existing at the closing date, as well as for specified transaction expenses and other specified items, and is subject to agreement with the Purchaser, with final agreement of these items yet to occur. Accordingly, it is possible that the sales price and resulting gain for this divestiture may be materially adjusted in subsequent periods.

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


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues	$	94.4	$	95.1	$	313.5	$	319.6
Costs and expenses:
Cost of product sold	81.3		78.4		258.0		253.5
Selling, general and administrative	10.3		7.0		28.4		23.0


Other income, net	—		0.2		—		0.9

Income before income tax	2.8		9.9		27.1		44.0
Income tax provision	(33.8)		(2.7)		(6.8)		(10.5)
Income (loss) from discontinued operations, net of tax	$	(31.0)	$	7.2	$	20.3	$	33.5

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


ASSETS

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

Wind-Down of the Heat Transfer Business

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

Major line items constituting pre-tax income (loss) and after-tax income (loss) of Heat Transfer for the three and nine months ended September 26, 2020 ~~and September 28, 2019, as applicable.~~are shown below:


	Three months ended		Nine months ended
	September 26, 2020		September 26, 2020
Revenues	$	—	$	3.2

Cost of product sold	0.1		2.6
Selling, general and administrative	(0.1)		0.1

Special charges, net	0.1		0.5

Income (loss) before income tax	(0.1)		—
Income tax provision	—		—
Income (loss) from discontinued operations, net of tax	$	(0.1)	$	—

We recognized net ~~income~~gain (loss) of $(3.3) and $0.0 during the three and nine months ended October 2, 2021 and net gain (loss) of $0.1 and $(1.2) during the three and nine months ended September 26, 2020 ~~respectively, and net income (loss) during the three and nine months ended September 28, 2019 of $0.3 and $(1.3), respectively,~~ within “Gain (loss) on disposition of discontinued operations, net of tax” resulting primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior ~~business divestitures.~~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 and nine months ended October 2, 2021 and September 26, ~~2020 and September 28, 2019:~~2020:


		Three months ended September 26, 2020											Three months ended October 2, 2021
Reportable Segments and All Other		HVAC		Detection and Measurement		Engineered Solutions		All Other		Total
Reportable Segments and Other												Reportable Segments and Other	HVAC		Detection and Measurement		Other		Total

Major product lines	Major product lines											Major product lines
Cooling		$	79.7	$	0	$	0	$	0	$	79.7
Package and process cooling equipment and services												Package and process cooling equipment and services	$	104.1	$	—	$	—	$	104.1
Boilers, comfort heating, and ventilation	Boilers, comfort heating, and ventilation	74.9		0		0		0		74.9		Boilers, comfort heating, and ventilation	75.2		—		—		75.2
Underground locators, inspection and rehabilitation equipment, and robotic systems	Underground locators, inspection and rehabilitation equipment, and robotic systems	0		52.0		0		0		52.0		Underground locators, inspection and rehabilitation equipment, and robotic systems	—		60.1		—		60.1
Signal monitoring, obstruction lighting, and bus fare collection systems		0		33.2		0		0		33.2
Power transformers		0		0		95.1		0		95.1
Process cooling equipment and services, and heat exchangers		0		0		28.0		0.2		28.2
Communication technologies, obstruction lighting, and bus fare collection systems												Communication technologies, obstruction lighting, and bus fare collection systems	—		46.3		—		46.3

South African projects	South African projects	0		0		0		0.3		0.3		South African projects	—		—		0.1		0.1
		$	154.6	$	85.2	$	123.1	$	0.5	$	363.4		$	179.3	$	106.4	$	0.1	$	285.8

Timing of Revenue Recognition	Timing of Revenue Recognition											Timing of Revenue Recognition
Revenues recognized at a point in time	Revenues recognized at a point in time	$	154.6	$	76.2	$	8.4	$	0.1	$	239.3	Revenues recognized at a point in time	$	154.1	$	94.5	$	—	$	248.6
Revenues recognized over time	Revenues recognized over time	0		9.0		114.7		0.4		124.1		Revenues recognized over time	25.2		11.9		0.1		37.2
		$	154.6	$	85.2	$	123.1	$	0.5	$	363.4		$	179.3	$	106.4	$	0.1	$	285.8

911



	Nine months ended October 2, 2021
Reportable Segments and Other	HVAC		Detection and Measurement		Other		Total

Major product lines
Package and process cooling equipment and services	$	317.3	$	—	$	0.2	$	317.5
Boilers, comfort heating, and ventilation	223.0		—		—		223.0
Underground locators, inspection and rehabilitation equipment, and robotic systems	—		193.4		—		193.4
Communication technologies, obstruction lighting, and bus fare collection systems	—		135.8		—		135.8

South African projects	—		—		0.7		0.7
	$	540.3	$	329.2	$	0.9	$	870.4

Timing of Revenue Recognition
Revenues recognized at a point in time	$	474.8	$	292.5	$	—	$	767.3
Revenues recognized over time	65.5		36.7		0.9		103.1
	$	540.3	$	329.2	$	0.9	$	870.4


		Nine months ended September 26, 2020											Three months ended September 26, 2020
Reportable Segments and All Other		HVAC		Detection and Measurement		Engineered Solutions		All Other		Total
Reportable Segments and Other												Reportable Segments and Other	HVAC		Detection and Measurement		Other		Total

Major product lines	Major product lines											Major product lines
Cooling		$	214.2	$	0	$	0	$	0	$	214.2
Package and process cooling equipment and services												Package and process cooling equipment and services	$	107.7	$	—	$	0.2	$	107.9
Boilers, comfort heating, and ventilation	Boilers, comfort heating, and ventilation	191.2		0		0		0		191.2		Boilers, comfort heating, and ventilation	74.9		—		—		74.9
Underground locators, inspection and rehabilitation equipment, and robotic systems	Underground locators, inspection and rehabilitation equipment, and robotic systems	0		148.0		0		0		148.0		Underground locators, inspection and rehabilitation equipment, and robotic systems	—		52.0		—		52.0
Signal monitoring, obstruction lighting, and bus fare collection systems		0		121.2		0		0		121.2
Power transformers		0		0		319.6		0		319.6
Process cooling equipment and services, and heat exchangers		0		0		105.2		3.8		109.0
South African projects		0		0		0		2.7		2.7
Communication technologies, obstruction lighting, and bus fare collection systems												Communication technologies, obstruction lighting, and bus fare collection systems	—		33.2		—		33.2
South African Projects												South African Projects	—		—		0.3		0.3
		$	405.4	$	269.2	$	424.8	$	6.5	$	1,105.9		$	182.6	$	85.2	$	0.5	$	268.3

Timing of Revenue Recognition	Timing of Revenue Recognition											Timing of Revenue Recognition
Revenues recognized at a point in time	Revenues recognized at a point in time	$	405.4	$	245.4	$	31.6	$	2.1	$	684.5	Revenues recognized at a point in time	$	160.6	$	76.2	$	—	$	236.8
Revenues recognized over time	Revenues recognized over time	0		23.8		393.2		4.4		421.4		Revenues recognized over time	22.0		9.0		0.5		31.5
		$	405.4	$	269.2	$	424.8	$	6.5	$	1,105.9		$	182.6	$	85.2	$	0.5	$	268.3


		Three months ended September 28, 2019											Nine months ended September 26, 2020
Reportable Segments and All Other		HVAC		Detection and Measurement		Engineered Solutions		All Other		Total
Reportable Segments and Other												Reportable Segments and Other	HVAC		Detection and Measurement		Other		Total

Major product lines	Major product lines											Major product lines
Cooling		$	68.4	$	0	$	0	$	0	$	68.4
Package and process cooling equipment and services												Package and process cooling equipment and services	$	319.4	$	—	$	0.6	$	320.0
Boilers, comfort heating, and ventilation	Boilers, comfort heating, and ventilation	71.7		0		0		0		71.7		Boilers, comfort heating, and ventilation	191.2		—		—		191.2
Underground locators and inspection and rehabilitation equipment		0		45.0		0		0		45.0
Signal monitoring, obstruction lighting, and bus fare collection systems		0		52.6		0		0		52.6
Power transformers		0		0		93.4		0		93.4
Process cooling equipment and services, and heat exchangers		0		0		27.7		0.9		28.6
Underground locators, inspection and rehabilitation equipment, and robotic systems												Underground locators, inspection and rehabilitation equipment, and robotic systems	—		148.0		—		148.0
Communication technologies, obstruction lighting, and bus fare collection systems												Communication technologies, obstruction lighting, and bus fare collection systems	—		121.2		—		121.2
South African projects	South African projects	0		0		0		5.1		5.1		South African projects	—		—		2.7		2.7
		$	140.1	$	97.6	$	121.1	$	6.0	$	364.8		$	510.6	$	269.2	$	3.3	$	783.1

Timing of Revenue Recognition	Timing of Revenue Recognition											Timing of Revenue Recognition
Revenues recognized at a point in time	Revenues recognized at a point in time	$	140.1	$	91.0	$	12.6	$	0.4	$	244.1	Revenues recognized at a point in time	$	429.6	$	245.4	$	0.2	$	675.2
Revenues recognized over time	Revenues recognized over time	0		6.6		108.5		5.6		120.7		Revenues recognized over time	81.0		23.8		3.1		107.9
		$	140.1	$	97.6	$	121.1	$	6.0	$	364.8		$	510.6	$	269.2	$	3.3	$	783.1

1012

Nine months ended September 28, 2019
Reportable Segments and All Other HVAC Detection and Measurement Engineered Solutions All Other Total
Major product lines
Cooling $ 194.3 $ 0 $ 0 $ 0 $ 194.3
Boilers, comfort heating, and ventilation 205.1 0 0 0 205.1
Underground locators and inspection and rehabilitation equipment 0 144.7 0 0 144.7
Signal monitoring, obstruction lighting, and bus fare collection systems 0 139.7 0 0 139.7
Power transformers 0 0 296.8 0 296.8
Process cooling equipment and services, and heat exchangers 0 0 101.3 7.7 109.0
South African projects (1)
0 0 0 (8.8) (8.8)
$ 399.4 $ 284.4 $ 398.1 $ (1.1) $ 1,080.8
Timing of Revenue Recognition
Revenues recognized at a point in time $ 399.4 $ 266.7 $ 38.0 $ 2.0 $ 706.1
Revenues recognized over time (1)
0 17.7 360.1 (3.1) 374.7
$ 399.4 $ 284.4 $ 398.1 $ (1.1) $ 1,080.8

~~__________________________~~

~~(1)~~ ~~As further discussed below, during the nine months ended September 28, 2019, we reduced the amount of revenue associated with the large power projects in South Africa by $23.5.~~

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 ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019:~~2020:


Contract Balances	Contract Balances	September 26, 2020		December 31, 2019		Change		Contract Balances	October 2, 2021		December 31, 2020		Change
Contract Accounts Receivable(1)	Contract Accounts Receivable(1)	$	223.2	$	260.8	$	(37.6)	Contract Accounts Receivable(1)	$	202.8	$	210.6	$	(7.8)
Contract Assets	Contract Assets	70.3		63.4		6.9		Contract Assets	23.7		32.5		(8.8)
Contract Liabilities - current	Contract Liabilities - current	(83.3)		(100.8)		17.5		Contract Liabilities - current	(50.7)		(46.3)		(4.4)
Contract Liabilities - non-current(2)	Contract Liabilities - non-current(2)	(4.1)		(3.3)		(0.8)		Contract Liabilities - non-current(2)	(5.9)		(3.4)		(2.5)
Net contract balance	Net contract balance	$	206.1	$	220.1	$	(14.0)	Net contract balance	$	169.9	$	193.4	$	(23.5)

___________________________

(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 $14.0~~ The $23.5 decrease in our net contract balance from December 31, ~~2019~~2020 to ~~September 26, 2020~~October 2, 2021 was due primarily to cash payments received from customers during the period, partially offset by revenue recognized during the period.

During the three and nine months ended ~~September 26, 2020,~~October 2, 2021, we recognized revenues of ~~$14.8~~$8.6 and ~~$79.0, respectively,~~$31.8, respectively, related to our contract liabilities at December 31, ~~2019.~~2020.

Performance Obligations

As of ~~September 26, 2020,~~October 2, 2021, the ~~aggregate~~aggregate amount allocated to remaining performance obligations was ~~$71.0.~~$102.5. We expect to recognize revenue on approximately ~~47%~~63% and ~~72%~~86% of 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.

On June 28, 2019, our South African subsidiary, DBT, reached an agreement with Alstom S&E Africa (PTY) LTD (“Alstom/GE”), one of the prime contractors on the large power projects in South Africa, to, among other things, settle all material outstanding claims between the parties (other than certain pass-through claims relating to third parties). In connection with the agreement, we reduced the amount of cumulative revenue associated with variable consideration on the large power projects in South Africa by $5.8 during the second quarter of 2019.

~~As of September 26, 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.As a result of this agreement, the weighted-average remaining lease term and weighted-average discount rate of our operating leases are now 7 years and 3.1%, respectively.~~There have been no ~~other~~ material changes to our operating and finance leases during the nine months ended ~~September 26, 2020.~~October 2, 2021.

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

We are a global supplier of highly ~~specialized,~~specialized, engineered solutions with ~~operations~~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~~2 reportable segments: HVAC and Detection and ~~Measurement, and Engineered Solutions.~~Measurement. The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment. In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the ~~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,~~expense, 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 package and process cooling equipment products for the HVAC industrial and ~~industrial~~power generation markets, as well as boilers and comfort heating and ventilation products for the residential and commercial markets. The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers. The segment serves a customer base in North America, Europe, and ~~Asia 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~~Other

As noted above, “Other” consists of our South African operating segment, DBT. Our ~~Engineered Solutions reportable~~DBT operating 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~~markets, with its efforts focused primarily on 2 large power projects in South Africa that are in the final stages of completion (see Note 15 for ~~the segment’s products are direct to customers and third-party representatives. The segment has a strong presence in North America.~~

~~All Other~~

Our “All Other” group of operating segments engineer, design, manufacture, install and service equipment, including heat exchangers, primarily for the industrial and power generation markets. The primary distribution channels for the group’s products are direct to customers and third-party representatives. These operating segments have a presence in North America and South Africa.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 and nine months ended October 2, 2021 and September 26, 2020 ~~and September 28, 2019~~ are presented below:


		Three months ended				Nine months ended				Three months ended				Nine months ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues:	Revenues:										Revenues:
HVAC reportable segment	HVAC reportable segment	$	154.6	$	140.1	$	405.4	$	399.4		HVAC reportable segment	$	179.3	$	182.6	$	540.3	$	510.6
Detection and Measurement reportable segment	Detection and Measurement reportable segment	85.2		97.6		269.2		284.4			Detection and Measurement reportable segment	106.4		85.2		329.2		269.2
Engineered Solutions reportable segment		123.1		121.1		424.8		398.1
All Other (1)		0.5		6.0		6.5		(1.1)
Other											Other	0.1		0.5		0.9		3.3
Consolidated revenues	Consolidated revenues	$	363.4	$	364.8	$	1,105.9	$	1,080.8		Consolidated revenues	$	285.8	$	268.3	$	870.4	$	783.1

Income (loss):	Income (loss):										Income (loss):
HVAC reportable segment	HVAC reportable segment	$	26.3	$	22.2	$	59.5	$	57.3		HVAC reportable segment	$	21.4	$	26.8	$	69.1	$	64.1
Detection and Measurement reportable segment	Detection and Measurement reportable segment	14.2		20.5		48.4		59.2			Detection and Measurement reportable segment	9.9		14.2		41.3		48.4
Engineered Solutions reportable segment		9.2		5.9		44.7		26.9
All Other (1)		(5.5)		(5.7)		(13.6)		(38.3)
Other											Other	(4.1)		(5.3)		(12.6)		(13.9)
Total income for segments	Total income for segments	44.2		42.9		139.0		105.1			Total income for segments	27.2		35.7		97.8		98.6

Corporate expense	Corporate expense	(10.4)		(10.0)		(30.0)		(32.9)			Corporate expense	(11.5)		(11.8)		(39.0)		(33.8)
Long-term incentive compensation expense	Long-term incentive compensation expense	(3.4)		(3.3)		(10.2)		(10.1)			Long-term incentive compensation expense	(3.4)		(3.2)		(9.5)		(9.6)

Special charges, net	Special charges, net	(0.4)		(2.0)		(2.1)		(3.4)			Special charges, net	(0.5)		(0.3)		(1.9)		(1.6)
Other operating income (expense)		0		0		0.4		(1.8)
Other operating income (expense)(1)											Other operating income (expense)(1)	—		—		(2.7)		0.4
Consolidated operating income	Consolidated operating income	$	30.0	$	27.6	$	97.1	$	56.9		Consolidated operating income	$	11.8	$	20.4	$	44.7	$	54.0

~~_____________________~~___________________________

(1)~~As indicated in Note 4, during~~ For the nine months ended October 2, 2021, includes a charge of $2.7 related to revisions of recorded assets for asbestos-related claims. For the nine months ended September ~~28, 2019, we reduced revenues associated~~26, 2020, includes a gain of $0.4 related to revisions to estimates of certain liabilities retained in connection with the ~~large power projects in South Africa by $23.5.~~2016 sale of the dry cooling business.

(7) SPECIAL CHARGES, NET

Special charges, net, for the three and nine months ended October 2, 2021 and September 26, 2020 ~~and September 28, 2019~~ are described in more detail below:

Three months ended Nine months ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
HVAC reportable segment $ 0 $ 0.1 $ 0.5 $ 0.8
Detection and Measurement reportable segment 0 0 0.1 0
Engineered Solutions reportable segment 0 0.3 0 0.7
All Other 0 1.4 0.6 1.7
Corporate 0.4 0.2 0.9 0.2
Total $ 0.4 $ 2.0 $ 2.1 $ 3.4


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
HVAC reportable segment	$	—	$	—	$	0.2	$	0.5
Detection and Measurement reportable segment	—		—		0.6		0.1
Other	0.5		—		1.1		0.2
Corporate	—		0.3		—		0.8
Total	$	0.5	$	0.3	$	1.9	$	1.6

HVAC — Charges for the nine months ended October 2, 2021 related to severance costs associated with a restructuring action at one of the segment's heating businesses. Charges for the nine months ended September 26, 2020 related primarily to severance costs associated with restructuring actions at one ofthe segment's ~~Patterson-Kelley~~heating businesses and its Cooling Americas businesses. Charges for the three and nine months ended September 28, 2019 related primarily to severance, asset impairment, and other charges associated with the planned relocation of certain operations and severance costs associated with a restructuring action at the segment’s Cooling EMEA business.

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

~~Engineered Solutions~~Other — Charges for the three and nine months ended ~~September 28, 2019 related primarily to charges associated with the relocation of certain operations and~~October 2, 2021 included an asset impairment ~~charge.~~

~~All Other~~ ~~— Charges for the nine months ended September 26, 2020 related primarily to~~charge and severance costs incurred in connection with the wind-down activities at ~~DBT, our South African subsidiary, and Heat Transfer.~~DBT. Charges for the ~~three and~~ nine months ended September ~~28, 2019 related primarily to~~26, 2020 included severance costs ~~incurred in connection with the continuation of a restructuring action~~ at DBT.

Corporate –— Charges for the three and nine months ended September 26, 2020 related to asset impairment and other charges associated with the move to a new corporate headquarters. ~~Charges for the three and nine months ended September 28, 2019 related to severance costs incurred in connection with the rationalization of certain administrative functions.~~

No significant future charges are expected to be incurred under actions approved as of ~~September 26, 2020.~~October 2, 2021.

The following is an analysis of our restructuring liabilities for the nine months ended October 2, 2021 and September 26, ~~2020 and September 28, 2019:~~2020:


		Nine months ended					Nine months ended
		September 26, 2020		September 28, 2019			October 2, 2021		September 26, 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 (1)	Special charges (1)	1.7		2.6		Special charges (1)	1.4		1.2
Utilization — cash	Utilization — cash	(2.4)		(3.2)		Utilization — cash	(2.4)		(2.3)
Currency translation adjustment and other	Currency translation adjustment and other	(0.2)		0		Currency translation adjustment and other	—		(0.2)
Balance at end of period	Balance at end of period	$	0.8	$	2.1	Balance at end of period	$	0.5	$	0.4

~~_____________________~~___________________________

(1)For the nine months ended October 2, 2021 and September 26, 2020, excludes $0.5 and ~~September 28, 2019, excludes~~ $0.4, ~~and $0.8,~~ respectively, of non-cash charges that impacted “Special ~~charges, net”~~charges” but not the restructuring liabilities.

(8) INVENTORIES, NET

Inventories at ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019~~2020 comprised the following:

September 26,
2020 December 31,
2019
Finished goods $ 63.5 $ 57.6
Work in process 23.2 19.3
Raw materials and purchased parts 105.6 90.3
Total FIFO cost 192.3 167.2
Excess of FIFO cost over LIFO inventory value (13.0) (12.3)
Total inventories, net $ 179.3 $ 154.9


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

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 ~~39%~~31% and ~~36%~~35% of total inventory at ~~September 26, 2020~~October 2, 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 nine months ended ~~September 26, 2020~~October 2, 2021 were as follows:

December 31,
2019
Goodwill
Resulting from
Business
Combinations (1)
Impairments Foreign
Currency
Translation September 26,
2020
HVAC reportable segment
Gross goodwill $ 277.1 $ 0.5 $ 0 $ 1.4 $ 279.0
Accumulated impairments (144.6) — — 0.1 (144.5)
Goodwill 132.5 0.5 0 1.5 134.5
Detection and Measurement reportable segment
Gross goodwill 304.1 38.0 0 0.3 342.4
Accumulated impairments (133.6) — — 0.7 (132.9)
Goodwill 170.5 38.0 0 1.0 209.5
Engineered Solutions reportable segment
Gross goodwill 334.2 0 0 3.7 337.9
Accumulated impairments (187.9) — — (3.7) (191.6)
Goodwill 146.3 0 0 0 146.3
All Other
Gross goodwill 20.8 0 0 0 20.8
Accumulated impairments (20.8) — — 0 (20.8)
Goodwill 0 0 0 0 0
Total
Gross goodwill 936.2 38.5 0 5.4 980.1
Accumulated impairments (486.9) — — (2.9) (489.8)
Goodwill $ 449.3 $ 38.5 $ 0 $ 2.5 $ 490.3


	December 31, 2020		Goodwill Resulting from Business Combinations (1)		Impairments (2)		Foreign Currency Translation		October 2, 2021
HVAC reportable segment
Gross goodwill	$	492.2	$	—	$	—	$	(6.5)	$	485.7
Accumulated impairments	(340.6)		—		—		4.5		(336.1)
Goodwill	151.6		—		—		(2.0)		149.6

Detection and Measurement reportable segment
Gross goodwill	351.5		64.2		—		(3.6)		412.1
Accumulated impairments	(134.5)		—		(23.3)		0.1		(157.7)
Goodwill	217.0		64.2		(23.3)		(3.5)		254.4

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

Total
Gross goodwill	843.7		64.2		—		(10.1)		897.8
Accumulated impairments	(475.1)		—		(23.3)		4.6		(493.8)
Goodwill	$	368.6	$	64.2	$	(23.3)	$	(5.5)	$	404.0

___________________________

(1)Reflects (i) goodwill acquired with the ~~ULC acquisition~~Sealite and ECS acquisitions of ~~$38.0~~$38.5 and $20.6, respectively, (ii) an increase in ~~Patterson-Kelley's~~ULC's goodwill during ~~the period~~2021 of ~~$0.6~~$3.1 resulting from revisions to the valuation of certain assets and liabilities and income tax accounts, and (iii) 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 assets and liabilities and income tax accounts. ~~These increases were partially offset by a decrease to goodwill during the period from revisions to the valuation of certain tangible assets at Patterson-Kelley of $0.5.~~ As indicated in Note 1, the acquired assets, ~~including~~including goodwill, and liabilities assumed in the ~~ULC~~Sealite, ECS and ~~Patterson-Kelley~~Sensors & Software acquisitions have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

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

1516

Other Intangibles, Net

Identifiable intangible assets at ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019~~2020 comprised the following:

September 26, 2020 December 31, 2019
Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Value Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Value
Intangible assets with determinable lives: (1)

Customer relationships $ 100.2 $ (13.9) $ 86.3 $ 77.4 $ (8.7) $ 68.7
Technology 51.7 (5.5) 46.2 29.5 (3.3) 26.2
Patents 4.5 (4.5) 0 4.5 (4.5) 0
Other 18.5 (10.1) 8.4 12.6 (9.2) 3.4
174.9 (34.0) 140.9 124.0 (25.7) 98.3
Trademarks with indefinite lives (2)
161.6 — 161.6 153.4 — 153.4
Total $ 336.5 $ (34.0) $ 302.5 $ 277.4 $ (25.7) $ 251.7


	October 2, 2021						December 31, 2020
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with determinable lives (1):
Customer relationships	$	126.6	$	(23.7)	$	102.9	$	103.4	$	(16.2)	$	87.2
Technology	65.9		(10.5)		55.4		54.4		(6.8)		47.6
Patents	4.5		(4.5)		—		4.5		(4.5)		—
Other	22.4		(16.7)		5.7		18.8		(12.5)		6.3
	219.4		(55.4)		164.0		181.1		(40.0)		141.1
Trademarks with indefinite lives (2)	173.2		—		173.2		163.9		—		163.9
Total	$	392.6	$	(55.4)	$	337.2	$	345.0	$	(40.0)	$	305.0

___________________________

(1)The identifiable intangible assets ~~associated~~associated with the ~~ULC acquisition consists~~Sealite and ECS acquisitions consist of customer backlog of ~~$4.6,~~$1.9 and $0.8, respectively, customer relationships of ~~$22.8,~~$12.1 and $12.6, respectively, technology of ~~$21.9~~$6.6 and ~~non-compete agreements~~$5.8, respectively, and definite-lived trademarks of ~~$1.7.~~$0.0 and $1.2, respectively.

(2)Changes during the nine months ended ~~September 26, 2020~~October 2, 2021 related primarily to the acquisition of ~~ULC~~Sealite trademarks of ~~$7.6.~~$11.6 and, as previously discussed, the impairment charge of $1.0 related to ULC's trademarks.

In connection with the ~~acquisition~~acquisitions of ~~ULC,~~Sealite and ECS, which ~~has~~have definite-lived ~~intangibles~~intangible assets as noted above, we ~~updated~~increased our estimated annual amortization expense related to intangible assets to approximately ~~$13.5~~$21.0 for the full year ~~2020, $17.0 for~~ 2021, and ~~$14.2~~$19.0 for 2022 and each of the four years thereafter.

At ~~September 26, 2020,~~October 2, 2021, the net carrying ~~valu~~evalue of intangible ~~asse~~tsassets with determinable lives consisted of ~~$25.2~~$22.4 in the HVAC reportable segment and ~~$115.7~~$141.6 in the Detection and Measurement reportable segment. At ~~September 26, 2020,~~October 2, 2021, trademarks with indefinite lives consisted of ~~$96.4~~$105.5 in the HVAC reportable segment ~~$56.1~~and $67.7 in the Detection and Measurement reportable ~~segment, and $9.1 in the Engineered Solutions reportable segmen~~t.segment.

We perform our annual goodwill impairment testing during ~~the~~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”), Patterson-Kelley, LLC (“Patterson-Kelley”) and ULC, exceeded the carrying value of their respective net assets by over 75%. The estimated fair values of Cues and Patterson-Kelley exceeded the carrying value of their respective net assets by approximately 12% and 3%, while ULC's fair value approximates 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 $17.1, respectively, as of October 2, 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 as of September 26, 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 could have an adverse impact on our consolidated financial results in the fourth quarter of 2020, and possibly longer. As of September 26, 2020, there were 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 results may require an impairment charge related to one or more of these assets in a future period.

1617

(10) WARRANTY

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

Nine months ended
September 26,
2020 September 28,
2019
Balance at beginning of year $ 35.1 $ 34.0
Acquisitions 1.6 0.1
Provisions 10.0 9.3
Usage (9.5) (9.3)
Currency translation adjustment 0.1 0
Balance at end of period 37.3 34.1
Less: Current portion of warranty 13.7 12.1
Non-current portion of warranty $ 23.6 $ 22.0


	Nine months ended
	October 2, 2021		September 26, 2020
Balance at beginning of year	$	35.3	$	31.8
Acquisitions	—		1.6
Provisions	8.0		8.2
Usage	(7.2)		(7.8)
Currency translation adjustment	—		0.1
Balance at end of period	36.1		33.9
Less: Current portion of warranty	12.1		11.9
Non-current portion of warranty	$	24.0	$	22.0

(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 Nine months ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Service cost $ 0 $ 0 $ 0 $ 0
Interest cost 2.7 3.3 8.1 9.9
Expected return on plan assets (2.4) (2.4) (7.2) (7.3)
Net periodic pension benefit expense $ 0.3 $ 0.9 $ 0.9 $ 2.6


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



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

Foreign Pension Plans

Three months ended Nine months ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Service cost $ 0 $ 0 $ 0 $ 0
Interest cost 1.0 1.2 3.0 3.5
Expected return on plan assets (1.4) (1.7) (4.4) (4.9)
Net periodic pension benefit income $ (0.4) $ (0.5) $ (1.4) $ (1.4)


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

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

Postretirement Plans

Three months ended Nine months ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Service cost $ 0 $ 0 $ 0 $ 0
Interest cost 0.4 0.6 1.2 1.8
Amortization of unrecognized prior service credits (1.2) (1.0) (3.6) (3.0)
Net periodic postretirement benefit income $ (0.8) $ (0.4) $ (2.4) $ (1.2)


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

Amortization of unrecognized prior service credits	(1.2)		(1.2)		(3.6)		(3.6)
Net periodic postretirement benefit income	$	(0.9)	$	(0.8)	$	(2.7)	$	(2.4)

1718

(12) INDEBTEDNESS

The following summarizes our debt activity (both current and non-current) for the nine months ended ~~September 26, 2020:~~

December 31,
2019 Borrowings Repayments
Other(5)
September 26,
2020
Revolving loans (1)
$ 140.0 $ 183.9 $ (118.9) $ 0 $ 205.0
Term loan(2)
248.2 0 0 0.3 248.5
Trade receivables financing arrangement(3)
0 65.0 (60.4) 0 4.6
Other indebtedness(4)
5.3 0 (1.8) 2.3 5.8
Total debt 393.5 $ 248.9 $ (181.1) $ 2.6 463.9
Less: short-term debt 142.6 108.0
Less: current maturities of long-term debt 1.0 5.6
Total long-term debt $ 249.9 $ 350.3
October 2, 2021:


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




Trade receivables financing arrangement(3)	28.0		179.0		(207.0)		—		—
Other indebtedness(4)	6.0		0.6		(0.9)		(2.3)		3.4
Total debt	412.4		$	388.7	$	(551.5)	$	(2.0)	247.6


Less: short-term debt	101.2								2.3
Less: current maturities of long-term debt	7.2								11.4
Total long-term debt	$	304.0							$	233.9

___________________________

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

(2)The term loan is repayable in quarterly installments beginning in the first quarter of 2021, with the quarterly installments equal to 0.625% 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 ~~$1.5~~$1.1 and ~~$1.8~~$1.4 at ~~September 26, 2020~~October 2, 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 September 26, 2020, we had $20.1 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $4.6.~~ 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 ~~$1.7~~$2.3 and ~~$2.6~~$1.7 and finance lease obligations of ~~$2.4~~$1.1 and ~~$2.7, at September 26, 2020~~$2.6 at October 2, 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.

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

At ~~September 26, 2020,~~October 2, 2021, we had ~~$227.6~~$437.8 of available borrowing capacity under our revolving credit facilities, after giving effect to ~~borrowings under the domestic revolving loan facility of $205.0 and $17.4~~$12.2 reserved for domestic letters of credit. In addition, at ~~September 26, 2020,~~October 2, 2021, we had ~~$19.3~~$31.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to ~~$80.7~~$23.8 reserved for outstanding letters of credit.

The weighted-average interest rate of outstanding borrowings under our senior credit agreement was approximately 1.6% at ~~September 26, 2020.~~October 2, 2021.

At ~~September 26, 2020,~~October 2, 2021, we were in compliance with all covenants of our senior credit agreement.

Off Balance Sheet Arrangements

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

(13) DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swaps

~~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 $240.5~~ ~~as of September 26, 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,~~$245.3, 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 ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019,~~2020, the unrealized loss, net of tax, recorded in ~~Accumulated Other Comprehensive Income (“AOCI”~~accumulated other comprehensive income (“AOCI”) ~~for our interest rate swap agreements~~ was ~~$7.6~~$2.2 and ~~$1.9,~~$5.9, respectively. In addition, as of October 2, 2021, the fair value of our interest rate swap agreements totaled ~~$10.0 at September 26, 2020,~~$2.9, with ~~$3.5~~$2.4 recorded as a current liability and the remainder in long-term liabilities, and ~~$2.5~~$7.8 at December 31, ~~2019 (all of which is~~2020 (with $1.4 recorded as a current liability and the remainder in long-term liabilities). Changes in ~~the~~ fair value of our interest rate swap ~~agreements~~agreements are reclassified into earnings as a component of interest expense, when the forecasted transaction impacts earnings.

Currency Forward Contracts

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

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

We had FX forward contracts with an aggregate notional ~~amou~~ntamount of ~~$7.2~~$8.6 and ~~$26.0~~$6.3 outstanding as of ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019,~~2020, respectively, with all of the ~~$7.2~~$8.6 scheduled to ~~matur~~emature within one year.

Commodity Contracts

From time to time, we ~~enter~~enter into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials. The commodity contracts relate solely to Transformer Solutions. As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer Solutions. Immediately prior to the sale, we extinguished the existing commodity contracts and reclassified from AOCI a net loss of $0.6 to “Gain (loss) on disposition of discontinued operations, net of tax” within our condensed consolidated statements of operations for the three and nine months ended October 2, 2021. At ~~September 26, 2020 and~~ December 31, ~~2019,~~2020, the outstanding notional amount of commodity contracts w~~ere~~ ~~3.9 and 3.4~~was 3.2 pounds of ~~copper, respectively. We designate~~copper. Prior to extinguishment, we designated and ~~account~~accounted for these contracts as cash flow hedges and, to the extent the commodity contracts ~~are~~were effective in offsetting the variability of the forecasted purchases, the change in fair value iswas included in AOCI. We ~~reclassify AOCI~~reclassified amounts associated with our commodity contracts ~~to cost~~out of ~~products sold~~AOCI when the forecasted transaction ~~impacts~~impacted earnings. As of ~~September 26, 2020 and~~ December 31, ~~2019,~~2020, the fair value of these contracts ~~were~~was a current asset of $2.4. Since these commodity contracts related to our Transformer Solutions business, the amount has been recorded within assets of ~~$1.1 and $0.4, respectively.~~discontinued operations in the accompanying condensed consolidated balance sheet. The unrealized gain, net of taxes, recorded in AOCI ~~were $0.7~~ an~~d $0.3~~was $1.5 as of ~~September 26, 2020 and~~ December 31, ~~2019, respectively. We anticipate reclassifying~~ 2020.

~~the~~
~~unrealized gain~~ ~~as of September 26, 2020 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		Nine months ended
	October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020
Weighted-average number of common shares used in basic income per share	45.331	44.708	45.244	44.538
Dilutive securities — Employee stock options and restricted stock units	1.319	1.186	1.211	1.156
Weighted-average number of common shares and dilutive securities used in diluted income per share	46.650	45.894	46.455	45.694

Three months ended Nine months ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Weighted-average number of common shares used in basic income per share 44.708 44.072 44.538 43.870
Dilutive securities — Employee stock options and restricted stock units 1.186 1.104 1.156 0.991
Weighted-average number of common shares and dilutive securities used in diluted income per share 45.894 45.176 45.694 44.861
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 0.222 and 0.631, respectively, for the three months ended October 2, 2021, and 0.261 and 0.631, respectively, for the nine months ended October 2, 2021.

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

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 0.369 and 0.909, respectively, for the three months ended September 28, 2019, and 0.373 and 0.961, respectively, for the nine months ended September 28, 2019.

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 performance period, with performance based on the total return of our stock over the three-year performance period against a peer group within the S&P 600 Capital Goods Index. Stock options and RSU’s vest ratably over the three-year period subsequent to the date of grant.

Effective May ~~14, 2020,~~11, 2021, we granted ~~0.028~~0.017 RSU's to our non-employee directors, which vest in their entirety immediately prior to the annual meeting of stockholders in May ~~2021.~~2022.

~~Compensation~~Compensation expense within income from continuing operations related to long-term incentive awards totaled $3.4 and ~~$3.3~~$3.2 for the three months ended October 2, 2021 and September 26, 2020 and ~~September 28, 2019, respectively,~~$9.5 and ~~$10.2 and $10.1~~$9.6 for the nine months ended October 2, 2021 and September 26, 2020, ~~and September 28, 2019.~~respectively. The related tax benefit was ~~$0.9~~$0.6 and $0.8 for the three months ended October 2, 2021 and September 26, 2020 and ~~September 28, 2019, respectively,~~$1.6 and ~~$2.6 and $2.5~~$2.4 for the nine months ended October 2, 2021 and September 26, 2020, ~~and September 28, 2019.~~respectively.

Accumulated Other Comprehensive Income

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


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

__________________________

(1)Net of tax benefit of $0.7 as of October 2, 2021 and July 3, 2021.

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

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


	Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total
Balance at beginning of period	$	238.6	$	(4.4)	$	14.3	$	248.5
Other comprehensive income (loss) before reclassifications	(3.5)		3.1		—		(0.4)
Amounts reclassified from accumulated other comprehensive income (loss)	—		(0.9)		(2.7)		(3.6)
Current-period other comprehensive income (loss)	(3.5)		2.2		(2.7)		(4.0)
Balance at end of period	$	235.1	$	(2.2)	$	11.6	$	244.5

__________________________

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

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

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

Foreign
Currency
Translation
Adjustment
Net Unrealized Losses
on Qualifying Cash
Flow Hedges(1)
Pension and
Postretirement
Liability
Adjustment(2)
Total
Balance at beginning of period $ 227.2 $ (8.0) $ 16.1 $ 235.3
Other comprehensive income before reclassifications 1.7 0.4 0 2.1
Amounts reclassified from accumulated other comprehensive income (loss) 0 0.7 (0.9) (0.2)
Current-period other comprehensive income (loss) 1.7 1.1 (0.9) 1.9
Balance at end of period $ 228.9 $ (6.9) $ 15.2 $ 237.2


	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	$	227.2	$	(8.0)	$	16.1	$	235.3
Other comprehensive income before reclassifications	1.7		0.4		—		2.1
Amounts reclassified from accumulated other comprehensive income (loss)	—		0.7		(0.9)		(0.2)
Current-period other comprehensive income (loss)	1.7		1.1		(0.9)		1.9
Balance at end of period	$	228.9	$	(6.9)	$	15.2	$	237.2

__________________________

(1)Net of tax benefit of $2.2 and $2.6 as of September 26, 2020 and June 27, 2020, respectively.

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

The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended September 26, 2020 were as follows:

Foreign
Currency
Translation
Adjustment
Net Unrealized
Losses
on Qualifying Cash
Flow Hedges(1)
Pension and
Postretirement
Liability
Adjustment(2)
Total
Balance at beginning of period $ 228.0 $ (1.6) $ 17.9 $ 244.3
Other comprehensive income (loss) before reclassifications 0.9 (7.8) 0 (6.9)
Amounts reclassified from accumulated other comprehensive income (loss) 0 2.5 (2.7) (0.2)
Current-period other comprehensive income (loss) 0.9 (5.3) (2.7) (7.1)
Balance at end of period $ 228.9 $ (6.9) $ 15.2 $ 237.2


	Foreign Currency Translation Adjustment		Net Unrealized Losses on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total
Balance at beginning of period	$	228.0	$	(1.6)	$	17.9	$	244.3
Other comprehensive income (loss) before reclassifications	0.9		(7.8)		—		(6.9)
Amounts reclassified from accumulated other comprehensive income (loss)	—		2.5		(2.7)		(0.2)
Current-period other comprehensive income (loss)	0.9		(5.3)		(2.7)		(7.1)
Balance at end of period	$	228.9	$	(6.9)	$	15.2	$	237.2

__________________________

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

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

The ~~changes in the components~~following summarizes amounts reclassified from each component of accumulated other comprehensive income ~~net of tax,~~ for the three months ended October 2, 2021 and September ~~28, 2019 were as follows:~~26, 2020:

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 $ 227.2 $ (2.7) $ 18.2 $ 242.7
Other comprehensive loss before reclassifications (1.8) (0.6) 0 (2.4)
Amounts reclassified from accumulated other comprehensive income (loss) 0 0.4 (0.8) (0.4)
Current-period other comprehensive loss (1.8) (0.2) (0.8) (2.8)
Balance at end of period $ 225.4 $ (2.9) $ 17.4 $ 239.9

~~__________________________~~

~~(1)Net of tax benefit of $1.0 and $0.9 as of September 28, 2019 and June 29, 2019, respectively.~~

~~(2)Net of tax provision of $5.9 and $6.1 as of September 28, 2019 and June 29, 2019, respectively. The balances as of September 28, 2019 and June 29, 2019 include unamortized prior service credits.~~

~~The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended September 28, 2019 were as follows:~~

Foreign Currency Translation Adjustment
Net Unrealized Losses on Qualifying Cash Flow Hedges(1)
Pension and Postretirement Liability Adjustment(2)
Total
Balance at beginning of period $ 225.8 $ (0.6) $ 19.7 $ 244.9
Other comprehensive loss before reclassifications (0.4) (2.9) 0 (3.3)
Amounts reclassified from accumulated other comprehensive income (loss) 0 0.6 (2.3) (1.7)
Current-period other comprehensive loss (0.4) (2.3) (2.3) (5.0)
Balance at end of period $ 225.4 $ (2.9) $ 17.4 $ 239.9

~~__________________________~~

~~(1)Net of tax benefit of $1.0 and $0.2 as of September 28, 2019 and December 31, 2018, respectively.~~

~~(2)~~Net of tax provision of $5.9 and $6.6 as of September 28, 2019 and December 31, 2018, respectively. The balances as of September 28, 2019 and December 31, 2018 include unamortized prior service credits.


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

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

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

The following summarizes amounts reclassified from each component of accumulated ~~comprehensive income for the three months ended September 26, 2020 and September 28, 2019:~~

Amount Reclassified from AOCI
Three months ended
September 26, 2020 September 28, 2019 Affected Line Item in the Condensed
Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:
Commodity contracts $ (0.5) $ 0.3 Cost of products sold
Swaps 1.4 0.2 Interest expense
Pre-tax 0.9 0.5
Income taxes (0.2) (0.1)
$ 0.7 $ 0.4
Gains on pension and postretirement items:
Amortization of unrecognized prior service credits - Pre-tax $ (1.2) $ (1.0) Other income, net
Income taxes 0.3 0.2
$ (0.9) $ (0.8)

~~The following summarizes amounts reclassified from each component of accumulated~~other comprehensive income for the nine months ended October 2, 2021 and September 26, ~~2020 and September 28, 2019:~~2020:


		Amount Reclassified from AOCI						Amount Reclassified from AOCI
		Nine months ended						Nine months ended
		September 26, 2020		September 28, 2019		Affected Line Item in the Condensed Consolidated Statements of Operations		October 2, 2021		September 26, 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	$	0.1	$	0.6	Cost of products sold	Commodity contracts	$	(3.8)	$	0.1	Income from discontinued operations, net of tax
Swaps	Swaps	3.2		0.2		Interest expense	Swaps	2.6		3.2		Interest expense
Pre-tax	Pre-tax	3.3		0.8			Pre-tax	(1.2)		3.3
Income taxes	Income taxes	(0.8)		(0.2)			Income taxes	0.3		(0.8)
		$	2.5	$	0.6			$	(0.9)	$	2.5

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	$	(3.6)	$	(3.0)	Other income, net	Amortization of unrecognized prior service credits - Pre-tax	$	(3.6)	$	(3.6)	Other income, net

Income taxes	Income taxes	0.9		0.7			Income taxes	0.9		0.9
		$	(2.7)	$	(2.3)			$	(2.7)	$	(2.7)

(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 totaled ~~$554.3 (including $514.5 for asbestos product liability matters)~~$540.4 and ~~$592.4 (including $552.2 for asbestos product liability matters)~~$575.7 at ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019,~~2020, respectively. Of these amounts, ~~$479.6~~$469.5 and ~~$517.6~~$499.8 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at ~~September 26, 2020~~October 2, 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. Our recorded assets and liabilities related to asbestos-related claims were as follows at October 2, 2021 and December 31, 2020:


	October 2, 2021		December 31, 2020
Insurance recovery assets (1)	$	453.9	$	496.4
Liabilities for claims (2)	499.4		535.2

__________________________

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

(2)Of these amounts, $444.8 and $479.9 are included in “Other long-term liabilities” at October 2, 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 nine months ended October 2, 2021 and September 26, 2020:


	Nine months ended	Nine months ended
	October 2, 2021	September 26, 2020
Pending claims, beginning of period	9,782	11,079
Claims filed	2,044	1,730
Claims resolved	(1,797)	(2,651)
Pending claims, end of period	10,029	10,158

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

During the nine months ended October 2, 2021 and September 26, 2020, our (receipts) payments for asbestos-related ~~matters,~~claims, net of respective insurance recoveries of $39.8 and $23.3, were ~~$15.8. During the~~$(2.2) and $15.8, respectively. The nine months ended ~~September 28, 2019, our payments for asbestos-related matters, net~~October 2, 2021 includes insurance proceeds of $15.0, associated with the settlement of an asbestos insurance ~~recoveries of $39.1, were $9.8.~~coverage matter. 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~~During the nine months ended October 2, 2021, we recorded ~~insurance recovery~~a charge of $2.7 related to revisions of recorded assets for asbestos-related claims. There were no other changes in estimates associated with ~~the~~our assets and liabilities related to our asbestos product liability matters ~~with such amounts totaling~~ ~~$489.4~~during the three and ~~$509.6 at September 26, 2020~~nine months ended October 2, 2021 and ~~December 31, 2019, respectively. Of these amounts,~~ ~~$439.4~~ ~~and $459.6 are included in “Other assets” within our condensed consolidated balance sheets as of September 26, 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 and nine months ended September 26, ~~2020 and September 28, 2019, there were no changes in estimates associated with the liabilities and assets related to our asbestos product liability matters.~~2020.

Large Power Projects in South Africa

Overview- Since 2008, DBT has been executing contracts on ~~2 large~~ two 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 Heavy Industries Power—ZAF, ~~(f.k.a. Mitsubishi-Hitachi Power Systems Africa (PTY) LTD),~~ or ~~"MHI."~~“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 MHI ~~including claims totaling~~of approximately South African Rand ~~1,133.3~~1,100.0 (or $~~66.7~~72.5) ~~that have been submitted to~~. As DBT prepares these claims for dispute resolution processes, ~~as required under~~ the ~~relevant contracts,~~amounts, along with ~~such amount subject~~the characterization, of the claims could change. Of these claims, South African Rand 566.5 (or $37.4), which is inclusive of the amounts awarded in the adjudications referred to ~~change as~~below, are currently proceeding through contractual dispute resolution processes and DBT ~~progresses through these~~is likely to initiate additional dispute resolution processes. ~~Certain of these processes~~DBT is also pursuing several claims to force MHI to abide by its contractual obligations and provide DBT with certain benefits that MHI may have ~~been completed in 2020.~~received from its customer on the projects. In addition to existing asserted claims, DBT believes it has additional claims and rights to recovery based on its performance under the contracts with, and actions taken by, MHI. DBT is continuing to evaluate the claims and the amounts owed to it under the contracts based on MHI's failure to comply with its contractual obligations. The amounts DBT may recover for current and potential future claims against MHI are not currently known given (i) the extent of current and potential future claims by MHI against DBT (see below for further discussion) and (ii) the unpredictable nature of any dispute resolution processes that may occur in connection with these current and potential future claims. No revenue has been recorded in the accompanying condensed consolidated financial statements with respect to current or potential future claims against MHI.

On July 23, 2020, a dispute adjudication panel issued a ruling in favor of DBT on certain matters related to the Kusile and Medupi projects. The panel (i) ruled that DBT had achieved takeover on 9 of the units; (ii) ordered MHI to return $2.3 of bonds (which have been subsequently returned by MHI); (iii) ruled that DBT is entitled to the return of an additional $4.5 of bonds upon the completion of certain administrative milestones; (iv) ordered MHI to pay South African Rand 18.4 (or $1.1 at the time of the ruling) in incentive payments for work performed by DBT (which MHI has subsequently paid); and (v) ruled that MHI waived its rights to assert delay damages against DBT on one of the units of the Kusile project. The ruling is subject to MHI’s rights to seek further arbitration in the matter, as provided in the contracts. As such, the incentive payments noted above have not been recorded in our condensed consolidated statements of operations.

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

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

Claims by MHI - On February 26, 2019, DBT received notification of an interim claim consisting of both direct and consequential damages from MHI alleging, among other things, that DBT (i) provided defective product and (ii) failed to meet certain project milestones. WeIn 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. On June 4, 2021, in connection with the arbitration, DBT received a revised version of the claim. Similar to the interim claim, we believe ~~the notification is unsubstantiated and~~ the vast majority of the ~~claimed~~ damages summarized in the revised claim are ~~prohibited under the relevant contracts. Therefore, we believe~~unsubstantiated and, thus, any loss for the majority of these ~~claimed damages~~claims is considered remote. For the remainder of the claims in both the interim notification and the revised version, which largely appear to be direct in nature (approximately South African Rand ~~948.0~~950.0 or $~~55.8~~62.6), 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~~intends to vigorously defend itself against these ~~alleged defects, but without further substantiation or other justification (see further discussion below).~~claims. Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims; (ii) complexity of contractual relationships between the end customer, MHI, and DBT; (iii) legal interpretation of the contract provisions and application of South African law to the contracts; and (iv) unpredictable nature of any dispute resolution processes that may occur in connection with these claims.

In April and July 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 407.2 (or ~~$23.9)~~$26.9) from MHI alleging that DBT failed to meet certain project milestones related to the construction of the filters for both the Kusile and Medupi projects. DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a probable loss associated with these claims. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims. Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss.

MHI has made other claims against DBT totaling South African Rand 176.2 (or ~~$10.4)~~$11.6). 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; (iii) ruled that DBT is entitled to the return of an additional $4.0 of bonds upon the completion of certain administrative milestones; and (iv) ordered MHI to pay South African Rand 18.4 (or $1.1) in incentive payments for work performed by DBT, 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 for the three and nine months ended September 26, 2020.

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

26 ~~2020.~~

The remaining ~~amount~~bond of ~~outstanding bonds that have been~~$1.9 issued ~~in favor of~~to MHI ~~include (i) $18.1 of~~as a performance ~~and retention money guarantees, which~~guarantee could be exercised by MHI for an alleged ~~defects or other alleged breaches~~breach of DBT's obligations, and (ii) a $19.2 bond that can only be exercised by MHI in the event that (a) it receives a favorable judgment on a certain matter and (b) DBT fails to pay any money damages awarded in such judgment.obligation. In the event that MHI were to receive payment on a portion, or all, of the remaining ~~bonds,~~bond, we would be required to reimburse the ~~respective~~ issuing bank.

In addition to ~~these bonds,~~this bond, 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 nine months ended October 2, 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.

Environmental Matters

Our operations and properties are subject to federal, state, local and foreign regulatory requirements relating to environmental protection. It is our policy to comply fully with all applicable requirements. As part of our effort to comply, we have a comprehensive environmental compliance program that includes environmental audits conducted by internal and external independent professionals, as well as regular communications with our operating units regarding environmental compliance requirements and anticipated regulations. Based on current information, we believe that our operations are in substantial compliance with applicable environmental laws and regulations, and we are not aware of any violations that could have a material effect, individually or in the aggregate, on our business, financial condition, and results of operations or cash flows. As of ~~September 26, 2020,~~October 2, 2021, we had liabilities for site investigation and/or remediation at 25 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 ~~September 26, 2020,~~October 2, 2021, we have been notified that we are potentially responsible and have received other notices of potential liability pursuant to various environmental ~~laws~~laws at 1411 sites at which the liability has not been settled, of which 9 sites have been active in the past few years. These laws maymay impose liability on certain persons that are considered jointly and severally liable for the costs of investigation and remediation ~~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.

(16) INCOME AND OTHER TAXES

Uncertain Tax Benefits

As of ~~September 26, 2020~~October 2, 2021, we had gross unrecognized tax benefits of ~~$16.8~~$7.3 (net unrecognized tax benefits of ~~$13.5)~~$6.4). OfAll of these net unrecognized tax benefits ~~$9.4~~ would impact our effective tax rate from continuing operations if recognized.

We classify interest and penalties related to unrecognized tax benefits as a component of our income tax provision. As of ~~September 26, 2020,~~October 2, 2021, gross accrued interest totaled ~~$4.7~~$3.1 (net accrued interest of ~~$3.6)~~$2.5). As of ~~September 26, 2020,~~October 2, 2021, we had 0no accrual for penalties included in our unrecognized tax benefits.

Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $~~10.0. T~~5.0he. The previously unrecognized tax benefits relate to a variety of tax matters including transfer pricing and various state matters.

Other Tax Matters

For the three months ended ~~September 26, 2020,~~October 2, 2021, we recorded an income tax ~~provision~~provision of ~~$5.8~~$3.7 on ~~$28.5~~$11.4 of pre-tax income from continuing operations, resulting in an effective rate of ~~20.4%~~32.5%. This compares toto an income tax provision for the three months ended September ~~28, 2019~~26, 2020 of ~~$2.8~~ $3.1 on ~~$24.0~~$18.7 of pre-tax income from continuing operations, resulting in an effective rate of ~~11.7%~~16.6%. The most significant item impacting the income tax provision for the third quarter of 2021 was $0.7 of expense related to the revaluation of certain deferred tax liabilities due to an enacted tax rate increase. The most significant item impacting the income tax provision for the third quarter of 2020 was $1.2 of tax benefits related to our U.S. tax credits and incentives. The most significant item impacting the income tax provision for the third quarter of 2019 was a $1.9 tax benefit associated with the revision of a previous estimate related to the taxation of foreign earnings.

For the nine months ended ~~September 26, 2020,~~October 2, 2021, we recorded an income tax provision ~~of $18.9~~of $9.8 on ~~$92.7~~$51.2 of pre-tax income from continuing operations, resulting in an effective rate of ~~20.4%~~19.1%. This compares to an income tax provision for the nine months ended September ~~28, 2019~~26, 2020 of ~~$11.5~~$8.4 on ~~$52.7~~$48.7 of pre-tax income from continuing operations, resulting in an effective rate of ~~21.8%~~17.2%. The most significant items impacting the income tax provision for the first nine months of 2021 were (i) a benefit of $2.2 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims and (ii) $1.0 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, partially offset by (iii) $1.3 of expense related to the revaluation of deferred tax liabilities due to an enacted tax rate increase. The most significant items impacting the income tax provision for the first nine months of 2020 were (i) ~~$1.6~~$1.5 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the period, (ii) the $1.2 of tax benefits associated with U.S. tax credits and incentives noted above, and (iii) $0.5 of tax benefits associated with statute expirations in certain jurisdictions during the second quarter of 2020. The most significant items impacting the income tax provision for the first nine months of 2019 were foreign losses for which no tax benefit was recognized as future realization of any such foreign tax benefit is considered unlikely, offset by (i) $1.7 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the period, (ii) $1.3 of tax benefits related to our U.S. tax credits and incentives, and (iii) the $1.9 adjustment to the taxation of foreign earnings noted above.

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~~concluded its audit of our ~~2007,~~ 2013, 2014, 2015, 2016 and 2017 federal income tax returns. ~~With regard~~In connection with such, we recorded a tax benefit of $2.2 during the three months ended July 3, 2021 related to ~~all open~~the resolution of certain liabilities for uncertain tax ~~years, we believe any contingencies are adequately provided for.~~positions and interest associated with various refund claims.

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 September 26, 2020.

As provided within the CARES Act, we are deferring payment of our social security payroll taxes, for the period March 27, 2020 to December 31, 2020, to 2021, with the amount deferred as of September 26, 2020 totaling $6.8.

(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 0.0 and Euro 6.1, respectively, at September 26, 2020) will remain in place through each instrument’s expiration date, with such expiration dates occurring through 2022.~~ sale. 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~~(Euro 0.0 and Euro ~~2.5, respectively,~~1.0, respectively, at ~~September 26, 2020)~~October 2, 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 have expired and bonds have been periodically returned. As of October 2, 2021, all remaining bonds have been returned.Summarized below are changes in the liability and asset during the nine months ended October 2, 2021 and September 26, ~~2020 and September 28, 2019.~~2020.


		Nine months ended									Nine months ended
		September 26, 2020				September 28, 2019					October 2, 2021				September 26, 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	$	—	$	2.0	$	0.3
Reduction/Amortization for the period (2)	Reduction/Amortization for the period (2)	(0.3)		(0.2)		(2.2)		(0.7)		Reduction/Amortization for the period (2)	(1.7)		—		(0.3)		(0.2)
Impact of changes in foreign currency rates	Impact of changes in foreign currency rates	0.1		0		(0.1)		0		Impact of changes in foreign currency rates	(0.1)		—		0.1		—
Balance at end of period ~~(3)~~	Balance at end of period ~~(3)~~	$	1.8	$	0.1	$	2.1	$	0.5	Balance at end of period ~~(3)~~	$	—	$	—	$	1.8	$	0.1

___________________________

(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 with the guarantees and bonds is reflected within “Other long-term liabilities,” while the balance associated with the indemnification assets is reflected within “Other assets.”

Contingent Consideration for ~~ULC Acquisition~~Sensors & Software and ECS Acquisitions - In connection with the ~~acquisition~~acquisitions of ~~ULC,~~Sensors & Software and ECS, the ~~seller is~~respective sellers are eligible for additional cash consideration of up to ~~$45.0,~~$3.9 and $16.8, respectively, with ~~payments scheduled to be made in 2021 and 2022~~payment of such contingent consideration dependent upon ~~successful~~the achievement of certain ~~operational and financial~~ milestones. The estimated fair value of such contingent consideration is ~~$24.3,~~$0.7 and is$8.2, respectively, with such amounts reflected as ~~a liability in~~liabilities within our condensed consolidated balance ~~sheet as of September 26, 2020.~~sheets. We estimated the fair value of the contingent consideration for these acquisitions based on the probability of ~~ULC~~Sensors & Software and ECS achieving the ~~aforementioned operational and financial~~applicable milestones.

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

Valuation Methodologies Used to Measure Fair Value on a Recurring Basis

Derivative Financial Instruments — Our financial derivative assets and liabilities include commodity contracts (until the sale of Transformer Solutions), interest rate swaps, and FX forward ~~contracts, 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 ~~September 26, 2020,~~October 2, 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 and nine months ended

October 2, 2021 and September 26, 2020, we recorded ~~gains~~a gain of $1.6 and $9.0, respectively and $2.1 and $7.4, respectively, to “Other income, net” to reflect an increase in the estimated fair value of the equity security. As of ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019,~~2020, the equity security had an estimated fair value of $~~29.3~~$36.0 and ~~$21.9,~~$27.0, respectively.

During the nine months ended September 28, 2019, we recorded a gain of $7.9 to “Other income, net” to reflect an increase in the estimated fair value of the equity security. In addition, we received a distribution during the first quarter of 2019 of $2.6 included within “Cash flows from operating activities” in our condensed consolidated statement of cash flows.

Indebtedness and Other — The estimated fair value of our debt instruments as of ~~September 26, 2020~~October 2, 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.

2831

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

FORWARD-LOOKING STATEMENTS

Some of the statements in this document and any documents incorporated by reference, including any statements as to operational and financial projections, constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our businesses’ or our industries’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Such statements may address our plans, our strategies, our prospects, changes and trends in our business and the markets in which we operate under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) or in other sections of this document. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential” or “continue” or the negative of those terms or other comparable terminology. Particular risks and uncertainties facing us include economic, business and other risks stemming from our internal operations, legal and regulatory risks, and uncertainties with respect to 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, uncertainties and other factors that could cause results to differ materially from those projected in these forward-looking statements. We caution you that these risk factors may not be exhaustive. We operate in a continually changing business environment and frequently enter into new businesses and product lines. We cannot predict these new risk factors, and we cannot assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, you should not rely on forward-looking statements as a prediction of actual results. We disclaim any responsibility to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.

~~IMPACT OF THE~~ COVID-19 PANDEMIC, SUPPLY CHAIN DISRUPTIONS, AND OTHER ECONOMIC FACTORS

~~As further discussed below, the~~The COVID-19 pandemic had ~~a modest~~an adverse impact on our consolidated results of operations ~~for the three and nine months ended September 26, 2020. This impact is primarily evident~~ in the ~~decline in revenues at certain~~first half of ~~our businesses due to a reduction in customer demand. These adverse~~2020, with diminishing impacts ~~could continue~~ during the ~~fourth quarter~~second half of 2020 and possibly longer. Although certain of our businesses have been, and 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 under 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 across the country, we may close facilities from time to time to address employee safety matters. In terms of liquidity, we generated $60.9 of cash flows from operating activities associated with continuing operations during the first nine months of ~~2020~~2021. During the third quarter of 2021, certain of our businesses began to experience disruptions in the supply chain, which has negatively impacted their production of goods and, ~~have experienced no consequential~~thus, resulted in lower absorption of manufacturing costs and delays in ~~collecting outstanding amounts due from our customers. In addition, as of September 26, 2020, we had over $300.0 of availability from cash on-hand~~shipments to customers during the quarter. Our businesses are also experiencing increased costs for certain components, commodities, and ~~aggregate borrowing capacity under our senior credit facilities~~services and, ~~trade receivable financing arrangement. Lastly, scheduled repayments over the next twelve months for our long-term debt arrangements totaled only $5.6 as of September 26, 2020.~~in some cases, labor shortages. We ~~also have taken~~are taking actions to manage ~~near-term~~any additional costs and ~~cash flows, including reducing discretionary expenses and capital expenditures, and implemented actions to address~~other potential ~~material sourcing challenges.~~impacts of these matters. We will continue to assess the actual and expected impacts ~~of the COVID-19 pandemic~~ and the need for further actions.

OTHER SIGNIFICANT MATTERS

•Acquisitions

◦ULC Robotics (“ULC”)

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

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

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

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

▪Contingent Consideration

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

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

•See ~~Notes~~Note 1 ~~9, and 16~~ to our condensed consolidated financial statements ~~and “Risk Factors”~~ for additional ~~considerations regarding~~details.

▪Indefinite-Lived Intangible Assets and Goodwill

•We also concluded that the ~~current and potential impacts~~lack of achievement of the ~~COVID-19 pandemic.~~above milestones, along with lower than anticipated future cash flows, are indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill.

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

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

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

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

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

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

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

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

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

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

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

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

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

◦Enterprise Control Systems Ltd (“ECS”)

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

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

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

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

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

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

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

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

•Change in Segment Reporting Structure

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

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

•Large Power Projects in South Africa

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

▪In connection with the rulings, DBT received South African Rand 126.6 (or $8.6 at the time of payment) and South African Rand 82.0 (or $6.0 at the time of payment), respectively.

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

▪On July 5, 2021, DBT received notice from MHI of its intent to seek final and binding arbitration in the Kusile matter.

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

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

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

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

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

◦See Note 15 to our condensed consolidated financial statements for additional details.

•Cash Receipts in the Third Quarter of 2021

◦Received federal income tax refunds of $22.4.

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

OVERVIEW OF OPERATING RESULTS

Revenues for the three and nine months ended ~~September 26, 2020~~October 2, 2021 totaled ~~$363.4~~$285.8 and ~~$1,105.9~~$870.4, respectively, compared to ~~$364.8~~$268.3 and ~~$1,080.8~~$783.1 during the ~~comparable~~respective periods in ~~2019.~~2020. The ~~decrease~~increase in ~~revenue~~revenues during the three and nine months ended ~~September 26, 2020,~~October 2, 2021, compared to the respective ~~period in 2019,~~prior-year periods, was due primarily to ~~a decline in organic revenue, partially offset by~~ the impact of the ~~Patterson-Kelley, LLC~~ULC, Sensors & Software, Sealite and ~~ULC Robotics (“ULC”) acquisitions.~~ECS acquisitions and an increase in organic revenue. The ~~decline~~increase in organic revenue was due primarily to higher sales of heating and underground pipe and locator products, partially offset by lower sales of ~~communication technologies, obstruction lighting, HVAC domestic cooling,~~bus fare collection systems. During the first half of 2020, sales of heating and ~~HVAC heating~~underground pipe and locator products ~~with a significant portion of the decline attributable to declines in customer demand and order delays caused~~were impacted negatively by the COVID-19 ~~pandemic, partially offset by higher~~pandemic. The decline in sales of ~~HVAC cooling products in the international markets. The increase in revenues during the nine months ended September 26, 2020, compared to the respective period in 2019,~~bus fare collection systems was due primarily to ~~(i)~~ the ~~impact~~timing of large projects, as the ~~SGS Refrigeration, Inc. (“SGS”), Patterson-Kelley, and ULC acquisitions and (ii) adjustments which resulted in reductions~~extent of such projects can fluctuate from period to the cumulative revenue associated with variable consideration on the large power projects in South Africa of $23.5 during the nine months ended September 28, 2019, partially offset by a decline in organic revenue. The decline in organic revenue was due primarily to lower sales of HVAC heating products and communication technologies products, with a significant portion of the decline attributable to declines in customer demand and order delays caused by the COVID-19 pandemic, partially offset by higher sales of (i) power transformers and (ii) HVAC cooling products in the international markets. See “Results of Reportable and Other Operating Segments” for additional details.period.

During the three and nine months ended ~~September 26, 2020,~~October 2, 2021, we generated operating income of ~~$30.0~~$11.8 and ~~$97.1,~~$44.7, respectively, compared to ~~$27.6~~$20.4 and ~~$56.9~~$54.0 for the ~~three and nine months ended September 28, 2019, respectively.~~respective periods in 2020. The ~~increase~~decrease in operating income during the three months ended ~~September 26, 2020,~~October 2, 2021, compared to the ~~same~~respective prior-year period, ~~in 2019,~~ was due primarily to ~~(i) increases~~ additional amortization expense and one-time costs (e.g., charges for inventory adjusted to fair value at the acquisition date) associated with recent acquisitions and lower absorption of manufacturing costs at certain of our businesses due to disruptions in profitability within our HVAC and Engineered Solutions reportable segments and (ii) a decline in “Special charges, net” during the three months ended September 26, 2020, partially offset by a decline in profitability within our Detection and Measurement reportable segment. their supply chain.The ~~increase~~decrease in operating income during the nine months ended ~~September 26, 2020,~~October 2, 2021, compared to the ~~same~~respective prior-year period, ~~in 2019,~~ was due primarily to ~~(i) the reduction of revenue noted above of $23.5~~higher corporate expense related to ~~the large power projects~~increased investments in ~~South Africa during the nine months ended September 28, 2019~~continuous improvement and ~~(ii) increases~~other strategic initiatives and an increase in profitability within our Engineered Solutions reportable segment, partially offset by a decline in profitability within our Detection and Measurement reportable segment. See “Results of Reportable and Other Operating Segments” for additional details.incentive compensation expense.

Cash flows from operating activities associated with continuing operations totaled ~~$60.9~~$94.0 for the nine months ended October 2, 2021, compared to cash flows from operating activities of $11.0 during the nine months ended September 26, ~~2020, compared to $73.3 during the nine months ended September 28, 2019.~~2020. The ~~decrease~~increase in cash flows from operating activities was due primarily to ~~(i) payments of $14.3 that were made during the~~improved cash flows within our heating and underground pipe and locator businesses associated with improved profitability and decreases in working capital, as well as third quarter ~~of 2020 with respect to bonds~~2021 cash receipts related to federal tax refunds of $22.4 and insurance proceeds of $15.0 associated with the ~~large power projects in South Africa (see Note 15 to our condensed consolidated financial statements for additional details) and (ii)~~settlement of an increase in 2019 incentive compensation expense, which was paid in March 2020, versus 2018 incentive compensation expense, which was paid in March 2019. These declines in cash flows were offset partially by the impact of the deferral of payment of $6.8 in social security payroll taxes, as provided for under the CARES Act. (See Note 16 to the condensed consolidated financial statements for additional details).asbestos insurance coverage matter.

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~~ nine months ~~of 2020,~~ended October 2, 2021, when compared to the consolidated operating results for the ~~first nine months 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,~~divestitures, and the impact of ~~the~~a reduction ~~to revenues on the large power projects~~ in ~~South Africa~~revenue during the ~~nine months ended September 28, 2019~~second quarter of ~~$23.5.~~ 2021 associated with the settlement of claims on a legacy dry cooling project. We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented as, when ~~read~~considered in conjunction with our revenues, it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors we use in internal evaluations of the overall performance of our business. This metric, however, is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”), should not be considered a substitute for net revenue growth (decline) as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.

The following table provides selected financial information for the three and nine months ended October 2, 2021 and September 26, 2020, ~~and September 28, 2019,~~ respectively, including the reconciliation of organic revenue ~~decline~~ increase to the net revenue increase ~~(decrease)~~:


		Three months ended							Nine months ended								Three months ended							Nine months ended
		September 26, 2020			September 28, 2019			% Change	September 26, 2020			September 28, 2019			% Change		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change
Revenues	Revenues	$	363.4		$	364.8		(0.4)	$	1,105.9		$	1,080.8		2.3	Revenues	$	285.8		$	268.3		6.5	$	870.4		$	783.1		11.1
Gross profit	Gross profit	108.3			106.2			2.0	336.4			297.6			13.0	Gross profit	94.0			91.7			2.5	300.0			269.7			11.2
% of revenues	% of revenues	29.8		%	29.1		%		30.4		%	27.5		%		% of revenues	32.9		%	34.2		%		34.5		%	34.4		%
Selling, general and administrative expense	Selling, general and administrative expense	74.6			74.6			—	229.3			229.5			(0.1)	Selling, general and administrative expense	76.2			67.7			12.6	234.7			206.2			13.8
% of revenues	% of revenues	20.5		%	20.4		%		20.7		%	21.2		%		% of revenues	26.7		%	25.2		%		27.0		%	26.3		%
Intangible amortization	Intangible amortization	3.3			2.0			65.0	8.3			6.0			38.3	Intangible amortization	5.5			3.3			66.7	16.0			8.3			92.8
Special charges, net	Special charges, net	0.4			2.0			(80.0)	2.1			3.4			(38.2)	Special charges, net	0.5			0.3			66.7	1.9			1.6			18.8
Other operating (income) expense	Other operating (income) expense	—			—			*	(0.4)			1.8			*	Other operating (income) expense	—			—			*	2.7			(0.4)			*

Other income, net	Other income, net	2.9			1.0			190.0	9.4			10.1			(6.9)	Other income, net	2.9			2.7			7.4	17.2			8.5			102.4
Interest expense, net	Interest expense, net	(4.4)			(4.6)			(4.3)	(13.8)			(14.3)			(3.5)	Interest expense, net	(3.3)			(4.4)			(25.0)	(10.7)			(13.8)			(22.5)

Income from continuing operations before income taxes	Income from continuing operations before income taxes	28.5			24.0			18.8	92.7			52.7			75.9	Income from continuing operations before income taxes	11.4			18.7			(39.0)	51.2			48.7			5.1
Income tax provision	Income tax provision	(5.8)			(2.8)			107.1	(18.9)			(11.5)			64.3	Income tax provision	(3.7)			(3.1)			19.4	(9.8)			(8.4)			16.7
Income from continuing operations	Income from continuing operations	22.7			21.2			7.1	73.8			41.2			79.1	Income from continuing operations	7.7			15.6			(50.6)	41.4			40.3			2.7

Components of revenue increase (decrease):
Components of revenue increase:																Components of revenue increase:
Organic	Organic							(3.8)							(3.4)	Organic							0.7							5.4
Foreign currency	Foreign currency							0.3							—	Foreign currency							0.7							1.0
South Africa revenue adjustments								—							2.2
Acquisitions	Acquisitions							3.1							3.5	Acquisitions							5.1							5.3

Net revenue increase (decrease)								(0.4)							2.3
Settlement of legacy dry cooling contract																Settlement of legacy dry cooling contract							—							(0.6)
Net revenue increase																Net revenue increase							6.5							11.1

_________________________________

* Not meaningful for comparison purposes.

Revenues — For the three months ended ~~ended September 26, 2020,~~October 2, 2021, the ~~decrease~~increase in ~~revenue,~~revenues, compared to the ~~respective~~respective period in ~~2019,~~2020, was due primarily to ~~a decline in organic revenue, partially offset by~~ the impact of the ~~Patterson-Kelley~~acquisitions of Sealite, ULC, Sensors and ~~ULC acquisitions.~~Software, and ECS and, to a lesser extent, an increase in organic revenue and the favorable impact of foreign currency exchange rates. The ~~decline~~increase in organic revenue was due to higher sales of cooling products in the Americas region, as well as higher sales of underground pipe and locator, communication technologies, and obstruction lighting products. These increases in organic revenue were partially offset by lower sales of cooling products in the EMEA region and bus fare collection systems. For the nine months ended October 2, 2021, the increase in revenues, compared to the respective period in 2020, was primarily due to an increase in organic revenue and the impact of the acquisitions noted above. The increase in organic revenue was due primarily to higher sales of heating and underground pipe and locator products, partially offset by lower sales of ~~communication technologies, obstruction lighting, HVAC domestic cooling, and HVAC heating products, with a significant portion~~bus fare collection systems. During the first half of ~~the decline attributable to declines in customer demand and order delays caused by the COVID-19 pandemic, partially offset by higher sales of HVAC cooling products in the international markets.~~

For the nine months ended September 26, 2020, the increase in revenue, compared to the respective period in 2019, was due primarily to (i) the impact of the SGS, Patterson-Kelley, and ULC acquisitions and (ii) adjustments which resulted in reductions to the cumulative revenue associated with variable consideration on the large power projects in South Africa of $23.5 during the nine months ended September 28, 2019, partially offset by a decline in organic revenue. The decline in organic revenue was due primarily to lower sales of HVAC heating products and communication technologies products, with a significant portion of the decline attributable to declines in customer demand and order delays caused by the COVID-19

3135

~~pandemic, partially offset by higher~~2020, sales of ~~(i) power transformers~~heating and ~~(ii) HVAC cooling~~underground pipe and locator products were impacted negatively by the COVID-19 pandemic. The decline in sales of bus fare collection systems was due primarily to the ~~international markets.~~timing of large projects, as the extent of such projects can fluctuate from period-to-period.

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

Gross Profit — For the three and nine months ended ~~September 26, 2020,~~October 2, 2021, the increase in gross profit, ~~and gross profit as a percentage of revenue,~~ compared to the respective ~~period~~periods in ~~2019,~~2020, was due primarily to an increase in profitability at our (i) power transformer business associated with a more favorable sales mix and improved pricing discipline and (ii) cooling products businesses resulting from (a) improved operational execution and favorable sales mix for the domestic operations and (b) increased sales volumes for the international operations. These increases in gross profit were offset partially by declines in gross profit within our Detection and Measurement reportable segment resulting from lower sales volumes.

~~For the nine months ended September 26, 2020,~~ the increase in ~~gross profit and~~revenues noted above. The decrease in gross profit as a percentage of revenues during the three months ended October 2, 2021, compared to the respective period in ~~2019,~~2020, was due primarily to ~~(i)~~lower absorption of manufacturing costs at the ~~impact of the reductions in revenue of $23.5 noted above~~HVAC segment’s heating businesses associated with disruptions in the large power projects in South Africa recorded during the nine months ended September 28, 2019 and (ii) increases in profitability at our power transformer and cooling products businesses for the reasons noted above. These increases in gross profit were offset partially by declines in gross profit within our Detection and Measurement reportable segment resulting from lower sales volumes.supply chain.

Selling, General and Administrative (“SG&A”) Expense — For the three and nine months ended ~~September 26, 2020, S~~GOctober 2, 2021, the increase in SG&A expense, compared to the respective periods in ~~2019,~~2020, was ~~impacted by lower incentive compensation and travel expense, offset by~~due primarily to the incremental SG&A resulting from the acquisitions noted above.In addition, SG&A expense during the nine months ended October 2, 2021 was impacted by an increase in corporate expense associated with additional investments in connection with continuous improvement and other strategic initiatives and an increase in incentive compensation.

Intangible ~~Amortization~~Amortization — For the three and nine months ended ~~September 26, 2020,~~October 2, 2021, the increase in intangible amortization, compared to the respective periods in ~~2019,~~2020, was due to the ~~impact~~incremental amortization of $2.2 and $7.8, respectively, related to the acquisitions noted ~~above, including $0.8 of intangible amortization during the three months ended September 26, 2020 related to ULC.~~above.

Special Charges, net — Special charges, net, related primarily to restructuring initiatives to consolidate manufacturing, distribution, sales and administrative facilities, reduce ~~workforce.~~workforce and rationalize certain product lines. See Note 7 to our condensed consolidated financial statements for the details of actions taken in the first nine months of ~~2020~~2021 and ~~2019.~~2020.

Other Operating (Income) Expense — Other operating ~~(income)~~ expense for the nine months ended October 2, 2021 related to revisions to recorded assets for asbestos-related claims. Other operating income for the nine months ended September 26, 2020 ~~and September 28, 2019, relate~~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 October 2, 2021 was composed primarily of a gain of $1.6 related to a change in the estimated fair value of an equity security that we hold, a gain of $0.4 related to the sale of a trading security, and pension and postretirement income of $1.6, partially offset by foreign currency transaction losses of $0.8.

Other income, net, for the three months ended September 26, 2020 was composed primarily of ~~(i)~~ a gain of $2.1 related to a change in the estimated fair value of an equity security that we hold ~~(ii)~~and pension and postretirement income of $0.9, ~~and (iii) equity earnings of $0.2,~~ partially offset by foreign currency transaction losses of $0.3.

Other income, net, for the ~~three~~ nine months ended ~~September 28, 2019~~October 2, 2021 was composed primarily of a gain of $9.0 related to a change in the estimated fair value of an equity that security we hold, pension and postretirement income of $4.8, income derived from company-owned life insurance policies of ~~$0.9.~~$2.7, and income of $1.7 related to a reduction of the liability associated with the parent company guarantees and bank surety bonds that were outstanding in connection with the 2016 sale of Balcke Dürr, partially offset by foreign currency transaction losses of $1.1.

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

Other income, net, for the nine months ended September 28, 2019 was composed primarily of (i) a gain of $7.9 related to changes in the estimated fair value of an equity security that we hold and (ii) income derived from company-owned life insurance policies of $3.0, partially offset by foreign currency transaction losses of $0.9.

Interest Expense, netnet — Interest expense, net, includes both interest expense and interest income. The decrease in interest expense, net, during the three and nine months ended ~~September 26, 2020,~~October 2, 2021, compared to the respective periods in ~~2019,~~2020, was the result of a lower average effective interest ~~rates during 2020 periods, partially offset by the impact of higher~~rate and lower average debt balances during ~~the 2020 periods.~~2021.

Income Tax Provision —For the three months ended ~~September 26, 2020,~~October 2, 2021, we recorded an income tax ~~provision~~provision of ~~$5.8~~$3.7 on ~~$28.5~~$11.4 of pre-tax income from continuing operations, resulting in an effective rate of ~~20.4%~~32.5%. This compares toto an income tax provision for the three months ended September ~~28, 2019~~26, 2020 of ~~$2.8~~ $3.1 on ~~$24.0~~$18.7 of pre-tax income from continuing operations, resulting in an effective rate of ~~11.7%~~16.6%. The most significant item impacting the income tax provision for the third quarter of 2021 was $0.7 of expense related to the revaluation of certain deferred tax liabilities due to an enacted tax rate increase. The most significant item impacting the income tax provision for the third quarter of 2020 was $1.2 of tax benefits related to our U.S. tax credits and incentives. The most significant item impacting the income tax provision for the third quarter of 2019 was a $1.9 tax benefit associated with the revision of a previous estimate related to the taxation of foreign earnings.

3236

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.~~segments and other operating segment.

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

HVAC Reportable Segment

Three months ended Nine months ended
September 26, 2020 September 28, 2019 % Change September 26, 2020 September 28, 2019 % Change
Revenues $ 154.6 $ 140.1 10.3 $ 405.4 $ 399.4 1.5
Income 26.3 22.2 18.5 59.5 57.3 3.8
% of revenues 17.0 % 15.8 % 14.7 % 14.3 %
Components of revenue increase:
Organic 4.0 (6.5)
Foreign currency 0.3 (0.2)
Acquisitions 6.0 8.2
Net revenue increase: 10.3 1.5


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

Revenues — ~~For~~For the three months ended ~~September 26, 2020,~~October 2, 2021, the ~~increase~~decrease in ~~revenue,~~revenues, compared to the respective period in ~~2019,~~2020, was due to a net decline in organic revenue related primarily to the segment’s cooling business in the EMEA region, as this business had some large projects that contributed significant revenue to the segment’s results in the third quarter of 2020. Despite a significant increase in orders during the third quarter of 2021, organic revenue for the segment’s heating businesses was relatively flat during the quarter as production and shipments for the businesses were negatively impacted by disruptions in the supply chain.

For the nine months ended October 2, 2021, the increase in revenues, compared to the respective period in 2020, was due primarily to an increase in organic revenue for the segment’s heating businesses. Sales of heating products during the first half of 2020 were impacted negatively by (i) a warmer than normal winter and (ii) the COVID-19 pandemic. In addition, and as indicated above, sales for the segment’s heating businesses during the third quarter of 2021 were negatively impacted by disruptions in the supply chain.

Income — For the three months ended October 2, 2021, the decrease in income and margin, compared to the respective period in 2020, was due primarily to the ~~impact of the Patterson-Kelley acquisition~~revenue decline noted above and ~~an increase in organic revenue. The increase in organic revenue was due to higher sales of cooling products in the international markets, partially offset by~~ a decline in ~~sales of~~manufacturing cost absorption at the segment’s heating ~~products and domestic cooling products, resulting primarily from~~businesses associated with disruptions in the ~~negative impact of the COVID-19 pandemic on customer demand.~~supply chain.

For the nine months ended September 26, 2020, the increase in revenue, compared to the respective period in 2019, was due primarily to the impact of the SGS and Patterson-Kelley acquisitions, partially offset by a decline in organic revenue. The decline in organic revenue was due primarily to a decrease in sales of heating products resulting primarily from (i) a warmer than normal winter during the first quarter of 2020 and (ii) the negative impact of the COVID-19 pandemic on customer demand during the second and third quarters of 2020. Such decrease in organic revenue was partially offset by an increase in sales of cooling products in the international markets.

~~Income~~ ~~— For the three months ended September 26, 2020,~~October 2, 2021, the increase in income and margin, compared to the respective period in 2019, was due primarily to (i) the higher sales of cooling products in the international markets and (ii) improved operational execution and a favorable sales mix within the segment’s domestic cooling products business.

~~For the nine months ended September 26,~~ 2020, ~~the increase in income and margin, compared to the respective period in 2019,~~ was due primarily to the ~~matters~~increase in revenues noted ~~above for the three months ended September 26, 2020, partially offset by the impact of the lower sales of heating products noted above for the nine months ended September 26, 2020.~~above.

Backlog — The segment had backlog of ~~$92.6~~$204.0 and ~~$77.2~~$182.6 as of October 2, 2021 and September 26, 2020, ~~and September 28, 2019,~~ respectively. ~~Aggregate backlog related to Patterson-Kelley totaled $3.2 as of September 26, 2020.~~

3337

Detection and Measurement Reportable Segment


	Three months ended							Nine months ended
	October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change
Revenues	$	106.4		$	85.2		24.9	$	329.2		$	269.2		22.3
Income	9.9			14.2			(30.3)	41.3			48.4			(14.7)
% of revenues	9.3		%	16.7		%		12.5		%	18.0		%
Components of revenue increase:
Organic							7.6							5.2
Foreign currency							1.1							1.6
Acquisitions							16.2							15.5
Net revenue increase							24.9							22.3

Three months ended Nine months ended
September 26, 2020 September 28, 2019 % Change September 26, 2020 September 28, 2019 % Change
Revenues $ 85.2 $ 97.6 (12.7) $ 269.2 $ 284.4 (5.3)
Income 14.2 20.5 (30.7) 48.4 59.2 (18.2)
% of revenues 16.7 % 21.0 % 18.0 % 20.8 %
Components of revenue decrease:
Organic (16.7) (6.9)
Foreign currency 0.9 (0.2)
Acquisitions 3.1 1.8
Net revenue decrease (12.7) (5.3)
Revenues — For the three and nine months ended October 2, 2021, the increase in revenues, compared to the respective periods in 2020, was due primarily to the impact of the acquisitions of ECS, Sealite, ULC, and Sensors and Software and, to a lesser extent, organic revenue growth and the impact foreign currency exchange rates. The increase in organic revenue was primarily the result of higher sales of underground pipe and locator products and, to a lesser extent, higher sales of communication technologies and obstruction lighting products.These increases in organic revenue were offset partially by lower sales of bus fare collection systems. During the first half of 2020, sales of underground pipe and locator products were impacted negatively by the COVID-19 pandemic, while the decline in in sales of bus fare collection systems in the current-year period was due primarily to the timing of large projects, as extent of such projects can fluctuate from period to period.

Income — For the three and nine months ended October 2, 2021, the decrease in income and margin, compared to the respective periods in 2020, was due primarily to increased amortization expense, as well as inventory step-up charges ($0.7 and $2.3 during the three and nine months ended October 2, 2021), associated with the acquisitions noted above, partially offset by the income associated with the increases in revenue noted above.

Backlog — The segment had backlog of $176.5 and $89.5 as of October 2, 2021 and September 26, 2020, respectively. Aggregate backlog related to Sensors and Software, Sealite and ECS, businesses acquired after September 26, 2020, totaled $50.2 as of October 2, 2021.

Other

Three months ended

Nine months ended

October 2, 2021

September 26, 2020

% Change

October 2, 2021

September 26, 2020

% Change

Revenues

0.1

0.5

0.9

3.3

Loss

(4.1)

(5.3)

(12.6)

(13.9)

% of revenues

_________________________________

* Not meaningful for comparison purposes.

Revenues — For the three and nine months ended ~~September 26, 2020,~~October 2, 2021, the decrease in ~~revenue,~~revenues, compared to the respective periods in 2019, was due primarily to a decrease in organic revenue, partially offset by the impact of the ULC (three and nine months ended September 26, 2020) and Sabik (nine months ended September 26, 2020) acquisitions. The decline in organic revenue for the three months ended September 26, 2020, was ~~primarily the result of lower sales of communication technologies and obstruction lighting products, while the decline for the nine months ended September 26, 2020 was primarily~~ due to lower sales ~~of communication technologies products. A significant portion of the organic revenue decline was attributable to lower customer demand and order delays caused by the COVID-19 pandemic.~~

~~Income~~ ~~— For the three and ni~~ne months ended September 26, 2020, the decrease in income and margin, compared to the respective periods in 2019, was due to the impact of the revenue decreases noted above and a less favorable sales mix, as the decline in revenue related to ~~the COVID-19 pandemic was focused on the segment’s higher margin product lines.~~

~~Backlog~~ ~~— The segment had backlog of $89.5 and $86.9 as of September 26, 2020 and September 28, 2019, respectively. Aggregate backlog related to ULC totaled $23.5 as of September 26, 2020~~

~~Engineered Solutions Reportable Segment~~

Three months ended Nine months ended
September 26, 2020 September 28, 2019 % Change September 26, 2020 September 28, 2019 % Change
Revenues $ 123.1 $ 121.1 1.7 $ 424.8 $ 398.1 6.7
Income 9.2 5.9 55.9 44.7 26.9 66.2
% of revenues 7.5 % 4.9 % 10.5 % 6.8 %
Components of revenue increase:
Organic 1.8 6.8
Foreign currency (0.1) (0.1)
Net revenue increase 1.7 6.7

~~Revenues~~ ~~— For~~ the three and nine months ended September 26, 2020, the increase in revenue, compared to the respective periods in 2019, was due to an increase in organic revenue, primarily within the segment's power transformer business associated with (i) a more favorable sales mix and (ii) improved pricing discipline.

~~Income~~ ~~— For the three and nine months ended September 26, 2020, the increase in income and margin, compared to the respective periods in 2019, was due primarily to the increase in revenues noted above.~~

~~Backlog~~ ~~— The segment had backlog of~~ ~~$363.7~~ ~~and $354.5 as of September 26, 2020~~ ~~and September 28, 2019, respectively. Portions of the segment’s backlog are long-term in nature, with the related revenues expected to be recorded during the fourth quarter of 2020 and into 2021.~~

~~All Other~~

Three months ended Nine months ended
September 26, 2020 September 28, 2019 % Change September 26, 2020 September 28, 2019 % Change
Revenues $ 0.5 $ 6.0 * $ 6.5 $ (1.1) *
Loss (5.5) (5.7) * (13.6) (38.3) *
% of revenues * * * *
Components of revenue increase * *

* Not meaningful for comparison purposes.

~~Revenues~~ ~~— For the three months ended September 26, 2020, the decrease in revenue, compared to the respective period in 2019, was due to a decline in organic revenue 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.

For the nine months ended September 26, 2020, the increase in revenue, compared to the respective period in 2019, was due to adjustments which resulted in reductions to the cumulative revenue associated with variable consideration on the large power projects in South Africa of $23.5 during the nine months ended September 28, 2019, partially offset by a decline in organic revenue for the reasons noted above.

Loss — For the three and nine months ended ~~September 26, 2020,~~October 2, 2021, the loss decreased, compared to the respective ~~period~~periods in ~~2019,~~2020, as a result of the wind-down activities noted ~~above.~~

~~For the nine months ended September 26, 2020, the loss decreased, compared to the respective period in 2019, as operating results~~above for ~~the nine months ended September 28, 2019 included the reductions in revenue of $23.5 noted above associated with~~ the large power projects in South Africa. The losses for all periods presented relate primarily to legal costs associated with the claims matters for the large power projects in South Africa.

Backlog — ~~These~~The operating ~~segments~~segment had a backlog of ~~$4.5~~$2.9 and ~~$15.9~~$3.9 as of October 2, 2021 and September 26, 2020, ~~and September 28, 2019,~~ respectively.

CORPORATE AND OTHER EXPENSES

Three months ended Nine months ended
September 26, 2020 September 28, 2019 % Change September 26, 2020 September 28, 2019 % Change
Total consolidated revenues $ 363.4 $ 364.8 (0.4) $ 1,105.9 $ 1,080.8 2.3
Corporate expense 10.4 10.0 4.0 30.0 32.9 (8.8)
% of revenues 2.9 % 2.7 % 2.7 % 3.0 %
Long-term incentive compensation expense 3.4 3.3 3.0 10.2 10.1 1.0


	Three months ended							Nine months ended
	October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change
Total consolidated revenues	$	285.8		$	268.3		6.5	$	870.4		$	783.1		11.1
Corporate expense	11.5			11.8			(2.5)	39.0			33.8			15.4
% of revenues	4.0		%	4.4		%		4.5		%	4.3		%
Long-term incentive compensation expense	3.4			3.2			6.3	9.5			9.6			(1.0)

Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, NCNorth Carolina corporate headquarters. The increase in corporate expense during the three months ended September 26, 2020, compared to the respective period in 2019, was due primarily to professional fees incurred in connection with the acquisition of ULC. The decrease in corporate expense during the nine months ended ~~September 26, 2020,~~October 2, 2021, compared to the respective ~~period~~periods in ~~2019,~~2020, was due primarily to ~~lower~~increased investments in continuous improvement and other strategic initiatives and an increase in incentive compensation ~~and travel expenses during the nine months ended September 26, 2020.~~expense.

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. For the three months ended October 2, 2021, the increase in long-term incentive compensation expense, compared to the respective period in 2020, was due to a higher amount award forfeitures during the 2020 period. The decrease in long-term incentive compensation during the nine months ended October 2, 2021, compared to the respective period in 2020, was due to revisions to/finalization of the liability associated with the 2018 long-term cash awards during the first quarter of 2021, partially offset by the impact of a lower amount of award forfeitures during 2021. See Note 14 to our condensed consolidated financial statements for additional details.

3539

LIQUIDITY AND FINANCIAL CONDITION

Listed below are the cash flows from (used in) operating, investing, and financing activities and discontinued operations, as well as the net change in cash and equivalents for the nine months ended October 2, 2021 and September 26, ~~2020 and September 28, 2019.~~2020.


		Nine months ended					Nine months ended
		September 26, 2020		September 28, 2019			October 2, 2021		September 26, 2020
Continuing operations:	Continuing operations:					Continuing operations:
Cash flows from operating activities	Cash flows from operating activities	$	60.9	$	73.3	Cash flows from operating activities	$	94.0	$	11.0
Cash flows used in investing activities	Cash flows used in investing activities	(101.8)		(86.7)		Cash flows used in investing activities	(119.3)		(99.3)
Cash flows from (used in) financing activities	Cash flows from (used in) financing activities	64.5		(4.7)		Cash flows from (used in) financing activities	(166.8)		64.5
Cash flows used in discontinued operations		(4.5)		(3.5)
Cash flows from discontinued operations						Cash flows from discontinued operations	677.7		42.9
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	(3.1)		2.1		Change in cash and equivalents due to changes in foreign currency exchange rates	6.2		(3.1)
Net change in cash and equivalents	Net change in cash and equivalents	$	16.0	$	(19.5)	Net change in cash and equivalents	$	491.8	$	16.0

Operating Activities — The ~~decrease~~increase in cash flows from operating activities during the nine months ended ~~September 26, 2020,~~October 2, 2021, compared to the respective period in ~~2019,~~2020, was due primarily to ~~(i) payments of $14.3~~ ~~that were made during the~~improved cash flows within our underground pipe and locator and heating businesses associated with improved profitability and decreases in working capital, as well as third quarter ~~of 2020 with respect to bonds~~2021 cash receipts related to federal tax refunds of $22.4 and insurance proceeds of $15.0 associated with the ~~large power projects in South Africa (see Note 15 to our condensed consolidated financial statements for additional details) and (ii) the impact~~settlement of an increase in 2019 incentive compensation expense, which was paid in the first quarter of 2020, versus 2018 incentive compensation expense, which was paid in the first quarter of 2019. These decreases in cash flows from operating activities were offset partially by the impact of the deferral of payment of $~~6.8~~ ~~in social security payroll taxes, as provided under the CARES Act (see Note 16 to our condensed consolidated financial statements for additional details).~~asbestos insurance coverage matter.

Investing Activities — Cash flows used in investing activities for the nine months ended ~~September 26, 2020~~October 2, 2021 were comprised primarily of cash utilized ~~for~~in the ~~acquisition~~acquisitions of ~~ULC~~Sealite and ECS of ~~$87.9~~$80.3 and $39.4, respectively, and capital ~~expendi~~expenditures of $7.5~~tures of $15.0,~~, partially offset by proceeds from company-owned ~~life~~ insurance policies of ~~$1.1.~~$8.2.

Cash flows used in investing activities for the nine months ended September ~~28, 2019~~26, 2020 were comprised ~~primarily~~ of cash utilized for the ~~acquisitions~~acquisition of ~~Sabik and SGS~~ULC of ~~$87.2~~$87.9 and capital expenditures of ~~$10.7,~~$12.5, partially offset by proceeds from company-owned life insurance policies of ~~$5.9 and proceeds of $5.5 received in connection with the sale of Heat Transfer’s manufacturing facility.~~$1.1.

Financing Activities — Cash ~~flo~~flows used in financing activities for the nine months ended October 2, 2021 were comprised of net repayments under our various debt instruments of $162.8 and minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $4.0.

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

Cash flows from financing activities for the nine months ended September 28, 2019 were comprised of minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $4.2 and net repayments under our various debt instruments of $0.5.

Discontinued Operations — Cash flows ~~used in~~from discontinued operations for the nine months ended October 2, 2021 include proceeds received in connection with the sale of Transformers Solutions of $620.6. In addition, cash flows from discontinued operations for the nine months ended October 2, 2021 and September 26, 2020 ~~and September 28, 2019~~include cash flows from operations generated by Transformers Solutions, partially offset by cash disbursements related ~~primarily~~ to ~~disbursements for~~ liabilities retained in connection with ~~dispositions.~~dispositions.

Change in Cash and Equivalents due to Changes in Foreign Currency Exchange ~~Rates~~Rates — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during the first nine months of ~~2020~~2021 and ~~2019.~~2020.

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Borrowings and Availability

Borrowings — The following summarizes our debt activity (both current and non-current) for the nine months ended ~~September 26, 2020.~~October 2, 2021.


		December 31, 2019		Borrowings		Repayments		Other(5)		September 26, 2020			December 31, 2020		Borrowings		Repayments		Other(5)		October 2, 2021
Revolving loans (1)	Revolving loans (1)	$	140.0	$	183.9	$	(118.9)	$	—	$	205.0	Revolving loans (1)	$	129.8	$	209.1	$	(338.9)	$	—	$	—
Term loan(2)	Term loan(2)	248.2		—		—		0.3		248.5		Term loan(2)	248.6		—		(4.7)		0.3		244.2

Trade receivables financing arrangement(3)	Trade receivables financing arrangement(3)	—		65.0		(60.4)		—		4.6		Trade receivables financing arrangement(3)	28.0		179.0		(207.0)		—		—
Other indebtedness(4)	Other indebtedness(4)	5.3		—		(1.8)		2.3		5.8		Other indebtedness(4)	6.0		0.6		(0.9)		(2.3)		3.4
Total debt	Total debt	393.5		$	248.9	$	(181.1)	$	2.6	463.9		Total debt	412.4		$	388.7	$	(551.5)	$	(2.0)	247.6

Less: short-term debt	Less: short-term debt	142.6								108.0		Less: short-term debt	101.2								2.3
Less: current maturities of long-term debt	Less: current maturities of long-term debt	1.0								5.6		Less: current maturities of long-term debt	7.2								11.4
Total long-term debt	Total long-term debt	$	249.9							$	350.3	Total long-term debt	$	304.0							$	233.9

___________________________

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

(4)~~Includes~~Primarily includes balances under a purchase card program of ~~$1.7~~$2.3 and ~~$2.6~~$1.7 and finance lease obligations of ~~$2.4~~$1.1 and ~~$2.7,~~$2.6 at ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019,~~2020, respectively. The purchase card program allows for payment beyond the n~~ormal~~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 i~~nstruments~~instruments denominated in currencies other than the U.S. dollar, and the impact of amortization of debt issuance costs associated with the term loan.

At ~~September 26, 2020,~~October 2, 2021, we were in compliance with all covenants of our senior credit agreement.

Availability — At ~~September 26, 2020,~~October 2, 2021, we had ~~$227.6~~$437.8 of available borrowing capacity under our revolving credit facilities, after giving effect to ~~borrowings under the domestic revolving loan facility of $205.0 and $17.4~~$12.2 reserved for domestic letters of credit. ~~In addition, at September 26, 2020,~~During the second quarter of 2021, we reduced the available issuance capacity under our foreign credit instrument facilities from $100.0 to $55.0. At October 2, 2021, we had ~~$19.3~~$31.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to ~~$80.7~~$23.8 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 and 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

3741

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

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

Other Matters

Contractual Obligations — There have been no material changes in the amounts of our contractual obligations from those disclosed in our ~~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 ~~$17.1~~$8.9 as of ~~September 26, 2020.~~October 2, 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 $10.0.~~to $5.0.

Contingencies and Other Matters — Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., contracts, intellectual property, and competitive claims), environmental matters, 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.

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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 ~~September 26, 2020.~~October 2, 2021. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September 26, 2020.~~October 2, 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 ~~September 26, 2020~~October 2, 2021 were identified that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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 March 2020, our business began to experience the adverse impacts of the COVID-19 pandemic, including a modest impact on our consolidated financial results for the three and nine months ended September 26, 2020. 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 regular 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 could continue to have an adverse impact on our business and consolidated financial results during the fourth 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 prolonged reduction in the demand for certain of our products;~~

•~~A prolonged shut-down of one or more of our facilities either due to exposure to the COVID-19 pandemic 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~~2020 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results.

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

None.

ITEM 6. Exhibits



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

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

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

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

101.1			SPX Corporation financial information from its Form 10-Q for the quarterly period ended ~~September 26, 2020,~~October 2, 2021, formatted in Inline XBRL, including: (i) Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended October 2, 2021 and September 26, ~~2020 and September 28, 2019;~~2020; (ii) Condensed Consolidated Balance Sheets at ~~September 26, 2020~~October 2, 2021 and December 31, ~~2019;~~2020; (iii) Condensed Consolidated Statements of Equity for the three and nine months ended October 2, 2021 and September 26, ~~2020 and September 28, 2019;~~2020; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2021 and September 26, ~~2020 and September 28, 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)

4144

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: ~~October 29, 2020~~November 3, 2021	By		/s/ Eugene J. Lowe, III
			President and Chief Executive Officer


Date: ~~October 29, 2020~~November 3, 2021	By		/s/ James E. Harris
			Vice President, Chief Financial Officer and Treasurer

4245



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						2932
Item 3 – Quantitative and Qualitative Disclosures About Market Risk						3943
Item 4 – Controls and Procedures						3943

PART 2 – OTHER INFORMATION
Item 1 – Legal Proceedings						4044
Item 1A – Risk Factors						4044
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds						4144
Item 6 – Exhibits						4144

SIGNATURES						4245


	December 31, 2019		Goodwill Resulting from Business Combinations (1)		Impairments		Foreign Currency Translation		September 26, 2020
HVAC reportable segment
Gross goodwill	$	277.1	$	0.5	$	0	$	1.4	$	279.0
Accumulated impairments	(144.6)		—		—		0.1		(144.5)
Goodwill	132.5		0.5		0		1.5		134.5

Detection and Measurement reportable segment
Gross goodwill	304.1		38.0		0		0.3		342.4
Accumulated impairments	(133.6)		—		—		0.7		(132.9)
Goodwill	170.5		38.0		0		1.0		209.5

Engineered Solutions reportable segment
Gross goodwill	334.2		0		0		3.7		337.9
Accumulated impairments	(187.9)		—		—		(3.7)		(191.6)
Goodwill	146.3		0		0		0		146.3

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

Total
Gross goodwill	936.2		38.5		0		5.4		980.1
Accumulated impairments	(486.9)		—		—		(2.9)		(489.8)
Goodwill	$	449.3	$	38.5	$	0	$	2.5	$	490.3


	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	$	225.8	$	(0.6)	$	19.7	$	244.9
Other comprehensive loss before reclassifications	(0.4)		(2.9)		0		(3.3)
Amounts reclassified from accumulated other comprehensive income (loss)	0		0.6		(2.3)		(1.7)
Current-period other comprehensive loss	(0.4)		(2.3)		(2.3)		(5.0)
Balance at end of period	$	225.4	$	(2.9)	$	17.4	$	239.9