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 October ~~2, 2021~~1, 2022


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

For the transition period from to

Commission File Number 1-6948

SPX ~~CORPORATION~~TECHNOLOGIES, INC.

(Exact Name of registrant as specified in its charter)


Delaware						~~38-1016240~~88-3567996
(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~~SPX CORPORATION

(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 ~~29, 2021,~~ ~~45,413,380~~28, 2022, 45,187,022

SPX ~~CORPORATION~~TECHNOLOGIES, INC. AND SUBSIDIARIES

FORM 10-Q INDEX



PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)						3
Condensed Consolidated Balance Sheets						4
Condensed Consolidated Statements of Stockholders' 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						3236
Item 3 – Quantitative and Qualitative Disclosures About Market Risk						4347
Item 4 – Controls and Procedures						4347

PART 2 – OTHER INFORMATION
Item 1 – Legal Proceedings						4448
Item 1A – Risk Factors						4448
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds						4448
Item 6 – Exhibits						4449

SIGNATURES						4550

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPX ~~CORPORATION~~TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited; in millions, except per share amounts)


		Three months ended				Nine months ended					Three months ended				Nine months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Revenues	Revenues	$	285.8	$	268.3	$	870.4	$	783.1	Revenues	$	370.5	$	285.7	$	1,031.6	$	869.5
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of products sold	Cost of products sold	191.8		176.6		570.4		513.4		Cost of products sold	237.4		189.9		669.9		567.0
Selling, general and administrative	Selling, general and administrative	76.2		67.7		234.7		206.2		Selling, general and administrative	89.1		72.7		261.6		223.3
Intangible amortization	Intangible amortization	5.5		3.3		16.0		8.3		Intangible amortization	6.7		5.5		23.1		16.0
Impairment of goodwill and intangible assets										Impairment of goodwill and intangible assets	—		24.3		—		24.3
Special charges, net	Special charges, net	0.5		0.3		1.9		1.6		Special charges, net	—		(0.1)		0.1		0.7

Other operating (income) expense		—		—		2.7		(0.4)
Other operating (income) expense, net										Other operating (income) expense, net	—		(24.3)		1.0		(21.6)
Operating income	Operating income	11.8		20.4		44.7		54.0		Operating income	37.3		17.7		75.9		59.8

Other income, net		2.9		2.7		17.2		8.5
Other income (expense), net										Other income (expense), net	(24.6)		3.8		(19.8)		17.6
Interest expense	Interest expense	(3.5)		(4.5)		(11.1)		(14.0)		Interest expense	(2.6)		(3.5)		(7.3)		(10.9)
Interest income	Interest income	0.2		0.1		0.4		0.2		Interest income	1.0		0.1		1.4		0.2

Loss on amendment/refinancing of senior credit agreement										Loss on amendment/refinancing of senior credit agreement	(1.1)		—		(1.1)		(0.2)

Income from continuing operations before income taxes	Income from continuing operations before income taxes	11.4		18.7		51.2		48.7		Income from continuing operations before income taxes	10.0		18.1		49.1		66.5
Income tax provision		(3.7)		(3.1)		(9.8)		(8.4)
Income tax (provision) benefit										Income tax (provision) benefit	2.5		(4.2)		(4.5)		(11.9)
Income from continuing operations	Income from continuing operations	7.7		15.6		41.4		40.3		Income from continuing operations	12.5		13.9		44.6		54.6

Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	(31.0)		7.1		20.3		33.5		Income (loss) from discontinued operations, net of tax	—		(35.3)		—		9.4
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
Income (loss) on disposition of discontinued operations, net of tax										Income (loss) on disposition of discontinued operations, net of tax	(9.4)		351.7		(17.1)		355.0
Income (loss) from discontinued operations, net of tax										Income (loss) from discontinued operations, net of tax	(9.4)		316.4		(17.1)		364.4

Net income	Net income	$	331.1	$	22.8	$	419.4	$	72.6	Net income	$	3.1	$	330.3	$	27.5	$	419.0

Basic income per share of common stock:	Basic income per share of common stock:									Basic income per share of common stock:
Income from continuing operations	Income from continuing operations	$	0.17	$	0.35	$	0.92	$	0.90	Income from continuing operations	$	0.28	$	0.31	$	0.98	$	1.21
Income from discontinued operations		7.13		0.16		8.35		0.73
Income (loss) from discontinued operations										Income (loss) from discontinued operations	(0.21)		6.98		(0.38)		8.05
Net income per share	Net income per share	$	7.30	$	0.51	$	9.27	$	1.63	Net income per share	$	0.07	$	7.29	$	0.60	$	9.26

Weighted-average number of common shares outstanding — basic	Weighted-average number of common shares outstanding — basic	45.331		44.708		45.244		44.538		Weighted-average number of common shares outstanding — basic	45.144		45.331		45.382		45.244

Diluted income per share of common stock:	Diluted income per share of common stock:									Diluted income per share of common stock:
Income from continuing operations	Income from continuing operations	$	0.17	$	0.34	$	0.89	$	0.88	Income from continuing operations	$	0.27	$	0.30	$	0.96	$	1.18
Income from discontinued operations		6.93		0.16		8.14		0.71
Income (loss) from discontinued operations										Income (loss) from discontinued operations	(0.20)		6.78		(0.37)		7.84
Net income per share	Net income per share	$	7.10	$	0.50	$	9.03	$	1.59	Net income per share	$	0.07	$	7.08	$	0.59	$	9.02

Weighted-average number of common shares outstanding — diluted	Weighted-average number of common shares outstanding — diluted	46.650		45.894		46.455		45.694		Weighted-average number of common shares outstanding — diluted	46.132		46.650		46.253		46.455

Comprehensive income		$	325.0	$	24.7	$	415.4	$	65.5
Comprehensive income (loss)										Comprehensive income (loss)	$	(13.7)	$	324.2	$	0.8	$	415.0

The accompanying notes are an integral part of these statements.

SPX ~~CORPORATION~~TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share data)


		October 2, 2021		December 31, 2020			October 1, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and equivalents	Cash and equivalents	$	560.1	$	68.3	Cash and equivalents	$	183.4	$	388.2
Accounts receivable, net	Accounts receivable, net	212.1		221.0		Accounts receivable, net	266.1		223.4
Contract assets	Contract assets	23.7		32.5		Contract assets	30.2		28.9
Inventories, net	Inventories, net	170.3		143.1		Inventories, net	265.2		189.8
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
Other current assets						Other current assets	92.8		73.1

Assets of discontinued operations		—		121.6

Total current assets	Total current assets	1,046.5		682.6		Total current assets	837.7		903.4
Property, plant and equipment:	Property, plant and equipment:					Property, plant and equipment:
Land	Land	14.0		12.9		Land	13.9		13.9
Buildings and leasehold improvements	Buildings and leasehold improvements	61.7		64.9		Buildings and leasehold improvements	62.3		62.9
Machinery and equipment	Machinery and equipment	230.2		215.6		Machinery and equipment	227.8		231.4
		305.9		293.4			304.0		308.2
Accumulated depreciation	Accumulated depreciation	(197.9)		(183.4)		Accumulated depreciation	(197.0)		(194.9)
Property, plant and equipment, net	Property, plant and equipment, net	108.0		110.0		Property, plant and equipment, net	107.0		113.3
Goodwill	Goodwill	404.0		368.6		Goodwill	448.6		457.3
Intangibles, net	Intangibles, net	337.2		305.0		Intangibles, net	403.7		415.5
Other assets	Other assets	590.9		609.8		Other assets	619.8		675.9
Deferred income taxes	Deferred income taxes	3.2		23.9		Deferred income taxes	24.5		11.0
Assets of discontinued operations		—		219.1

Assets of DBT and Heat Transfer (includes cash and cash equivalents of $3.9 and $7.8 at October 1, 2022 and December 31, 2021, respectively) (Note 3)						Assets of DBT and Heat Transfer (includes cash and cash equivalents of $3.9 and $7.8 at October 1, 2022 and December 31, 2021, respectively) (Note 3)	41.2		52.2
TOTAL ASSETS	TOTAL ASSETS	$	2,489.8	$	2,319.0	TOTAL ASSETS	$	2,482.5	$	2,628.6
LIABILITIES AND EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY						LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	112.3	$	104.6	Accounts payable	$	125.2	$	119.6
Contract liabilities	Contract liabilities	50.7		46.3		Contract liabilities	45.5		44.7
Accrued expenses	Accrued expenses	240.6		209.4		Accrued expenses	194.6		217.9
Income taxes payable	Income taxes payable	60.2		0.4		Income taxes payable	6.8		42.1
Short-term debt	Short-term debt	2.3		101.2		Short-term debt	1.9		2.2
Current maturities of long-term debt	Current maturities of long-term debt	11.4		7.2		Current maturities of long-term debt	0.4		13.0

Liabilities of discontinued operations		—		115.8

Total current liabilities	Total current liabilities	477.5		584.9		Total current liabilities	374.4		439.5
Long-term debt	Long-term debt	233.9		304.0		Long-term debt	244.6		230.8
Deferred and other income taxes	Deferred and other income taxes	21.3		23.5		Deferred and other income taxes	25.5		31.3
Other long-term liabilities	Other long-term liabilities	696.8		746.7		Other long-term liabilities	726.9		788.5
Liabilities of discontinued operations		—		30.7

Liabilities of DBT and Heat Transfer (Note 3)						Liabilities of DBT and Heat Transfer (Note 3)	31.4		35.6
Total long-term liabilities	Total long-term liabilities	952.0		1,104.9		Total long-term liabilities	1,028.4		1,086.2
Commitments and contingent liabilities (Note 15)	Commitments and contingent liabilities (Note 15)	0		0		Commitments and contingent liabilities (Note 15)
Equity:
Stockholders' Equity:						Stockholders' 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
Common stock (53,277,632 and 45,218,054 issued and outstanding at October 1, 2022, respectively, and 53,011,255 and 45,467,768 issued and outstanding at December 31, 2021, respectively)						Common stock (53,277,632 and 45,218,054 issued and outstanding at October 1, 2022, respectively, and 53,011,255 and 45,467,768 issued and outstanding at December 31, 2021, respectively)	0.5		0.5
Paid-in capital	Paid-in capital	1,328.2		1,319.9		Paid-in capital	1,331.9		1,334.2
Retained deficit	Retained deficit	(68.7)		(488.1)		Retained deficit	(24.3)		(51.8)
Accumulated other comprehensive income	Accumulated other comprehensive income	244.5		248.5		Accumulated other comprehensive income	237.2		263.9
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)
Common stock in treasury (8,059,578 and 7,543,487 shares at October 1, 2022 and December 31, 2021, respectively)						Common stock in treasury (8,059,578 and 7,543,487 shares at October 1, 2022 and December 31, 2021, respectively)	(465.6)		(443.9)

Total equity		1,060.3		629.2
TOTAL LIABILITIES AND EQUITY		$	2,489.8	$	2,319.0
Total stockholders' equity						Total stockholders' equity	1,079.7		1,102.9
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY						TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,482.5	$	2,628.6

The accompanying notes are an integral part of these statements.

SPX ~~CORPORATION~~TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited; in millions)


		Three months ended October 2, 2021													Three months ended October 1, 2022
		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 Technologies, Inc. Stockholders’ Equity
Balance at July 3, 2021		$	0.5	$	1,321.2	$	(399.8)	$	250.6	$	(444.3)	$	728.2
Balance at July 2, 2022														Balance at July 2, 2022	$	0.5	$	1,327.3	$	(27.4)	$	254.0	$	(465.8)	$	1,088.6
Net income	Net income	—		—		331.1		—		—		331.1		Net income	—		—		3.1		—		—		3.1
Other comprehensive loss, net	Other comprehensive loss, net	—		—		—		(6.1)		—		(6.1)		Other comprehensive loss, net	—		—		—		(16.8)		—		(16.8)
Incentive plan activity	Incentive plan activity	—		3.0		—		—		—		3.0		Incentive plan activity	—		2.7		—		—		—		2.7
Long-term incentive compensation expense	Long-term incentive compensation expense	—		4.2		—		—		—		4.2		Long-term incentive compensation expense	—		2.1		—		—		—		2.1
Restricted stock unit vesting	Restricted stock unit vesting	—		(0.2)		—		—		0.1		(0.1)		Restricted stock unit vesting	—		(0.2)		—		—		0.2		—
Balance at October 2, 2021		$	0.5	$	1,328.2	$	(68.7)	$	244.5	$	(444.2)	$	1,060.3

Balance at October 1, 2022														Balance at October 1, 2022	$	0.5	$	1,331.9	$	(24.3)	$	237.2	$	(465.6)	$	1,079.7


		Nine months ended October 2, 2021													Nine months ended October 1, 2022
		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 Technologies, Inc. Stockholders’ Equity
Balance at December 31, 2020		$	0.5	$	1,319.9	$	(488.1)	$	248.5	$	(451.6)	$	629.2
Balance at December 31, 2021														Balance at December 31, 2021	$	0.5	$	1,334.2	$	(51.8)	$	263.9	$	(443.9)	$	1,102.9
Net income	Net income	—		—		419.4		—		—		419.4		Net income	—		—		27.5		—		—		27.5
Other comprehensive loss, net	Other comprehensive loss, net	—		—		—		(4.0)		—		(4.0)		Other comprehensive loss, net	—		—		—		(26.7)		—		(26.7)
Incentive plan activity	Incentive plan activity	—		9.8		—		—		—		9.8		Incentive plan activity	—		9.2		—		—		—		9.2
Long-term incentive compensation expense	Long-term incentive compensation expense	—		10.8		—		—		—		10.8		Long-term incentive compensation expense	—		7.7		—		—		—		7.7
Restricted stock unit vesting	Restricted stock unit vesting	—		(12.3)		—		—		7.4		(4.9)		Restricted stock unit vesting	—		(19.2)		—		—		12.0		(7.2)
Balance at October 2, 2021		$	0.5	$	1,328.2	$	(68.7)	$	244.5	$	(444.2)	$	1,060.3
Common stock repurchases														Common stock repurchases	—		—		—		—		(33.7)		(33.7)
Balance at October 1, 2022														Balance at October 1, 2022	$	0.5	$	1,331.9	$	(24.3)	$	237.2	$	(465.6)	$	1,079.7


		Three months ended September 26, 2020													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			Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Technologies, Inc. Stockholders’ Equity
Balance at June 27, 2020		$	0.5	$	1,303.4	$	(535.5)	$	235.3	$	(451.6)	$	552.1
Balance at July 3, 2021														Balance at July 3, 2021	$	0.5	$	1,321.2	$	(388.5)	$	250.6	$	(444.3)	$	739.5

Net income	Net income	—		—		22.8		—		—		22.8		Net income	—		—		330.3		—		—		330.3
Other comprehensive income, net		—		—		—		1.9		—		1.9
Other comprehensive loss, net														Other comprehensive loss, net	—		—		—		(6.1)		—		(6.1)
Incentive plan activity	Incentive plan activity	—		3.1		—		—		—		3.1		Incentive plan activity	—		3.0		—		—		—		3.0
Long-term incentive compensation expense	Long-term incentive compensation expense	—		3.2		—		—		—		3.2		Long-term incentive compensation expense	—		4.2		—		—		—		4.2
Restricted stock unit vesting	Restricted stock unit vesting	—		—		—		—		—		—		Restricted stock unit vesting	—		(0.2)		—		—		0.1		(0.1)
Balance at September 26, 2020		$	0.5	$	1,309.7	$	(512.7)	$	237.2	$	(451.6)	$	583.1
Balance at October 2, 2021														Balance at October 2, 2021	$	0.5	$	1,328.2	$	(58.2)	$	244.5	$	(444.2)	$	1,070.8


		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 Technologies, Inc. Stockholders’ 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	$	(477.2)	$	248.5	$	(451.6)	$	640.1

Net income	Net income	—		—		72.6		—		—		72.6		Net income	—		—		419.0		—		—		419.0
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 unit vesting	Restricted stock unit vesting	—		(12.7)		—		—		8.4		(4.3)		Restricted stock unit vesting	—		(12.3)		—		—		7.4		(4.9)
Balance at September 26, 2020		$	0.5	$	1,309.7	$	(512.7)	$	237.2	$	(451.6)	$	583.1
Balance at October 2, 2021														Balance at October 2, 2021	$	0.5	$	1,328.2	$	(58.2)	$	244.5	$	(444.2)	$	1,070.8

The accompanying notes are an integral part of these statements.

SPX ~~CORPORATION~~TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


		Nine months ended					Nine months ended
		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021
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	$	419.4	$	72.6	Net income	$	27.5	$	419.0
Less: Income from discontinued operations, net of tax		378.0		32.3
Less: Income (loss) from discontinued operations, net of tax						Less: Income (loss) from discontinued operations, net of tax	(17.1)		364.4
Income from continuing operations	Income from continuing operations	41.4		40.3		Income from continuing operations	44.6		54.6
Adjustments to reconcile income from continuing operations to net cash from operating activities:
Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:						Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:
Special charges, net	Special charges, net	1.9		1.6		Special charges, net	0.1		0.7
Gain on change in fair value of equity security		(9.0)		(7.4)
(Gain) loss on change in fair value of equity security						(Gain) loss on change in fair value of equity security	3.0		(9.0)

Deferred and other income taxes	Deferred and other income taxes	1.9		13.0		Deferred and other income taxes	(16.9)		1.9
Depreciation and amortization	Depreciation and amortization	32.1		21.6		Depreciation and amortization	36.9		31.9
Pension and other employee benefits	Pension and other employee benefits	4.1		5.3		Pension and other employee benefits	10.0		1.0
Long-term incentive compensation	Long-term incentive compensation	9.5		9.6		Long-term incentive compensation	7.7		9.4
Other, net	Other, net	3.6		3.3		Other, net	1.4		3.6
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	62.5		51.1		Accounts receivable and other assets	(20.9)		74.9
Inventories	Inventories	(20.1)		(24.1)		Inventories	(78.4)		(21.6)
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	(31.5)		(101.0)		Accounts payable, accrued expenses and other	(76.5)		(50.6)
Cash spending on restructuring actions	Cash spending on restructuring actions	(2.4)		(2.3)		Cash spending on restructuring actions	(0.4)		(1.2)
Net cash from continuing operations		94.0		11.0
Net cash from discontinued operations		59.8		45.4
Net cash from operating activities		153.8		56.4
Net cash from (used in) continuing operations						Net cash from (used in) continuing operations	(89.4)		95.6
Net cash from (used in) discontinued operations						Net cash from (used in) discontinued operations	(21.1)		58.2
Net cash from (used in) operating activities						Net cash from (used in) operating activities	(110.5)		153.8
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		8.2		1.1
Proceeds related to company-owned life insurance policies, net						Proceeds related to company-owned life insurance policies, net	4.6		8.2
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	(120.0)		(87.9)		Business acquisitions, net of cash acquired	(40.0)		(120.0)

Capital expenditures	Capital expenditures	(7.5)		(12.5)		Capital expenditures	(10.0)		(7.5)

Net cash used in continuing operations	Net cash used in continuing operations	(119.3)		(99.3)		Net cash used in continuing operations	(45.4)		(119.3)
Net cash from (used in) discontinued operations	Net cash from (used in) discontinued operations	617.9		(2.5)		Net cash from (used in) discontinued operations	(13.9)		617.9
Net cash from (used in) investing activities	Net cash from (used in) investing activities	498.6		(101.8)		Net cash from (used in) investing activities	(59.3)		498.6
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	209.1		183.9		Borrowings under senior credit facilities	245.0		209.1
Repayments under senior credit facilities	Repayments under senior credit facilities	(343.6)		(118.9)		Repayments under senior credit facilities	(243.7)		(343.6)
Borrowings under trade receivables financing arrangement		179.0		65.0
Repayments under trade receivables financing arrangement		(207.0)		(60.4)
Borrowings under trade receivables arrangement						Borrowings under trade receivables arrangement	—		179.0
Repayments under trade receivables arrangement						Repayments under trade receivables arrangement	—		(207.0)
Net repayments under other financing arrangements	Net repayments under other financing arrangements	(0.3)		(1.8)		Net repayments under other financing arrangements	(0.7)		(0.3)
Payment of contingent consideration	Payment of contingent consideration	—		(1.5)		Payment of contingent consideration	(1.3)		—
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	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)		Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	(4.9)		(3.7)
Repurchases of common stock						Repurchases of common stock	(33.7)		—
Financing fees paid						Financing fees paid	(1.9)		—

Net cash from (used in) continuing operations		(166.8)		64.5
Net cash used in discontinued operations		—		—
Net cash from (used in) financing activities		(166.8)		64.5
Net cash used in continuing operations						Net cash used in continuing operations	(41.2)		(166.5)
Net cash from (used in) discontinued operations						Net cash from (used in) discontinued operations	1.0		(0.3)
Net cash used in financing activities						Net cash used in financing activities	(40.2)		(166.8)
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	6.2		(3.1)		Change in cash and equivalents due to changes in foreign currency exchange rates	1.3		6.2
Net change in cash and equivalents	Net change in cash and equivalents	491.8		16.0		Net change in cash and equivalents	(208.7)		491.8
Consolidated cash and equivalents, beginning of period	Consolidated cash and equivalents, beginning of period	68.3		54.7		Consolidated cash and equivalents, beginning of period	396.0		68.3
Consolidated cash and equivalents, end of period	Consolidated cash and equivalents, end of period	$	560.1	$	70.7	Consolidated cash and equivalents, end of period	$	187.3	$	560.1


	Nine months ended
	October 1, 2022		October 2, 2021
Components of cash and equivalents:
Cash and cash equivalents	$	183.4	$	553.7
Cash and cash equivalents included in assets of DBT and Heat Transfer	3.9		6.4
Total cash and equivalents	$	187.3	$	560.1

The accompanying notes are an integral part of these statements.

SPX ~~CORPORATION~~TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(1) BASIS OF PRESENTATION

Unless otherwise indicated, “we,” “us” and “our” mean SPX ~~Corporation~~Technologies, Inc. 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. All of our ~~VIEs~~VIE's are ~~considered~~ immaterial, individually and in aggregate, to our condensed consolidated financial statements.

Merger and Consummation of Holding Company Reorganization

As reported in the Form 8-K of SPX Technologies, Inc. (the “Company”) filed on August 15, 2022, the Company is the successor registrant pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended, to SPX Corporation (“Legacy SPX”) as a result of the completion on August 15, 2022 of a holding company reorganization (“Holding Company Reorganization”) effected as a merger of Legacy SPX with and into SPX Merger, LLC, a subsidiary of the Company. Each share of the Company’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the Holding Company Reorganization was automatically converted into an equivalent corresponding share of Company common stock having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Legacy SPX common stock being converted. Accordingly, upon consummation of the Holding Company Reorganization, Legacy SPX stockholders became stockholders of the Company.

Sale of ~~Transformers~~Transformer Solutions Business

On October 1, 2021, we completed the ~~previously announced~~ sale of SPX Transformer Solutions, Inc. (“Transformer Solutions”) pursuant to the terms of 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 an aggregate cash purchase price of $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 ~~cash~~ proceeds ~~received totaling~~of $620.6~~. After~~ received in the third quarter of 2021. During the first quarter of 2022, we agreed to the final adjustment of the purchase price which resulted in a payment to the Purchaser of $13.9 with an increase to the gain on sale of ~~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.~~$0.2. Historically, Transformer Solutions’ operations ~~have~~ had a significant impact on our consolidated financial results, with revenues totaling approximately 25% of our total consolidated revenues. As we no longer have a consequential presence in the power ~~generation~~transmission and distribution markets, and given Transformer Solutions' significance to our historical consolidated financial results, we ~~have~~ concluded that the sale of Transformer Solutions ~~represents~~represented a strategic shift. Accordingly, we have classified the business as a discontinued operation in the accompanying condensed consolidated financial ~~statements for all periods presented.~~statements. See Note 3 for additional details.

~~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 our former Engineered Solutions reportable segment, with annual income representing less than 5% of the total annual income of our reportable segments, are being reported within our HVAC reportable segment, as these operations are now being managed, and evaluated by our Chief Operating Decision Maker, as part of our HVAC cooling business.

Wind-Down of ~~the SPX Heat Transfer~~DBT Technologies Business

~~As a continuation of our strategic shift away from power-generation markets, during~~During the fourth quarter of ~~2020,~~2021, we ~~completed the wind-down~~substantially ceased all operations of ~~the SPX Heat Transfer business~~DBT Technologies (PTY) LTD (“~~Heat Transfer”~~DBT”)~~, which included providing all products and services on the business’s remaining contracts with customers.~~. As a result, we are reporting ~~Heat Transfer~~DBT as a discontinued operation in the accompanying condensed consolidated financial ~~statements for all periods presented.~~statements. DBT continues to be involved in various dispute resolution matters related to two large power projects. See Note 3 for additional ~~details.~~details regarding DBT's presentation as a discontinued operation and Note 15 regarding the dispute resolution matters.

~~Acquisition~~Sale of ~~ULC~~

Transformer Solutions Business

On ~~September 2, 2020,~~October 1, 2021, we completed the ~~acquisition~~sale of ~~ULC Robotics~~SPX Transformer Solutions, Inc. (“~~ULC”~~Transformer Solutions”), a leading developer of robotic systems, machine learning applications, and inspection technology for the energy, utility, and industrial markets, for cash proceeds of $89.2, net of cash acquired of $4.0. Under pursuant to the terms of 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. for an aggregate cash purchase ~~and sales agreement, the seller was eligible for additional cash consideration~~price of ~~up to $45.0,~~$645.0 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~~net proceeds of $~~24.3,~~ 620.6~~which~~

~~represented the estimated fair value of the contingent consideration. During~~ received in the third quarter of ~~2021,~~2021. During the first quarter of 2022, we agreed to the final adjustment of the purchase price which resulted in a payment to the Purchaser of $13.9 with an increase to the gain on sale of $0.2. Historically, Transformer Solutions’ operations had a significant impact on our consolidated financial results, with revenues totaling approximately 25% of our total consolidated revenues. As we no longer have a consequential presence in the power transmission and distribution markets, and given Transformer Solutions' significance to our historical consolidated financial results, we concluded that the ~~operational and~~sale of Transformer Solutions represented a strategic shift. Accordingly, we have classified the business as a discontinued operation in the accompanying condensed consolidated 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~~statements. See Note 93 for ~~further discussion of this matter). The post-acquisition operating results of ULC are reflected within our Detection and Measurement reportable segment.~~additional details.

~~Acquisition~~Wind-Down of ~~Sensors & Software~~DBT Technologies Business

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 $3.9, with 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 consider~~ation is $0.7, whic~~h 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~~

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, primarily for the final assessment and valuation of 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, 2020. Interim results are not necessarily indicative of full year results.

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 2021 are April 3, July 3 and October 2, compared to the respective March 28, June 27 and September 26, 2020 dates. We had five more days in the first quarter of 2021 and will have six fewer days inDuring the fourth quarter of 2021, ~~than~~we substantially ceased all operations of DBT Technologies (PTY) LTD (“DBT”). As a result, we are reporting DBT as a discontinued operation in the respective 2020 periods. It is not practicable to estimate the impact of the five additional days on our consolidated operating results for the nine months ended October 2, 2021, when compared to the consolidated operating results for the 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 June 2016, the Financial Accounting Standards Board (“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 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 adopted this guidance on January 1, 2021, with no material impact on ouraccompanying condensed consolidated financial statements. DBT continues to be involved in various dispute resolution matters related to two large power projects. See Note 3 for additional details regarding DBT's presentation as a discontinued operation and Note 15 regarding the dispute resolution matters.

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 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, etc.) necessitated by the reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by the reference rate reform. Application of the guidance in the amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. 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 September 2, 2020, November 11, 2020, April 19, 2021 and August 2, 2021, we completed the acquisitions of ULC, Sensors & Software, Sealite and 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

On October 1, 2021, we completed the sale of SPX Transformer Solutions, Inc. (“Transformer Solutions”) pursuant to the terms of 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. for an aggregate cash purchase price of $645.0 with net proceeds of $620.6 received in the third quarter of 2021. During the first quarter of 2022, we agreed to the final adjustment of the purchase price which resulted in a payment to the Purchaser of $13.9 with an increase to the gain on sale of $0.2. Historically, Transformer Solutions’ operations had a significant impact on our consolidated financial results, with revenues totaling approximately 25% of our total consolidated revenues. As we no longer have a consequential presence in the power transmission and distribution markets, and given Transformer Solutions' significance to our historical consolidated financial results, we concluded that the sale of Transformer Solutions represented a strategic shift. Accordingly, we have classified the business as a discontinued operation in the accompanying condensed consolidated financial statements. See Note 3 for additional details.

Wind-Down of DBT Technologies Business

During the fourth quarter of 2021, we substantially ceased all operations of DBT Technologies (PTY) LTD (“DBT”). As a result, we are reporting DBT as a discontinued operation in the accompanying condensed consolidated financial statements. DBT continues to be involved in various dispute resolution matters related to two large power projects. See Note 3 for additional details regarding DBT's presentation as a discontinued operation and Note 15 regarding the dispute resolution matters.

Acquisition of 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 $89.2, net of cash acquired of $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, net.” We also recorded an impairment charge to “Impairment of goodwill and intangible assets” of $24.3 during the quarter (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 Sealite

On April 19, 2021, we completed the acquisition of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, “Sealite”). Sealite is a leader in the design and manufacture of marine and aviation Aids-to-Navigation products. We purchased Sealite for cash consideration of $80.3, net of cash acquired of $2.3, which included a final settlement of working capital that resulted in a reduction of the purchase price of $1.3 in the third quarter of 2021. The post acquisition operating results of Sealite are reflected within our Detection and Measurement reportable segment.

Acquisition of ECS

On August 2, 2021, we completed the acquisition of Enterprise Control Systems Ltd (“ECS”), a leader in the design and manufacture of highly-engineered tactical datalinks and radio frequency (“RF”) countermeasures, including counter-drone and counter-IED RF jammers. We purchased ECS for cash consideration of $39.4, net of cash acquired of $5.1. Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $13.5, with payment to be made in the fourth quarter of 2022 upon successful achievement of certain financial performance milestones. At the time of the acquisition, we recorded a liability of $8.2, which represented the estimated fair value of the contingent consideration. During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of certain large orders, resulting in a reduction of the estimated liability of $6.7. During the first and second quarters of 2022, we further reduced the estimated liability by $0.9 and $0.4, respectively, with such amounts recorded within “Other operating (income) expense, net.” The estimated fair value of such contingent consideration, which we have reflected as a liability in our condensed consolidated balance sheets, was $0.0 and $1.5 at October 1, 2022 and December 31, 2021, respectively. The post acquisition operating results of ECS are reflected within our Detection and Measurement reportable segment.

Acquisition of Cincinnati Fan

On December 15, 2021, we completed the acquisition of Cincinnati Fan & Ventilator Co., Inc. (“Cincinnati Fan”), a leader in engineered air movement solutions, including blowers and critical exhaust systems. We purchased Cincinnati Fan for cash consideration of $145.2, net of cash acquired of $2.5. During the second quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receiving $0.4 during the second quarter. The post acquisition operating results of Cincinnati Fan are reflected within our HVAC reportable segment.

Acquisition of ITL

On March 31, 2022, we completed the acquisition of International Tower Lighting, LLC (“ITL”), a leader in the design and manufacture of highly-engineered Aids-to-Navigation systems, including obstruction lighting for telecommunications towers, wind turbines and numerous other terrestrial obstructions. We purchased ITL for cash consideration of $41.8, net of cash acquired of $1.1. During the third quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receiving $1.4 during the quarter. The post acquisition operating results of ITL are reflected within our Detection and Measurement reportable segment.

The assets acquired and liabilities assumed in the Cincinnati Fan and ITL 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, primarily for the final assessment and valuation of certain income tax amounts.

Change in Accounting Method

During the fourth quarter of 2021, as a means of harmonizing our accounting method for inventory across all of our businesses, we converted the inventory accounting for certain domestic businesses within our HVAC reportable segment from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. This change in accounting has been retrospectively applied to our condensed consolidated financial statements. See Note 8 for additional information.

Other

Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from these estimates. The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021 (“our 2021 Annual Report on Form 10-K”). Interim results are not necessarily indicative of full year results.

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 2022 are April 2, July 2, and October 1, compared to the respective April 3, July 3 and October 2, 2021 dates. We had one less day in the first quarter of 2022 and will have one more day in the fourth quarter of 2022 than in the respective 2021 periods. It is not practicable to estimate the impact of the one less day on our consolidated operating results for the nine months ended October 1, 2022, when compared to the consolidated operating results for the 2021 respective period.

Reclassification of Prior-Year Amounts

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

Correction of Prior-Year Classification

Subsequent to issuance of the December 31, 2021 financial statements, management concluded that the impairment charge of $24.3 related to our ULC business’ goodwill and intangible assets mentioned above should have been reported in a separate line item within operating income. These amounts, which were previously classified within “Other operating (income) expense, net,” have been reclassified to “Impairment of goodwill and intangible assets” for the three and nine months ended October 2, 2021. As a result of this correction, “Other operating (income) expense, net” for the three and nine months ended October 2, 2021 reflects income of $24.3 and $21.6, respectively, whereas the expense disclosed prior to reclassification for the three and nine months ended October 2, 2021 was $0.0 and $2.7, respectively. The reclassification for the year ended December 31, 2021 will also be reflected within our Annual Report on Form 10-K for the year ending December 31, 2022.

(2) NEW ACCOUNTING PRONOUNCEMENTS

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

The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on June 30, 2023. In an effort to address the various challenges created by such discontinuance, the Financial Accounting Standards Board (“FASB”) issued two amendments to existing guidance, Accounting Standards Update (“ASU”) No. 2020-04 and No. 2021-01, Reference Rate Reform. The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, etc.) necessitated by the reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by the reference rate reform. Application of the guidance in the amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. In conjunction with entering into an Amended and Restated Credit Agreement (the “Credit Agreement”) on August 12, 2022, we adopted this guidance with no material impact on our condensed consolidated financial statements. Refer to Note 12 for additional information on the Credit Agreement.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. This guidance is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The impact of adopting this guidance on our condensed consolidated financial statements will depend on business combinations occurring on or after the effective date.

In March 2022, the FASB issued ASU No. 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. This ASU allows multiple hedged layers to be designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments. This guidance applies to all entities that elect to apply the portfolio layer method of hedge accounting in accordance with Topic 815 and is effective for public entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326) - Troubled Debt Restructurings and Vintage Disclosures, which requires enhanced disclosure of certain loan refinancing and restructuring by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This guidance also requires the disclosure of current-period gross write-offs by year of origination for

financing receivables and net investments in leases. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and allows for early adoption in any interim period after issuance. We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements.

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

(3) ACQUISITIONS AND DISCONTINUED OPERATIONS

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

Sale of Transformer Solutions Business

As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer Solutions for which we received net cash proceeds of ~~$620.6. In connection with the sale, we~~$620.6, and recorded a gain of ~~$357.7 to~~ “~~Gain (loss) on disposition~~$355.0 in the third quarter of 2021. The results of Transformer Solutions are presented as a discontinued ~~operations, net~~operation for all periods presented. Major line items constituting pre-tax income and after-tax income of ~~tax~~” ~~within our condensed consolidated statements of operations~~Transformer Solutions for the three and nine months ended October 2, ~~2021.~~2021 are shown below:

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.


	Three months ended		Nine months ended
	October 2, 2021		October 2, 2021
Revenues	$	94.4	$	313.5
Costs and expenses:
Cost of product sold	80.5		257.2
Selling, general and administrative	10.3		28.4




Income before income tax	3.6		27.9
Income tax provision	(33.8)		(6.8)
Income (loss) from discontinued operations, net of tax	$	(30.2)	$	21.1

910

~~The results~~Wind-Down of ~~Transformer Solutions~~DBT Business

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

Major line items constituting pre-tax ~~income~~loss and after-tax ~~income (loss)~~loss of ~~Transformer Solutions~~DBT 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~~


	Three months ended		Nine months ended
	October 2, 2021		October 2, 2021
Revenues	$	0.1	$	0.9
Costs and expenses:
Cost of product sold	0.5		1.4
Selling, general and administrative	3.4		11.4
Special charges	0.6		1.2
Other expense, net	0.9		0.4
Interest income	0.1		0.2

Loss before income tax	(5.2)		(13.3)
Income tax benefit	0.1		1.6
Loss from discontinued operations, net of tax	$	(5.1)	$	(11.7)

The assets and liabilities of DBT have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of October 1, 2022 and December 31, 2021. The major line items constituting DBT's assets and liabilities as of October 1, 2022 and December 31, 2021 are shown below:


	October 1, 2022		December 31, 2021
ASSETS
Cash and equivalents	$	3.9	$	7.8
Accounts receivable, net	7.3		9.1
Other current assets	6.2		7.0
Property, plant and equipment:
Buildings and leasehold improvements	0.2		0.2
Machinery and equipment	1.2		1.5
	1.4		1.7
Accumulated depreciation	(1.3)		(1.5)
Property, plant and equipment, net	0.1		0.2
Other assets	23.4		27.6
Total assets of DBT	$	40.9	$	51.7
LIABILITIES
Accounts payable	$	1.3	$	2.3
Contract liabilities	3.3		5.6
Accrued expenses	22.2		22.4
Other long-term liabilities	4.4		4.9
Total liabilities of DBT	$	31.2	$	35.2

1011

Wind-Down of the Heat Transfer Business

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

The assets and liabilities of Heat Transfer have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of October 1, 2022 and December 31, 2021. The major line items constituting Heat Transfer's assets and liabilities as of October 1, 2022 and December 31, 2021 are shown below:

~~Major line items constituting pre-tax~~


	October 1, 2022		December 31, 2021
ASSETS
Accounts receivable, net	$	—	$	0.1
Other current assets	0.2		0.2
Other assets	0.1		0.2

Total assets of Heat Transfer	$	0.3	$	0.5
LIABILITIES
Accounts payable	$	0.1	$	0.3
Accrued expenses	0.1		0.1
Total liabilities of Heat Transfer	$	0.2	$	0.4

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

For the three and nine months ended October 1, 2022 and October 2, 2021, results of ~~Heat Transfer~~operations from our businesses reported as discontinued operations were as follows:


	Three months ended				Nine months ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Transformer Solutions (1)
Income (loss) from discontinued operations	$	(0.6)	$	431.4	$	(0.8)	$	455.7
Income tax (provision) benefit	0.1		(106.6)		0.2		(79.6)
Income (loss) from discontinued operations, net	(0.5)		324.8		(0.6)		376.1

DBT (2)
Loss from discontinued operations	(5.7)		(5.2)		(14.2)		(13.3)
Income tax benefit	0.8		0.1		2.3		1.6
Loss from discontinued operations, net	(4.9)		(5.1)		(11.9)		(11.7)

Heat Transfer
Loss from discontinued operations	—		(0.1)		(0.2)		(0.3)
Income tax (provision) benefit	—		—		—		—
Loss from discontinued operations, net	—		(0.1)		(0.2)		(0.3)

All other (3)
Loss from discontinued operations	(5.4)		(4.3)		(5.9)		(5.4)
Income tax benefit	1.4		1.1		1.5		5.7
Income (loss) from discontinued operations, net	(4.0)		(3.2)		(4.4)		0.3

Total
Income (loss) from discontinued operations	(11.7)		421.8		(21.1)		436.7
Income tax (provision) benefit	2.3		(105.4)		4.0		(72.3)
Income (loss) from discontinued operations, net	$	(9.4)	$	316.4	$	(17.1)	$	364.4

___________________________

(1) Loss for the three and nine months ended ~~September 26, 2020 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 gain (loss) of $(3.3) and $0.0 during~~October 1, 2022 resulted primarily from revisions to liabilities retained in connection with the disposition. Income for the three and nine months ended October 2, 2021 ~~and net~~resulted primarily from the gain ~~(loss)~~on sale of ~~$0.1 and $(1.2) during~~the business of $355.0, as well as the results of operations for the periods.

(2) Loss for the three and nine months ended ~~September 26, 2020 within “Gain (loss) on~~ ~~disposition of discontinued operations, net of tax” resulting~~October 1, 2022 and October 2, 2021 resulted primarily from legal costs incurred in connection with various dispute resolution matters related to two large power projects.

(3) Income (loss) for the three and nine months ended October 1, 2022 and October 2, 2021 resulted primarily from asbestos-related charges and revisions to liabilities, including income tax liabilities, retained in connection with prior ~~businesses classified as discontinued operations.~~dispositions.

(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 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 1, 2022 and October 2, ~~2021 and September 26, 2020:~~2021:


		Three months ended October 2, 2021									Three months ended October 1, 2022
Reportable Segments and Other		HVAC		Detection and Measurement		Other		Total
Reportable Segments										Reportable Segments	HVAC		Detection and Measurement		Total

Major product lines	Major product lines									Major product lines
Package and process cooling equipment and services		$	104.1	$	—	$	—	$	104.1
Package and process cooling equipment and services, and engineered air quality solutions										Package and process cooling equipment and services, and engineered air quality solutions	$	134.5	$	—	$	134.5
Boilers, comfort heating, and ventilation	Boilers, comfort heating, and ventilation	75.2		—		—		75.2		Boilers, comfort heating, and ventilation	93.3		—		93.3
Underground locators, inspection and rehabilitation equipment, and robotic systems	Underground locators, inspection and rehabilitation equipment, and robotic systems	—		60.1		—		60.1		Underground locators, inspection and rehabilitation equipment, and robotic systems	—		61.5		61.5
Communication technologies, obstruction lighting, and bus fare collection systems	Communication technologies, obstruction lighting, and bus fare collection systems	—		46.3		—		46.3		Communication technologies, obstruction lighting, and bus fare collection systems	—		81.2		81.2

South African projects		—		—		0.1		0.1
		$	179.3	$	106.4	$	0.1	$	285.8		$	227.8	$	142.7	$	370.5

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	$	154.1	$	94.5	$	—	$	248.6	Revenues recognized at a point in time	$	212.2	$	117.1	$	329.3
Revenues recognized over time	Revenues recognized over time	25.2		11.9		0.1		37.2		Revenues recognized over time	15.6		25.6		41.2
		$	179.3	$	106.4	$	0.1	$	285.8		$	227.8	$	142.7	$	370.5


	Nine months ended October 1, 2022
Reportable Segments	HVAC		Detection and Measurement		Total

Major product lines
Package and process cooling equipment and services, and engineered air quality solutions	$	381.8	$	—	$	381.8
Boilers, comfort heating, and ventilation	257.8		—		257.8
Underground locators, inspection and rehabilitation equipment, and robotic systems	—		194.1		194.1
Communication technologies, obstruction lighting, and bus fare collection systems	—		197.9		197.9

	$	639.6	$	392.0	$	1,031.6

Timing of Revenue Recognition
Revenues recognized at a point in time	$	588.1	$	331.2	$	919.3
Revenues recognized over time	51.5		60.8		112.3
	$	639.6	$	392.0	$	1,031.6

1113


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

Major product lines	Major product lines									Major product lines
Package and process cooling equipment and services	Package and process cooling equipment and services	$	317.3	$	—	$	0.2	$	317.5	Package and process cooling equipment and services	$	104.1	$	—	$	104.1
Boilers, comfort heating, and ventilation	Boilers, comfort heating, and ventilation	223.0		—		—		223.0		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	—		193.4		—		193.4		Underground locators, inspection and rehabilitation equipment, and robotic systems	—		60.1		60.1
Communication technologies, obstruction lighting, and bus fare collection systems	Communication technologies, obstruction lighting, and bus fare collection systems	—		135.8		—		135.8		Communication technologies, obstruction lighting, and bus fare collection systems	—		46.3		46.3
											$	179.3	$	106.4	$	285.7
South African projects		—		—		0.7		0.7
		$	540.3	$	329.2	$	0.9	$	870.4

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	$	474.8	$	292.5	$	—	$	767.3	Revenues recognized at a point in time	$	154.1	$	94.5	$	248.6
Revenues recognized over time	Revenues recognized over time	65.5		36.7		0.9		103.1		Revenues recognized over time	25.2		11.9		37.1
		$	540.3	$	329.2	$	0.9	$	870.4		$	179.3	$	106.4	$	285.7

Three months ended September 26, 2020
Reportable Segments and Other HVAC Detection and Measurement Other Total
Major product lines
Package and process cooling equipment and services $ 107.7 $ — $ 0.2 $ 107.9
Boilers, comfort heating, and ventilation 74.9 — — 74.9
Underground locators, inspection and rehabilitation
equipment, and robotic systems — 52.0 — 52.0
Communication technologies, obstruction lighting, and bus fare collection systems — 33.2 — 33.2
South African Projects — — 0.3 0.3
$ 182.6 $ 85.2 $ 0.5 $ 268.3
Timing of Revenue Recognition
Revenues recognized at a point in time $ 160.6 $ 76.2 $ — $ 236.8
Revenues recognized over time 22.0 9.0 0.5 31.5
$ 182.6 $ 85.2 $ 0.5 $ 268.3


											Nine months ended October 2, 2021
		Nine months ended September 26, 2020
Reportable Segments and Other		HVAC		Detection and Measurement		Other		Total
Reportable Segments										Reportable Segments	HVAC		Detection and Measurement		Total

Major product lines	Major product lines									Major product lines
Package and process cooling equipment and services	Package and process cooling equipment and services	$	319.4	$	—	$	0.6	$	320.0	Package and process cooling equipment and services	$	317.3	$	—	$	317.3
Boilers, comfort heating, and ventilation	Boilers, comfort heating, and ventilation	191.2		—		—		191.2		Boilers, comfort heating, and ventilation	223.0		—		223.0
Underground locators, inspection and rehabilitation equipment, and robotic systems	Underground locators, inspection and rehabilitation equipment, and robotic systems	—		148.0		—		148.0		Underground locators, inspection and rehabilitation equipment, and robotic systems	—		193.4		193.4
Communication technologies, obstruction lighting, and bus fare collection systems	Communication technologies, obstruction lighting, and bus fare collection systems	—		121.2		—		121.2		Communication technologies, obstruction lighting, and bus fare collection systems	—		135.8		135.8
South African projects		—		—		2.7		2.7
		$	510.6	$	269.2	$	3.3	$	783.1		$	540.3	$	329.2	$	869.5

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	$	429.6	$	245.4	$	0.2	$	675.2	Revenues recognized at a point in time	$	474.8	$	292.5	$	767.3
Revenues recognized over time	Revenues recognized over time	81.0		23.8		3.1		107.9		Revenues recognized over time	65.5		36.7		102.2
		$	510.6	$	269.2	$	3.3	$	783.1		$	540.3	$	329.2	$	869.5

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 October ~~2, 2021~~1, 2022 and December 31, ~~2020:~~2021:


Contract Balances	Contract Balances	October 2, 2021		December 31, 2020		Change		Contract Balances	October 1, 2022		December 31, 2021		Change
Contract Accounts Receivable(1)	Contract Accounts Receivable(1)	$	202.8	$	210.6	$	(7.8)	Contract Accounts Receivable(1)	$	257.1	$	215.3	$	41.8
Contract Assets	Contract Assets	23.7		32.5		(8.8)		Contract Assets	30.2		28.9		1.3
Contract Liabilities - current	Contract Liabilities - current	(50.7)		(46.3)		(4.4)		Contract Liabilities - current	(45.5)		(44.7)		(0.8)
Contract Liabilities - non-current(2)	Contract Liabilities - non-current(2)	(5.9)		(3.4)		(2.5)		Contract Liabilities - non-current(2)	(5.5)		(5.8)		0.3
Net contract balance	Net contract balance	$	169.9	$	193.4	$	(23.5)	Net contract balance	$	236.3	$	193.7	$	42.6

___________________________

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

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

The ~~$23.5~~ ~~decrease~~$42.6 increase in our net contract balance from December 31, ~~2020~~2021 to October ~~2, 2021~~1, 2022 was due primarily to revenue recognized during the period, partially offset by cash payments received from customers during the ~~period, partially offset by revenue recognized during the~~ period.

During the three and nine months ended October ~~2, 2021,~~1, 2022, we recognized revenues of ~~$8.6~~$5.8 and ~~$31.8, respectively,~~$39.5, respectively, related to our contract liabilities at December 31, ~~2020.~~2021.

Performance ~~Obligations~~

As of October ~~2, 2021,~~1, 2022, the aggregate amount ~~allocated~~allocated to remaining performance obligations was ~~$102.5.~~$174.7. We expect to recognize revenue on approximately ~~63%~~48% and ~~86%~~90% of ~~remaining~~remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

(5) LEASES

There have been no material changes to our operating and finance leases during the three and nine months ended October ~~2, 2021.~~1, 2022.

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

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

~~Our DBT Technologies (PTY) LTD (“DBT”) operating segment is reported within an “Other” category outside of our reportable segments.~~ We have aggregated our ~~other~~ operating segments into the following 2two reportable segments: HVAC and Detection and Measurement. The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment. In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the ~~Codification.~~Accounting Standards Codification (“Codification”). Operating income or loss for each of our ~~operating~~reportable segments is determined before considering, if applicable, impairment and special charges, long-term incentive compensation, certain other operating income/expense, and other indirect corporate expenses. This is consistent with the way our Chief Operating Decision Maker evaluates the results of each segment.

HVAC Reportable Segment

Our HVAC reportable segment engineers, designs, manufactures, installs and services package and process cooling ~~equipment~~ products and engineered air movement solutions for the HVAC industrial and 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.

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.

~~Other~~

As noted above, “Other” consists of our South African operating segment, DBT. Our DBT operating segment engineers, designs, manufactures, installs, and services equipment for the industrial and power generation 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 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 segment~~ for the three and nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~ are presented below:

Three months ended Nine months ended
October 2,
2021 September 26,
2020 October 2,
2021 September 26,
2020
Revenues:
HVAC reportable segment $ 179.3 $ 182.6 $ 540.3 $ 510.6
Detection and Measurement reportable segment 106.4 85.2 329.2 269.2
Other 0.1 0.5 0.9 3.3
Consolidated revenues $ 285.8 $ 268.3 $ 870.4 $ 783.1
Income (loss):
HVAC reportable segment $ 21.4 $ 26.8 $ 69.1 $ 64.1
Detection and Measurement reportable segment 9.9 14.2 41.3 48.4
Other (4.1) (5.3) (12.6) (13.9)
Total income for segments 27.2 35.7 97.8 98.6
Corporate expense (11.5) (11.8) (39.0) (33.8)
Long-term incentive compensation expense (3.4) (3.2) (9.5) (9.6)
Special charges, net (0.5) (0.3) (1.9) (1.6)
Other operating income (expense)(1)
— — (2.7) 0.4
Consolidated operating income $ 11.8 $ 20.4 $ 44.7 $ 54.0

~~___________________________~~


	Three months ended				Nine months ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Revenues:
HVAC reportable segment	$	227.8	$	179.3	$	639.6	$	540.3
Detection and Measurement reportable segment	142.7		106.4		392.0		329.2
Consolidated revenues	$	370.5	$	285.7	$	1,031.6	$	869.5

Income:
HVAC reportable segment	$	30.9	$	23.0	$	71.7	$	71.2
Detection and Measurement reportable segment	25.7		9.9		63.2		41.3
Total income for reportable segments	56.6		32.9		134.9		112.5

Corporate expense	17.2		11.9		50.2		39.9
Long-term incentive compensation expense	2.1		3.4		7.7		9.4

Impairment of goodwill and intangible assets	—		24.3		—		24.3
Special charges, net	—		(0.1)		0.1		0.7
Other operating (income) expense, net	—		(24.3)		1.0		(21.6)
Consolidated operating income	$	37.3	$	17.7	$	75.9	$	59.8

~~(1)~~ 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 26, 2020, includes a gain of $0.4 related to revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

(7) SPECIAL CHARGES, NET

Special charges, net, for the three and nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~ are described in more detail below:


		Three months ended				Nine months ended				Three months ended				Nine months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
HVAC reportable segment	HVAC reportable segment	$	—	$	—	$	0.2	$	0.5		HVAC reportable segment	$	—	$	(0.1)	$	0.1	$	0.1
Detection and Measurement reportable segment	Detection and Measurement reportable segment	—		—		0.6		0.1			Detection and Measurement reportable segment	—		—		—		0.6
Other		0.5		—		1.1		0.2
Corporate		—		0.3		—		0.8

Total	Total	$	0.5	$	0.3	$	1.9	$	1.6		Total	$	—	$	(0.1)	$	0.1	$	0.7

HVAC — Charges for the nine months ended October 1, 2022 related to severance costs associated with a restructuring action at one of the segment's cooling businesses. Charges for the three and 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 of~~ ~~the segment's heating businesses and its Cooling Americas 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.~~

~~Other~~ — Charges for the three and nine months ended October 2, 2021 included an asset impairment charge and severance costs incurred in connection with the wind-down activities at DBT. Charges for the nine months ended September 26, 2020 included severance costs 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.~~businesses.

No significant future charges are expected to be incurred under actions approved as of October ~~2, 2021.~~1, 2022.

The following is an analysis of our restructuring liabilities for the nine months ended October ~~2, 2021~~1, 2022 and ~~September 26, 2020:~~

Nine months ended
October 2,
2021 September 26,
2020
Balance at beginning of year $ 1.5 $ 1.7
Special charges (1)
1.4 1.2
Utilization — cash (2.4) (2.3)
Currency translation adjustment and other — (0.2)
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 $0.4, respectively, of non-cash charges that impacted “Special charges” but not the restructuring liabilities.~~2021:


	Nine months ended
	October 1, 2022		October 2, 2021
Balance at beginning of year	$	0.3	$	0.8
Special charges	0.1		0.7
Utilization — cash	(0.4)		(1.2)
Currency translation adjustment and other	—		—
Balance at end of period	$	—	$	0.3

1516

(8) INVENTORIES, NET

Inventories at October ~~2, 2021~~1, 2022 and December 31, ~~2020~~2021 comprised the following:


		October 2, 2021		December 31, 2020			October 1, 2022		December 31, 2021
Finished goods	Finished goods	$	58.1	$	49.4	Finished goods	$	73.2	$	55.1
Work in process	Work in process	23.7		21.3		Work in process	34.3		21.1
Raw materials and purchased parts	Raw materials and purchased parts	102.4		84.3		Raw materials and purchased parts	157.7		113.6
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
Total inventories						Total inventories	$	265.2	$	189.8

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

As mentioned in Note 1, during the ~~last-in, first-out (“LIFO”)~~fourth quarter of 2021, we converted the inventory accounting for certain of our domestic businesses within our HVAC reportable segment from the LIFO method to the FIFO method. ~~These inventories were approximately 31%~~The effects of this accounting change have been retrospectively applied to all periods presented. The impact of this change on our condensed consolidated statements of operations and ~~35%~~condensed consolidated statements of ~~total inventory at~~comprehensive income for the three and nine months ended October 2, 2021 ~~and December 31, 2020, respectively. Other inventories are valued using the first-in, first-out (“FIFO”) method.~~was as follows:


	As Computed under LIFO		Effect of Change		As Adjusted
Consolidated Statement of Operations for three months ended October 2, 2021:
Income from continuing operations before income taxes	$	16.6	$	1.5	$	18.1
Income tax provision	(3.8)		(0.4)		(4.2)
Income from continuing operations	12.8		1.1		13.9
Income from discontinued operations, net of tax	318.3		(1.9)		316.4
Net income	$	331.1	$	(0.8)	$	330.3

Basic income per share of common stock:
Income from continuing operations, net of tax	$	0.28	$	0.03	$	0.31
Income from discontinued operations, net of tax	7.02		(0.04)		6.98
Net income attributable to SPX common stockholders	$	7.30	$	(0.01)	$	7.29

Diluted income per share of common stock:
Income from continuing operations, net of tax	$	0.28	$	0.02	$	0.30
Income from discontinued operations, net of tax	6.82		(0.04)		6.78
Net income attributable to SPX common stockholders	$	7.10	$	(0.02)	$	7.08

Total comprehensive income	$	325.0	$	(0.8)	$	324.2


	As Computed under LIFO		Effect of Change		As Adjusted
Consolidated Statement of Operations for nine months ended October 2, 2021:
Income from continuing operations before income taxes	$	64.5	$	2.0	$	66.5
Income tax provision	(11.4)		(0.5)		(11.9)
Income from continuing operations	53.1		1.5		54.6
Income from discontinued operations, net of tax	366.3		(1.9)		364.4
Net income	$	419.4	$	(0.4)	$	419.0

Basic income per share of common stock:
Income from continuing operations, net of tax	$	1.17	$	0.04	$	1.21
Income from discontinued operations, net of tax	8.10		(0.05)		8.05
Net income attributable to SPX common stockholders	$	9.27	$	(0.01)	$	9.26

Diluted income per share of common stock:
Income from continuing operations, net of tax	$	1.14	$	0.04	$	1.18
Income from discontinued operations, net of tax	7.89		(0.05)		7.84
Net income attributable to SPX common stockholders	$	9.03	$	(0.01)	$	9.02

Total comprehensive income	$	415.4	$	(0.4)	$	415.0

(9) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the nine months ended October ~~2, 2021~~1, 2022 were as follows:


		December 31, 2020		Goodwill Resulting from Business Combinations (1)		Impairments (2)		Foreign Currency Translation		October 2, 2021			December 31, 2021		Goodwill Resulting from Business Combinations (1)		Impairments		Foreign Currency Translation		October 1, 2022
HVAC reportable segment	HVAC reportable segment											HVAC reportable segment
Gross goodwill	Gross goodwill	$	492.2	$	—	$	—	$	(6.5)	$	485.7	Gross goodwill	$	528.9	$	0.1	$	—	$	(18.6)	$	510.4
Accumulated impairments	Accumulated impairments	(340.6)		—		—		4.5		(336.1)		Accumulated impairments	(334.1)		—		—		13.1		(321.0)
Goodwill	Goodwill	151.6		—		—		(2.0)		149.6		Goodwill	194.8		0.1		—		(5.5)		189.4

Detection and Measurement reportable segment	Detection and Measurement reportable segment											Detection and Measurement reportable segment
Gross goodwill	Gross goodwill	351.5		64.2		—		(3.6)		412.1		Gross goodwill	424.9		10.9		—		(20.0)		415.8
Accumulated impairments	Accumulated impairments	(134.5)		—		(23.3)		0.1		(157.7)		Accumulated impairments	(162.4)		—		—		5.8		(156.6)
Goodwill	Goodwill	217.0		64.2		(23.3)		(3.5)		254.4		Goodwill	262.5		10.9		—		(14.2)		259.2

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

Total	Total											Total
Gross goodwill	Gross goodwill	843.7		64.2		—		(10.1)		897.8		Gross goodwill	953.8		11.0		—		(38.6)		926.2
Accumulated impairments	Accumulated impairments	(475.1)		—		(23.3)		4.6		(493.8)		Accumulated impairments	(496.5)		—		—		18.9		(477.6)
Goodwill	Goodwill	$	368.6	$	64.2	$	(23.3)	$	(5.5)	$	404.0	Goodwill	$	457.3	$	11.0	$	—	$	(19.7)	$	448.6

___________________________

(1)Reflects (i) goodwill acquired with the ~~Sealite and ECS~~ITL acquisition o ~~acquisitions of $38.5 and $20.6, re~~f $~~spectively,~~10.7, (ii) an increase in ~~ULC's~~Sealite's goodwill ~~during 202~~1 of ~~$3.1~~$0.2 resulting from revisions to the valuation of certain assets and liabilities, and ~~income tax accounts, and~~ (iii) an increase in ~~Sensors & Software's~~Cincinnati Fan's goodwill of ~~$2.0 resulting~~ $0.1 resulting from revisions to the valuation of certain assets and ~~liabilities and income tax accounts.~~liabilities. As indicated in Note 1, the acquired assets, in~~cluding~~including goodwill, and liabilities assumed in the ~~Sealite, ECS~~Cincinnati Fan and ~~Sensors & Software~~ITL 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.

1618

Other Intangibles, Net

Identifiable intangible assets at October ~~2, 2021~~1, 2022 and December 31, ~~2020~~2021 comprised the following:


		October 2, 2021						December 31, 2020							October 1, 2022						December 31, 2021
		Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value			Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with determinable lives (1):
Intangible assets with determinable lives: (1)														Intangible assets with determinable lives: (1)
Customer relationships	Customer relationships	$	126.6	$	(23.7)	$	102.9	$	103.4	$	(16.2)	$	87.2	Customer relationships	$	196.1	$	(37.3)	$	158.8	$	188.2	$	(26.7)	$	161.5
Technology	Technology	65.9		(10.5)		55.4		54.4		(6.8)		47.6		Technology	80.2		(16.5)		63.7		80.1		(11.9)		68.2
Patents	Patents	4.5		(4.5)		—		4.5		(4.5)		—		Patents	4.5		(4.5)		—		4.5		(4.5)		—
Other	Other	22.4		(16.7)		5.7		18.8		(12.5)		6.3		Other	36.4		(23.4)		13.0		31.6		(18.0)		13.6
		219.4		(55.4)		164.0		181.1		(40.0)		141.1			317.2		(81.7)		235.5		304.4		(61.1)		243.3
Trademarks with indefinite lives ~~(2)~~	Trademarks with indefinite lives ~~(2)~~	173.2		—		173.2		163.9		—		163.9		Trademarks with indefinite lives ~~(2)~~	168.2		—		168.2		172.2		—		172.2
Total	Total	$	392.6	$	(55.4)	$	337.2	$	345.0	$	(40.0)	$	305.0	Total	$	485.4	$	(81.7)	$	403.7	$	476.6	$	(61.1)	$	415.5

___________________________

(1)The identifiable intangible assets asassociated wit~~sociated with~~h the ~~Sealite and ECS acquisitions~~ITL acquisition consist of customer ~~backlog of $1.9 and $0.8, respectively, customer~~ relationships of ~~$12.1 and $12.6, respectively, technology of $6.6 and $5.8, respectively, and~~$14.0, definite-lived trademarks of ~~$0.0~~$3.0, technology of $2.9, and ~~$1.2, respectively.~~non-compete agreements of $2.6.

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

In connection with the ~~acquisitions~~acquisition of ~~Sealite and ECS,~~ ITL, which ~~have~~has definite-lived ~~intangible assets~~intangibles as noted above, we ~~increased~~updated our estimated annual amortization expense related to intangible assets to approximately ~~$21.0~~$29.0 for the full year ~~2021,~~2022 and ~~$19.0~~$25.0 for ~~2022~~2023 and each of the four years thereafter.

At October ~~2, 2021,~~1, 2022, the net carrying ~~value~~value of intangible assets with determinable lives consisted of ~~$22.4~~$96.1 in the HVAC reportable segment and ~~$141.6~~$139.4 in the Detection and Measurement reportable segment. At October ~~2, 2021,~~1, 2022, trademarks with indefinite lives consisted of ~~$105.5~~$104.6 in the HVAC reportable segment and ~~$67.7~~$63.6 in the Detection and Measurement reportable segment.

We ~~perform our annual~~review goodwill and indefinite-lived intangible assets for impairment ~~testing~~annually during the fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of the end of the third quarter. In addition, we test goodwill for impairment on a more frequent basis if there are indications of potential impairment. In reviewing goodwill and indefinite-lived intangible assets for impairment, we initially perform a qualitative analysis. If there is an indication of impairment, we then perform a quantitative analysis. A significant amount of judgment is involved in determining if an indication of impairment has occurred between annual testing dates. Such indication may include: a significant decline in expected future cash flows; a significant adverse change in legal factors or the business climate; unanticipated competition; and a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit.

~~Based on our annual goodwill impairment testing~~As indicated in Note 1, we concluded during the ~~fourth~~third quarter of ~~2020, we~~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, net.” We also concluded that the ~~estimated fair value~~lack of ~~each~~achievement of ~~our reporting units, exclusive~~these milestones, along with lower than anticipated future cash flows, were indicators of ~~Cues, Inc.~~ ~~(“Cues”),~~ ~~Patterson-Kelley, LLC (“Patterson-Kelley”)~~potential impairment related to ULC’s indefinite-lived intangible assets and ~~ULC,~~ ~~exceeded~~goodwill. As such, we performed a quantitative analysis on ULC’s indefinite-lived intangible assets and goodwill during the third quarter of 2021. Based on such analysis, we determined that the carrying value of ~~their respective~~ULC’s net assets ~~by over 75%. The estimated fair values of Cues and Patterson-Kelley~~ exceeded the ~~carrying~~implied fair value of ~~their respective net assets by approximately 12%~~the business. As a result, we recorded an impairment charge to “Impairment of goodwill and ~~3%, while ULC's fair value approximates~~intangible assets” of $24.3 during the ~~carrying value of its net assets.~~ quarter, with $23.3 related to goodwill and the remainder to trademarks.

The total goodwill ~~for Cues, Patterson-Kelley and~~of ULC ~~was $~~wa~~47.9,~~s $~~14.2 and $17.1,~~$12.0 ~~respectively,~~ as of October ~~2, 2021.~~1, 2022. A change in assumptions used in ~~valuing Cues, Patterson-Kelley, or ULC~~ULC's quantitative analysis (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in ~~these reporting units~~ULC's estimated fair value being less than the ~~respective~~ carrying value of ~~their~~its net assets. In addition to ULC, the fair values of Sealite, ECS, Cincinnati Fan and ITL, acquisitions in 2021 and thus far in 2022, approximate their respective carrying values. If any of these reporting units isare unable to achieve ~~its~~their current financial forecast, we may be required to record an impairment charge in a future period related to ~~its goodwill.~~their goodwill and/or indefinite-lived intangible assets.

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~~value of our trademarks ~~are determined by~~is based on applying estimated royalty rates to projected revenues, with ~~the~~ resulting cash flows discounted at a rate of return that reflects current market conditions (fair value based on unobservable inputs - Level 3, as defined in Note 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.

1719

(10) WARRANTY

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


		Nine months ended
10						10	Nine months ended
		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021
Balance at beginning of year	Balance at beginning of year	$	35.3	$	31.8	Balance at beginning of year	$	34.8	$	35.3
Acquisitions	Acquisitions	—		1.6		Acquisitions	0.3		—
Provisions	Provisions	8.0		8.2		Provisions	8.2		8.0
Usage	Usage	(7.2)		(7.8)		Usage	(7.7)		(7.2)
Currency translation adjustment	Currency translation adjustment	—		0.1		Currency translation adjustment	(0.2)		—
Balance at end of period	Balance at end of period	36.1		33.9		Balance at end of period	35.4		36.1
Less: Current portion of warranty	Less: Current portion of warranty	12.1		11.9		Less: Current portion of warranty	12.5		12.1
Non-current portion of warranty	Non-current portion of warranty	$	24.0	$	22.0	Non-current portion of warranty	$	22.9	$	24.0

(11) EMPLOYEE BENEFIT PLANS

On February 17, 2022, we transferred our existing liability under the SPX Postretirement Benefit Plans (the “Plans”) for a group of participants with retiree life insurance benefits to an insurance carrier for consideration payable to the insurance carrier of $10.0. Of this consideration, $9.0 was paid during the first quarter of 2022, with the remainder paid in the second quarter of 2022. This transaction resulted in a settlement charge of $0.7 recorded to “Other income (expense), net” during the first quarter of 2022. In addition, and in connection with this transfer, we remeasured the assets and liabilities of the Plans as of the transfer date, which resulted in an actuarial gain of $0.4 recorded to “Other income (expense), net” for the three months ended April 2, 2022.

Participants in the SPX U.S. Pension Plan (the “U.S. Plan”) are eligible to elect a lump-sum payment option in lieu of a future pension benefit. During the first half of 2022, $10.0 was paid to participants who elected lump-sum payments. This triggered a plan settlement which resulted in a charge to “Other income (expense), net” of $2.3 during the quarter ended July 2, 2022. In addition, we remeasured assets and liabilities of the U.S. Plan at July 2, 2022, which resulted in an actuarial loss of $1.5 recorded to “Other income (expense), net” during the quarter ended July 2, 2022. In connection with the remeasurement, we updated our actuarial assumptions. The only changes of significance related to the discount rate and expected return on assets, which increased from 2.83% to 4.86% and 3.25% to 4.50%, respectively.

Additional settlements by the U.S. Plan during the quarter ended October 1, 2022 resulted in a charge to “Other income (expense), net” of $2.0. We also remeasured the assets and liabilities of the U.S. Plan as of October 1, 2022, which resulted in an actuarial loss of $0.4 recorded to “Other income (expense), net” during the quarter ended October 1, 2022. In connection with the remeasurement, we updated our actuarial assumptions. The only changes of significance related to the discount rate and expected return on assets, which increased from 4.86% to 5.70% and 4.50% to 5.00%, respectively.

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

Domestic Pension Plans


		Three months ended				Nine months ended					Three months ended				Nine months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Service cost	Service cost	$	—	$	—	$	—	$	—	Service cost	$	—	$	—	$	—	$	—
Interest cost	Interest cost	2.1		2.7		6.3		8.1		Interest cost	2.9		2.1		7.5		6.3
Expected return on plan assets	Expected return on plan assets	(2.2)		(2.4)		(6.6)		(7.2)		Expected return on plan assets	(2.0)		(2.2)		(6.2)		(6.6)

Settlement and actuarial losses (1)										Settlement and actuarial losses (1)	2.4		—		6.2		—

Net periodic pension benefit (income) expense	Net periodic pension benefit (income) expense	$	(0.1)	$	0.3	$	(0.3)	$	0.9	Net periodic pension benefit (income) expense	$	3.3	$	(0.1)	$	7.5	$	(0.3)

_________________

(1)For the three months ended October 1, 2022, consists of a settlement loss of $2.0 and an actuarial loss of $0.4. For the nine months ended October 1, 2022, consists of a settlement loss of $4.3 and an actuarial loss of $1.9.

Foreign Pension Plans


		Three months ended				Nine months ended					Three months ended				Nine months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Service cost	Service cost	$	—	$	—	$	—	$	—	Service cost	$	—	$	—	$	—	$	—
Interest cost	Interest cost	0.8		1.0		2.4		3.0		Interest cost	1.0		0.8		3.0		2.4
Expected return on plan assets	Expected return on plan assets	(1.4)		(1.4)		(4.2)		(4.4)		Expected return on plan assets	(1.5)		(1.4)		(4.5)		(4.2)

Net periodic pension benefit income	Net periodic pension benefit income	$	(0.6)	$	(0.4)	$	(1.8)	$	(1.4)	Net periodic pension benefit income	$	(0.5)	$	(0.6)	$	(1.5)	$	(1.8)

Postretirement Plans


		Three months ended				Nine months ended					Three months ended				Nine months ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Service cost	Service cost	$	—	$	—	$	—	$	—	Service cost	$	—	$	—	$	—	$	—
Interest cost	Interest cost	0.3		0.4		0.9		1.2		Interest cost	0.3		0.3		0.9		0.9

Amortization of unrecognized prior service credits	Amortization of unrecognized prior service credits	(1.2)		(1.2)		(3.6)		(3.6)		Amortization of unrecognized prior service credits	(1.1)		(1.2)		(3.3)		(3.6)
Settlement loss, net (1)										Settlement loss, net (1)	—		—		0.3		—
Net periodic postretirement benefit income	Net periodic postretirement benefit income	$	(0.9)	$	(0.8)	$	(2.7)	$	(2.4)	Net periodic postretirement benefit income	$	(0.8)	$	(0.9)	$	(2.1)	$	(2.7)

_________________

(1) For the nine months ended October 1, 2022, includes the impact of the transfer of the retiree life insurance benefits obligation.

(12) INDEBTEDNESS

The following summarizes our debt activity (both current and non-current) for the nine months ended October ~~2, 2021:~~1, 2022:


		December 31, 2020		Borrowings		Repayments		Other(5)		October 2, 2021			December 31, 2021		Borrowings		Repayments		Other		October 1, 2022
Revolving loans ~~(1)~~	Revolving loans ~~(1)~~	$	129.8	$	209.1	$	(338.9)	$	—	$	—	Revolving loans ~~(1)~~	$	—	$	—	$	—	$	—	$	—
Term loan(2)		248.6		—		(4.7)		0.3		244.2
Term loan(1)(2)												Term loan(1)(2)	242.7		245.0		(243.7)		0.3		244.3

Trade receivables financing arrangement(3)	Trade receivables financing arrangement(3)	28.0		179.0		(207.0)		—		—		Trade receivables financing arrangement(3)	—		—		—		—		—
Other indebtedness(4)	Other indebtedness(4)	6.0		0.6		(0.9)		(2.3)		3.4		Other indebtedness(4)	3.3		0.1		(0.8)		—		2.6
Total debt	Total debt	412.4		$	388.7	$	(551.5)	$	(2.0)	247.6		Total debt	246.0		$	245.1	$	(244.5)	$	0.3	246.9

Less: short-term debt	Less: short-term debt	101.2								2.3		Less: short-term debt	2.2								1.9
Less: current maturities of long-term debt	Less: current maturities of long-term debt	7.2								11.4		Less: current maturities of long-term debt	13.0								0.4
Total long-term debt	Total long-term debt	$	304.0							$	233.9	Total long-term debt	$	230.8							$	244.6

___________________________

(1)~~While not due for repayment until December 2024 under the terms of~~As noted below, we amended our senior credit agreement ~~we classify within current liabilities~~on August 12, 2022. The amendment made available a new term loan facility in the ~~portion~~amount of $245.0, the proceeds of which were primarily used to repay the outstanding balance ~~that we believe will be repaid over~~of $237.4 under the ~~next year, with such amount based on an estimate of cash that is expected to be generated over such period.~~

then-existing term loan facility.

(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%~~$245.0, beginning in December 2023 and in each of ~~the four quarters of 2022 and 2023, and 1.25% during~~ the first three quarters of ~~2024.~~2024, and 1.25% during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027. The remaining balance is payable in full on ~~December 17, 2024.~~August 12, 2027. Balances are net of unamortized debt issuance costs of ~~$1.1~~$0.7 and ~~$1.4~~$1.0 at October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively.

(3)Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses. At October 1, 2022, we had $30.3 of available borrowing capacity under this facility.

(4)Primarily includes balances under a purchase card program of ~~$2.3~~$1.9 and ~~$1.7~~$2.2 and finance lease obligations of ~~$1.1~~$0.7 and ~~$2.6~~$1.1 at October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively. The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

~~(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

On August 12, 2022, we entered into the Credit Agreement to, among other things, extend the term of the facilities under the Credit Agreement (with the aggregate of each facility comprising the “Senior Credit Facilities”) and provide for committed senior secured financing with an aggregate amount of $770.0 which consists of the following facilities at October 1, 2022 (each with a final maturity of August 12, 2027):

•A ~~detailed description~~term loan facility in an aggregate principal amount of ~~our senior~~$245.0;

•A multicurrency revolving credit ~~facilities is included~~facility, available for loans and letters of credit in ~~our 2020 Annual Report on Form 10-K.~~Dollars, Euro, Sterling and other currencies, in an aggregate principal amount up to the equivalent of $500.0 (with sub-limits equal to the equivalents of $200.0 for financial letters of credit, $50.0 for non-financial letters of credit, and $150.0 for non-U.S. exposure); and

~~On May 24, 2021 we elected to reduce our participating foreign credit instrument facility and~~

•A bilateral foreign credit instrument facility, available for performance letters of credit and bank undertakings, in an aggregate principal amount in various currencies up to the equivalent of $25.0.

The Credit Agreement also:

•Requires that we maintain a Consolidated Leverage Ratio (defined in the Credit Agreement) as of the last day of any fiscal quarter of not more than 3.75 to 1.00 (or (i) 4.00 to 1.00 for the four fiscal quarters after certain permitted acquisitions or (ii) 4.25 to 1.00 for the four fiscal quarters after certain permitted acquisitions with a minimum amount financed by unsecured debt);

•Requires that we maintain a Consolidated Interest Coverage Ratio (defined in the Credit Agreement) as of the last day of any fiscal quarter of at least 3.00 to 1.00;

•Allows SPX to seek additional commitments, without consent from the existing lenders, to add incremental term loan facilities and/or increase the commitments in respect of the revolving credit facility and/or the bilateral foreign credit instrument facility by up to an aggregate principal amount not to exceed (x) the greater of (i) $200.0 and (ii) the amount of Consolidated EBITDA (as defined in the Credit Agreement) for the four fiscal quarters ended most recently before the date of determination, plus (y) an unlimited amount so long as, immediately after giving effect thereto, our Consolidated Senior Secured Leverage Ratio (defined in the Credit Agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings, or analogous instruments and net of unrestricted cash and cash equivalents) at the date of determination secured by liens to Consolidated EBITDA for the four fiscal quarters ended most recently before such date) does not exceed 2.75:1.00, plus (z) an amount equal to all voluntary prepayments of the term loan facility and voluntary prepayments accompanied by permanent commitment reductions of the revolving credit facility and foreign credit instrument facility; and

•Establishes per annum fees charged and applies interest rate margins, as follows:


Consolidated Leverage Ratio	Revolving Commitment Fee		Financial Letter of Credit Fee		Foreign Credit Instrument (“FCI”) Commitment Fee		FCI Fee and Non-Financial Letter of Credit Fee		Term Secured Overnight Financing Rate (“SOFR”) Loans/Alternative Currency Loans		ABR Loans
Greater than or equal to 3.00 to 1.0	0.275	%	1.750	%	0.275	%	1.000	%	1.750	%	0.750	%
Between 2.00 to 1.0 and 3.00 to 1.0	0.250	%	1.500	%	0.250	%	0.875	%	1.500	%	0.500	%
Between 1.50 to 1.0 and 2.00 to 1.0	0.225	%	1.375	%	0.225	%	0.800	%	1.375	%	0.375	%
Less than 1.50 to 1.0	0.200	%	1.250	%	0.200	%	0.750	%	1.250	%	0.250	%

The interest rates applicable to loans under the Senior Credit Facilities are, at our option, equal to either (i) an alternate base rate (the highest of (a) the federal funds effective rate plus 0.5%, (b) the prime rate of Bank of America, N.A., and (c) the one-month Term SOFR rate plus 1.0%) or (ii) the Term SOFR rate for the applicable interest period plus 0.1%, plus, in each case, an applicable margin percentage, which varies based on the Consolidated Leverage Ratio (defined in the Credit Agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings or analogous instruments and net of unrestricted cash and cash equivalents) at the date of determination to Consolidated EBITDA for the four fiscal quarters ended most recently before such date). The interest rates applicable to loans in other currencies under the Senior Credit Facilities are, at the applicable borrower’s option, equal to either (a) an adjusted alternative currency daily rate or (b) an adjusted alternative currency term rate for the applicable interest period, plus, in each case, the applicable margin percentage. The borrowers may elect interest periods of one, three or six months (and, if consented to by all relevant lenders, any other period not greater than twelve months) for term rate borrowings, subject in each case to availability in the applicable currency.

The weighted-average interest rate of outstanding borrowings under the Credit Agreement was approximately 4.5% at October 1, 2022.

The fees for bilateral foreign credit instruments are as specified above unless otherwise agreed with the bilateral foreign issuing lender. The applicable borrower will also pay fronting fees on the outstanding amounts of financial and non-financial letters of credit at the rates of 0.125% per annum and 0.25% per annum, respectively.

SPX Enterprises, LLC, the direct wholly owned subsidiary of the Company, is the borrower under each of above facilities, and SPX may designate certain foreign subsidiaries to be borrowers under the revolving credit facility and the foreign credit instrument facility. All borrowings and other extensions of credit under the Credit Agreement are subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties.

The letters of credit under the revolving credit facility are stand-by letters of credit requested by SPX on behalf of any of our subsidiaries or certain joint ventures. The foreign credit instrument facility is used to issue foreign credit instruments, including bank undertakings to support our operations.

The Credit Agreement requires mandatory prepayments in amounts equal to the net proceeds from the sale or other disposition of (including from any casualty to, or governmental taking of) property in excess of specified values (other than in the ordinary course of business and subject to other exceptions) by SPX. Mandatory prepayments will be applied first to repay amounts outstanding under any term loans and then to amounts outstanding under the revolving credit facility (without reducing the commitments thereunder). No prepayment is required generally to the extent the net proceeds are reinvested (or committed to be reinvested) in permitted acquisitions, permitted investments or assets to be used in the business of SPX within 360 days (and if committed to be reinvested, actually reinvested within 180 days after the end of such 360-day period) of the receipt of such proceeds.

We may voluntarily prepay loans under the Credit Agreement, in whole or in part, without premium or penalty. Any voluntary prepayment of loans will be subject to reimbursement of the lenders’ breakage costs in the case of a prepayment of term rate borrowings other than on the last day of the relevant interest period. Indebtedness under the Credit Agreement is guaranteed by:

•Each existing and subsequently acquired or organized domestic material subsidiary with specified exceptions; and

•SPX with respect to the obligations of our foreign borrower subsidiaries under the revolving credit facility and the bilateral foreign credit instrument facility.

Indebtedness under the Credit Agreement is secured by a first priority pledge and security interest in 100% of the capital stock of our domestic subsidiaries (with certain exceptions) or our domestic subsidiary guarantors and 65% of the voting capital stock (and 100% of the non-voting capital stock) of material first-tier foreign subsidiaries (with certain exceptions). If SPX obtains a corporate credit rating from Moody’s and S&P and such corporate credit rating is less than “Ba2” (or not rated) by Moody’s and less than “BB” (or not rated) by S&P, then SPX and our domestic subsidiary guarantors are required to grant security interests, mortgages and other liens on substantially all of their assets. If SPX’s corporate credit rating is “Baa3” or better by Moody’s or “BBB-” or better by S&P and no defaults would exist, then all collateral security will be released and the indebtedness under the Credit Agreement will be unsecured.

The Credit Agreement also contains covenants that, among other things, restrict our ability to incur additional indebtedness, grant liens, make investments, loans or guarantees, bymake restricted junior payments, including dividends, redemptions of capital stock, and voluntary prepayments or repurchase of certain other indebtedness, engage in mergers, acquisitions or sales of assets, enter into sale and leaseback transactions, or engage in certain transactions with affiliates. The Credit Agreement contains customary representations, warranties, affirmative covenants and events of default.

We are permitted under the Credit Agreement to repurchase capital stock and pay cash dividends in an unlimited amount if our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) less than 2.75 to 1.00. If our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) greater than or equal to 2.75 to 1.00, the aggregate amount of ~~$20.0~~such repurchases and ~~$25.0, respectively. The facility reduction resulted~~dividend declarations cannot exceed (A) $100.0 in any fiscal year plus (B) to the extent not previously utilized for restricted junior payments or investments, an additional amount for all such repurchases and dividend declarations made after August 12, 2022 equal to the sum of (i) $100.0, plus (ii) a ~~write-off~~positive amount equal to 50% of ~~deferred finance costs of $0.2, recorded to “Interest expense”~~cumulative Consolidated Net Income (defined in the ~~condensed~~Credit Agreement generally as consolidated ~~statement~~net income subject to certain adjustments solely for the purposes of ~~operations~~determining this basket) during the period from September 24, 2015 to the end of the most recent fiscal quarter preceding the date of such repurchase or dividend declaration for ~~nine months ended October 2, 2021.~~which financial statements have been (or were required to be) delivered (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit), plus (iii) certain other amounts.

At October ~~2, 2021,~~1, 2022, we had ~~$437.8~~$489.0 of available borrowing capacity under our revolving credit facilities, after giving effect to ~~$12.2~~$11.0 reserved for ~~domestic~~outstanding letters of credit. In addition, at October ~~2, 2021,~~1, 2022, we had ~~$31.2~~$12.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to ~~$23.8~~$12.8 reserved for outstanding letters of credit.

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

At October ~~2, 2021,~~1, 2022, we were in compliance with all covenants of ~~our senior credit agreement.~~the Credit Agreement.

~~Off Balance Sheet Arrangements~~

AsIn connection with the August 2022 amendment of ~~October 2, 2021,~~the Credit Agreement, we recorded charges of $1.1 to “Loss on amendment/refinancing of senior credit agreement” related to the write-off of unamortized deferred financing costs totaling $0.7 and transaction costs of $0.4. Additionally, $1.5 of fees paid in connection with the ~~sale of Transformer Solutions~~August 2022 amendment were capitalized, with $1.2 related to our revolving loans and ~~pursuant~~$0.3 related to the ~~terms~~term loan. During 2021, we reduced the issuance capacity of our then-existing foreign credit instrument facilities resulting in a charge of $0.2 to “Loss on amendment/refinancing of senior credit agreement” associated with the ~~Stock Purchase Agreement dated June 8, 2021,~~ ~~surety bonds totaling approximately $27.4 remained in place at the time~~write-off 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.unamortized deferred financing costs.

(13) DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swaps

We previously maintained interest rate swap agreements that matured in March 2021 and effectively converted borrowings under our senior credit facilities to a fixed rate of 2.535%, plus the applicable margin.

In February 2020, and as a result of a December 2019 amendment that extended the maturity date of our then-existing senior credit facilities to December 17, 2024, we entered into additional interest swap agreements (“Swaps”). The Swaps have a remaining notional amount of ~~$245.3,~~$234.4, cover the period from March 2021 to November 2024, and effectively convert borrowings under our ~~senior credit facilities~~term loan for this period to a fixed rate of 1.061%, plus the applicable margin.

~~We have designated~~In connection with entering into the Credit Agreement, the Swaps were amended to be based on SOFR as opposed to LIBOR. As mentioned in Note 2, we applied the optional expedients per ASU No. 2020-04 and ~~are accounting~~No. 2021-01 and, thus, continue to designate and account for our interest rate swap agreements as cash flow hedges. As of October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, the unrealized ~~loss,~~gain, net of tax, recorded in accumulated other comprehensive income (“AOCI”) was ~~$2.2~~$11.8 and ~~$5.9,~~$0.5, respectively. In addition, as of October ~~2, 2021,~~1, 2022, the fair value of our interest rate swap agreements totaled ~~$2.9, with $2.4~~$15.6 (with $7.2 recorded as a current ~~liability~~asset and ~~the remainder in long-term liabilities,~~$8.4 as a non-current asset), and ~~$7.8~~$0.6 at December 31, ~~2020~~2021 (with ~~$1.4~~$2.5 recorded as a non-current asset and $1.9 as a current ~~liability and the remainder in long-term liabilities)~~liability). Changes in 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 amount of ~~$8.6~~$21.7 and ~~$6.3~~$8.7 outstanding as of October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively, with all of the ~~$8.6~~$21.7 scheduled to mature within one year. The fair value of our FX forward contracts was $0.5 at October 1, 2022 (recorded as a current asset) and was less than $0.1 at December 31, 2021.

Beginning in the second quarter of 2022, we have designated and accounted for certain of our FX forward contracts, with a notional amount of $3.3, as cash flow hedges. As of October 1, 2022, the unrealized gain/loss recorded in AOCI related to these cash flow hedges was less than $0.1. Changes in fair value of our FX forward contracts designated as cash flow hedges are reclassified into earnings, as a component of “Revenues” when the forecasted transaction impacts earnings.

Commodity Contracts

~~From time to time,~~For our Transformer Solutions business, we ~~ent~~erhistorically entered 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.~~Solutions, which has been presented within discontinued operations. Immediately prior to the sale, we extinguished the existing commodity contracts and reclassified from AOCI a net loss of $0.6 to “~~Gain~~“Gain (loss) on disposition of discontinued operations, net of ~~tax~~”tax” within our condensed consolidated statements of operations for the three and nine months ended October 2, 2021. ~~At December 31, 2020, the outstanding notional amount of commodity contracts was 3.2 pounds of copper.~~ Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and, to the extent the commodity contracts were effective in offsetting the variability of the forecasted purchases, the change in fair value was included in AOCI. We reclassified amounts associated with our commodity contracts out of AOCI when the forecasted transaction impacted earnings. As of December 31, 2020, the fair value of these contracts 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 discontinued operations in the accompanying condensed consolidated balance sheet. The unrealized gain, net of taxes, recorded in AOCI was $1.5 as of December 31, 2020.

2024

(14) STOCKHOLDERS' EQUITY AND LONG-TERM INCENTIVE COMPENSATION

Income Per Share

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


		Three months ended		Nine months ended			Three months ended		Nine months ended
		October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020		October 1, 2022	October 2, 2021	October 1, 2022	October 2, 2021
Weighted-average number of common shares used in basic income per share	Weighted-average number of common shares used in basic income per share	45.331	44.708	45.244	44.538	Weighted-average number of common shares used in basic income per share	45.144	45.331	45.382	45.244
Dilutive securities — Employee stock options and restricted stock units	Dilutive securities — Employee stock options and restricted stock units	1.319	1.186	1.211	1.156	Dilutive securities — Employee stock options and restricted stock units	0.988	1.319	0.871	1.211
Weighted-average number of common shares and dilutive securities used in diluted income per share	Weighted-average number of common shares and dilutive securities used in diluted income per share	46.650	45.894	46.455	45.694	Weighted-average number of common shares and dilutive securities used in diluted income per share	46.132	46.650	46.253	46.455

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 wwere 0.243 and 0.655, r~~ere 0.222 and 0.631, respectively,~~espectively, for the three ~~months~~months ended October ~~2, 2021,~~1, 2022, and ~~0.261~~0.270 and ~~0.631, respectively,~~0.720, respectively, for the nine months ended October ~~2, 2021.~~1, 2022.

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~~0.222 and ~~0.858,~~0.631, respectively, for the three months ended ~~September 26, 2020,~~October 2, 2021, and ~~0.346~~0.261 and ~~0.817,~~0.631, respectively, for the nine months ~~ended September 26, 2020.~~ended October 2, 2021.

Long-Term Incentive Compensation

Long-term incentive compensation awards may be granted to certain eligible employees or non-employee directors. A detailed description of the awards granted prior to ~~2021~~2022 is included in our ~~2020~~2021 Annual Report on Form 10-K.

Awards granted on March 1, ~~2021~~2022 to executive officers and other members of senior management were comprised of performance stock units (“PSU’s”), stock options, and time-based restricted stock units (“RSU’s”), 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 ~~11, 2021,~~10, 2022, we granted ~~0.017~~0.023 RSU's to our non-employee directors, which vest in their entirety immediately prior to the annual meeting of stockholders in May ~~2022.~~2023. A detailed description of the awards granted prior to 2022 is included in our 2021 Annual Report on Form 10-K.

Compensation expense within income from continuing operations related to long-term incentive awards totaled $2.1 and$3.4 for the three months ended October 1, 2022 and ~~$3.2~~October 2, 2021, respectively, and $7.7 and $9.4 for the nine months ended October 1, 2022 and October 2, 2021, respectively. The related tax benefit was $0.3 and $0.6 for the three months ended October 1, 2022 and October 2, 2021, respectively, and $1.2 and $1.6 for the nine months ended October 1, 2022 and October 2, 2021, respectively.

Repurchases of Common Stock

On May 10, 2022, our Board of Directors re-authorized management, in its sole discretion, to repurchase, in any fiscal year, up to $100.0 of our common stock, subject to maintaining compliance with all covenants of our Credit Agreement. Pursuant to this re-authorization, during the quarter ended July 2, 2022, we repurchased 0.707 shares of our common stock for aggregate cash payments of $33.7. As of October 1, 2022, the remaining maximum approximate amount of our common stock that may be purchased under this authorization is $66.3.

Accumulated Other Comprehensive Income

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended October 1, 2022 were as follows:


	Foreign Currency Translation Adjustment		Net Unrealized Gains on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total
Balance at beginning of period	$	236.3	$	8.6	$	9.1	$	254.0
Other comprehensive income (loss) before reclassifications	(19.2)		3.9		—		(15.3)
Amounts reclassified from accumulated other comprehensive income	—		(0.7)		(0.8)		(1.5)
Current-period other comprehensive income (loss)	(19.2)		3.2		(0.8)		(16.8)
Balance at end of period	$	217.1	$	11.8	$	8.3	$	237.2

__________________________

(1)Net of tax provision of $4.0 and $2.9 as of October 1, 2022 and July 2, 2022, respectively.

(2)Net of tax provision of $3.0 and $3.2 as of October 1, 2022 and July 2, 2022, respectively. The balances as of October 1, 2022 and July 2, 2022 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended October 1, 2022 were as follows:


	Foreign Currency Translation Adjustment		Net Unrealized Gains on Qualifying Cash Flow Hedges(1)		Pension and Postretirement Liability Adjustment(2)		Total
Balance at beginning of period	$	252.7	$	0.5	$	10.7	$	263.9
Other comprehensive income (loss) before reclassifications	(35.6)		11.5		0.1		(24.0)
Amounts reclassified from accumulated other comprehensive income	—		(0.2)		(2.5)		(2.7)
Current-period other comprehensive income (loss)	(35.6)		11.3		(2.4)		(26.7)
Balance at end of period	$	217.1	$	11.8	$	8.3	$	237.2

__________________________

(1)Net of tax provision of $4.0 and $0.1 as of October 1, 2022 and December 31, 2021, respectively.

(2)Net of tax provision of $3.0 and $3.7 as of October 1, 2022 and December 31, 2021, respectively. The balances as of October 1, 2022 and December 31, 2021 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended October 2, 2021 ~~and September 26, 2020 and $9.5 and $9.6 for the nine months ended~~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 ~~September 26, 2020,~~July 3, 2021, respectively. ~~The related~~

(2)Net of tax ~~benefit was $0.6~~provision of $4.0 and ~~$0.8 for the three months ended~~$4.3 as of October 2, 2021 and ~~September 26, 2020 and $1.6 and $2.4 for the nine months ended~~July 3, 2021, respectively. The balances as of October 2, 2021 and ~~September 26, 2020, respectively.~~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 following summarizes amounts reclassified from each component of accumulated other comprehensive income for the three months ended October 1, 2022 and October 2, 2021:


	Amount Reclassified from AOCI
	Three months ended
	October 1, 2022		October 2, 2021		Affected Line Item in the Condensed Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:
FX forward contracts	$	(0.2)	$	—	Revenues
Commodity contracts	—		(0.3)		Income from discontinued operations, net of tax
Swaps	(0.7)		0.6		Interest expense
Pre-tax	(0.9)		0.3
Income taxes	0.2		(0.1)
	$	(0.7)	$	0.2

Gains on pension and postretirement items:
Amortization of unrecognized prior service credits - Pre-tax	$	(1.1)	$	(1.2)	Other income (expense), net
Income taxes	0.3		0.3
	$	(0.8)	$	(0.9)

2127

~~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 — 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 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) — (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 and $0.5 as of September 26, 2020 and December 31, 2019, respectively.~~

~~(2)~~Net of tax provision of $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 following summarizes amounts reclassified from each component of accumulated other comprehensive income for the three months ended October 2, 2021 and September 26, 2020:~~

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 other comprehensive income for the nine months ended October 1, 2022 and October 2, ~~2021 and September 26, 2020:~~2021:


		Amount Reclassified from AOCI						Amount Reclassified from AOCI
		Nine months ended						Nine months ended
		October 2, 2021		September 26, 2020		Affected Line Item in the Condensed Consolidated Statements of Operations		October 1, 2022		October 2, 2021		Affected Line Item in the Condensed Consolidated Statements of Operations
(Gains) losses on qualifying cash flow hedges:	(Gains) losses on qualifying cash flow hedges:						(Gains) losses on qualifying cash flow hedges:

FX forward contracts							FX forward contracts	$	(0.2)	$	—	Revenues
Commodity contracts	Commodity contracts	$	(3.8)	$	0.1	Income from discontinued operations, net of tax	Commodity contracts	—		(3.8)		Income from discontinued operations, net of tax
Swaps	Swaps	2.6		3.2		Interest expense	Swaps	—		2.6		Interest expense
Pre-tax	Pre-tax	(1.2)		3.3			Pre-tax	(0.2)		(1.2)
Income taxes	Income taxes	0.3		(0.8)			Income taxes	—		0.3
		$	(0.9)	$	2.5			$	(0.2)	$	(0.9)

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)	$	(3.6)	Other income, net	Amortization of unrecognized prior service credits - Pre-tax	$	(3.3)	$	(3.6)	Other income (expense), net
Income taxes	Income taxes	0.9		0.9			Income taxes	0.8		0.9
		$	(2.7)	$	(2.7)			$	(2.5)	$	(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~~liabilities related to these matters totaled ~~$540.4~~$614.0 and ~~$575.7~~$658.8 at October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively. Of these amounts, ~~$469.5~~$538.9 and ~~$499.8~~$584.3 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these matters are based on a number of assumptions, including historical claims and payment experience. While we base our assumptions on facts currently known to us, they entail inherently subjective judgments and uncertainties. As a result, our current assumptions for estimating these liabilities may not prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations.

Our asbestos-related claims are with respect to products that we no longer manufacture or sell and are typical in certain of the industries in which we operate or pertain to legacy businesses we no longer operate. It is not unusual in these cases for 50fifty 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~~1, 2022 and December 31, ~~2020:~~2021:


		October 2, 2021		December 31, 2020			October 1, 2022		December 31, 2021
Insurance recovery assets (1)	Insurance recovery assets (1)	$	453.9	$	496.4	Insurance recovery assets (1)	$	479.8	$	526.2
Liabilities for claims (2)	Liabilities for claims (2)	499.4		535.2		Liabilities for claims (2)	574.6		616.5

__________________________

~~__________________________~~

(1)Of these ~~amounts~~a~~, $403.9~~mounts, $424.2 and ~~$446.4~~$473.6 are included in “~~Other assets~~”“Other assets” at October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively, while the remainder is included in “~~Other~~“Other current assets.”

(2)Of ~~these~~these amounts, ~~$444.8 and $479.9~~$520.4 and $561.4 are included in “~~Other~~“Other long-term ~~liabilities~~”liabilities” at October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively, while the remainder is included in “Accrued expenses“~~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 1, 2022 and October 2, ~~2021 and September 26, 2020:~~2021:


		Nine months ended	Nine months ended		Nine months ended
		October 2, 2021	September 26, 2020		October 1, 2022	October 2, 2021
Pending claims, beginning of period	Pending claims, beginning of period	9,782	11,079	Pending claims, beginning of period	10,065	9,782
Claims filed	Claims filed	2,044	1,730	Claims filed	2,249	2,044
Claims resolved	Claims resolved	(1,797)	(2,651)	Claims resolved	(1,733)	(1,797)
Pending claims, end of period	Pending claims, end of period	10,029	10,158	Pending claims, end of period	10,581	10,029

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 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ our (receipts) payments for asbestos-related claims, net of respective insurance recoveries of $27.7 and $39.8, were $20.2 and ~~$23.3, were~~ $(2.2) ~~and $15.8,~~, respectively. The nine months ended October 2,1, 2021 includes insurance proceeds of $15.0, associated with the settlement of an asbestos insurance 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 a result, have a material impact on our financial position, results of operations and cash flows.

During the three and nine months ended October 1, 2022, we recorded charges for asbestos-related matters of $21.7 and $24.0, respectively, with $16.5 and $18.8, respectively, recorded to continuing operations and the remainder to discontinued operations. Of such charges, $21.7 (continuing operations - $16.5 and discontinued operations - $5.2) resulted from a ruling by a North Carolina trial court, during the third quarter of 2022, that certain excess insurance carriers associated with our asbestos product liability matters are not required to cover the costs of defending suits that are dismissed without an indemnity payment. During the nine months ended October 2, 2021, we recorded a charge of $2.7 related to revisions of recorded assets for asbestos-related claims. There were no other changes in estimates associated with our assets and liabilities related to our asbestos product liability matters during the three and nine months ended October 2, 2021 and three and nine months ended September 26, 2020.

Large Power Projects in South Africa

Overview - Since 2008, DBT ~~has~~had been executing ~~contracts~~ on two large power projects in South Africa (Kusile and Medupi)., on which it has now substantially completed its scope of work. Over such time, the business environment surrounding these projects ~~has been~~was 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~~DBT's remaining responsibilities ~~related~~relate largely to resolution of various claims, primarily between itself and one of its prime contractors, Mitsubishi Heavy Industries Power—ZAF (f.k.a. Mitsubishi-Hitachi Power Systems Africa (PTY) LTD), or “MHI.”

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

Claims by DBT - DBT has asserted claims against MHI of approximately South African Rand ~~1,100.0~~1,000.0 (or $~~72.5~~)$56.0). As DBT prepares these claims for dispute resolution processes, the amounts, along with the characterization, of the claims could change. Of these claims, South African Rand ~~566.5~~732.6 (or $~~37.4~~)$41.0), which is inclusive of the amounts awarded in the adjudications referred to below, are currently proceeding through contractual ~~dispute~~dispute resolution processes and DBT is likely to initiate additional dispute resolution 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 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~~$4.3 of bonds upon the completion of certain administrative ~~milestones;~~milestones (which have been completed); (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 2two 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~~statements of ~~operations for the nine months ended October 2, 2021.~~operations. On July 5, 2021, DBT received notice from MHI of its intent to seek final and binding arbitration in this matter. The hearing on this matter is expected to occur in December 2022.

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~~statements of ~~operations for the nine months ended October 2, 2021.~~operations.

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. In September 2020, MHI made a demand on certain bonds issued in its favor by DBT, based solely on these alleged defects, but without further substantiation or other justification (see further discussion below). On December 30, 2020, MHI notified DBT of its intent to take these claims to binding ~~arbitration.~~arbitration even though the vast majority of these claims had not been brought appropriately before a dispute adjudication board as required under the relevant subcontracts. On June 4, 2021, in connection with the arbitration, DBT received a revised version of the claim. Similar to the interim claim, we believe the vast majority of the damages summarized in the revised claim are unsubstantiated and, thus, any loss for the majority of these claims is considered remote. ~~For the~~The remainder of the ~~claims~~damages in ~~both the interim notification and~~ the revised ~~version, which~~claim largely appear to be direct in nature (approximately South African Rand ~~950.0~~790.0 or $~~62.6~~),$44.2). On September 21, 2022, an arbitration tribunal ruled that only South African Rand 349.6 (or $19.6) of MHI's revised claim had been brought appropriately before a dispute adjudication board as required under the relevant subcontracts, with MHI's other claims dismissed from the arbitration proceedings. DBT has numerous defenses and, thus, we do not believe that DBT has a probable loss associated with any of these claims. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims. DBT intends to vigorously defend itself against these claims. Although it is reasonably possible that 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 $~~26.9~~)$22.8) 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~~potential loss or range of potential loss.

MHI has made other claims against DBT totaling South African Rand 176.2 (or $~~11.6~~).$9.9) and has also alleged that it has incurred additional remedial costs related to portions of DBT's scope of work. DBT has numerous defenses against these claims, as well as claims, if any, that may result from the above unsubstantiated allegations, and, thus, we do not believe that DBT has a probable loss associated with these ~~claims.~~claims and allegations. As such, no loss has been recorded in the condensed consolidated financial statements with respect to these ~~claims.~~claims and allegations.

Bonds Issued in Favor of MHI - DBT is obligated with respect to bonds issued by banks in favor of MHI. In September of 2020, MHI made a demand, and received payment of South African Rand 239.6 (or $14.3 at the time of payment), on certain of these bonds. In May 2021, MHI made an additional demand, and received payment of South African Rand 178.7 (or $12.5 at the time of payment), on certain of the remaining bonds at such time. In both cases, we funded the payment as required under the terms of the bonds and our senior credit agreement. In its demands, MHI purported that DBT failed to carry out its obligations to rectify certain alleged product defects and that DBT failed to meet certain project milestones. DBT denies liability for such allegations and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand 418.3 (or $~~27.6~~)$23.4) that has been paid. ~~However, given the extent and complexities~~On October 11, 2022, a dispute adjudication panel ruled MHI drew on amounts in excess of the ~~claims between~~bond values stipulated in the contracts and was required to refund DBT ~~and MHI, reimbursement of the~~ South African Rand ~~418.3~~90.8 (or ~~$27.6) is unlikely to occur over~~$5.1) of the ~~next twelve months. As such, we~~previously demanded amounts, plus interest of South African Rand 12.5 (or $0.7). MHI paid these amounts on October 14, 2022. We have reflected the remaining South African Rand ~~418.3~~327.5 (or $18.3) within ~~$27.6~~“~~) as a non-current asset within our~~Assets of DBT and Heat Transfer” on the condensed consolidated balance ~~sheet~~sheets as of October 2,1, 2022 and December 31, 2021.

The remaining bond of South Africa Rand 29.2 (or $~~1.9~~1.6) issued to MHI as a performance guarantee could be exercised by MHI for an alleged breach of DBT's obligation. In the event that MHI were to receive payment on a portion, or all, of the remaining bond, we would be required to reimburse the issuing bank.

In addition to ~~this~~the remaining bond, SPX ~~Corporation~~Technologies, Inc. has guaranteed DBT’s performance on these projects to the prime 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~~statements of ~~operations for the nine months ended October 2, 2021.~~operations.

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 October 2, 2021, we~~We had liabilities for site investigation and/or remediation at 2518 sites ~~(25 sites at December 31, 2020)~~ that we own or control, or formerly owned and ~~controlled.~~controlled, as of October 1, 2022 and December 31, 2021. In addition, while we believe that we maintain adequate accruals to cover the costs of site investigation and/or remediation, we cannot provide assurance that new matters, developments, laws and regulations, or stricter interpretations of existing laws and regulations will not materially affect our business or operations in the future.

Our environmental accruals cover anticipated costs, including investigation, remediation, and 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 October 2,1, 2022 and December 31, 2021, we have been notified thatthat we are potentially responsible and have received other notices of potential liability pursuant to various ~~environmental la~~wsenvironmental laws at 119 sites, at which the liability has not been settled and all of which ~~9 sites~~ have been active in the past few years. These laws may impose liability on certain persons that are considered jointly and severally liable for the costs of investigation and remediation of hazardous substances present at these sites, regardless of fault or legality of the original disposal. These persons include the present or former owners or operators of the site and companies that generated, disposed of or arranged for the disposal of hazardous substances at the site. We are considered a “de minimis” potentially responsible party at most of the sites, and we estimate that our aggregate liability, if any, related to these sites is not material to our condensed consolidated financial statements. We conduct extensive environmental due diligence with respect to potential acquisitions, including environmental site assessments and such further testing as we may deem warranted. If an environmental matter is identified, we estimate the cost and either establish a liability, purchase insurance or obtain an indemnity from a financially sound seller; however, in connection with our acquisitions or dispositions, we may assume or retain significant environmental liabilities, some of which we may be unaware. The potential costs related to these environmental matters and the possible impact on future operations are uncertain due in part to the complexity of government laws and regulations and their interpretations, the varying costs and effectiveness of various clean-up technologies, the uncertain level of insurance or other types of recovery, and the questionable level of our responsibility. We record a liability when it is both probable and the amount can be reasonably estimated.

In our opinion, after considering accruals established for such purposes, the cost of remedial actions for compliance with the present laws and regulations governing the protection of the environment are not expected to have a material impact, individually or in the aggregate, on our financial position, results of operations or cash flows.

Self-insured Risk Management Matters

We are self-insured for certain of our workers’ compensation, automobile, product and general liability, disability and health costs, and we believe that we maintain adequate accruals to cover our retained liability. Our accruals for risk management matters are determined by us, are based on claims filed and estimates of claims incurred but not yet reported, and generally are not discounted. We consider a number of factors, including third-party actuarial valuations, when making these determinations. We maintain third-party stop-loss insurance policies to cover certain liability costs in excess of predetermined retained amounts. The insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against loss exposure.

(16) INCOME AND OTHER TAXES

Uncertain Tax Benefits

As of October ~~2, 2021~~1, 2022, we had gross unrecognized tax ~~benefits~~benefits of ~~$7.3~~$6.3 (net unrecognized tax benefits of ~~$6.4~~)$5.6). All of these net unrecognized tax benefits 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 October ~~2, 2021,~~1, 2022, gross accrued interest totaled ~~$3.1~~$2.8 (net accrued interest of ~~$2.5~~)$2.3). As of October ~~2, 2021,~~1, 2022, we had no accrual for penalties included in our unrecognized tax benefits.

Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to ~~$5.0. Th~~e$5.0. 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 October ~~2, 2021,~~1, 2022, we recorded an income tax ~~provision~~benefit of ~~$3.7~~$2.5 on ~~$11.4~~$10.0 of pre-tax income from continuing operations, resulting in an effective rate of ~~32.5%~~(25.0)%. This compares toto an income tax provision for the three months ended ~~September 26, 2020~~October 2, 2021 of ~~$3.1~~ $4.2 on ~~$18.7~~$18.1 of pre-tax income from continuing operations, resulting in an effective rate of ~~16.6%~~23.2%. The most significant item impacting the income tax benefit for the third quarter of 2022 was a tax benefit of $4.2 related to the release of valuation allowances recognized against certain deferred tax assets, as we now expect to realize these deferred tax assets due to the recent Holding Company Reorganization (see Note 1). The most significant item impacting the income tax provision for the third quarter of 2021 was $0.7 of expense related to thethe 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.~~

For the nine months ended October ~~2, 2021,~~1, 2022, we recorded an income tax provision of ~~$9.8~~of $4.5 on ~~$51.2~~$49.1 of pre-tax income from continuing operations, resulting in an effective rate of ~~19.1%~~9.2%. This compares to an income tax provision for the nine months ended ~~September 26, 2020~~October 2, 2021 of ~~$8.4~~$11.9 on ~~$48.7~~$66.5 of pre-tax income from continuing operations, resulting in an effective rate of ~~17.2%~~17.9%. The most significant items impacting the income tax provision during the first nine months of 2022 were (i) the $4.2 of tax benefit noted above related to the release of valuation allowances resulting from the Holding Company Reorganization, (ii) $0.7 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, and (iii) $0.7 tax benefits related to revisions to liabilities for uncertain tax positions. 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) $1.5 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.

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

~~The~~During the second quarter of 2021, the Internal Revenue Service (“IRS”) concluded its audit of our 2013, 2014, 2015, 2016 and 2017 federal income tax returns. ~~In connection with such, we recorded a tax benefit of $2.2 during the three months ended July 3, 2021~~We believe contingencies related to the ~~resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims.~~

subsequent returns are adequately provided for.

State income tax returns generally are subject to examination for a period of three to five years after filing the respective tax returns. The impact on such tax returns of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. We have various state income tax returns in the process of examination. We believe any uncertain tax positions related to these examinations have been adequately provided for.

We have various foreign income tax returns under examination. ~~The most significant of these is in Germany for the 2010 through 2014 tax years.~~ We believe that any uncertain tax positions related to these examinations have been adequately provided for.

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

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

On March 27, 2020, the CARES Act was enacted into law and provides 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 October 1, 2022 and December 31, 2021.

As provided within the CARES Act, we deferred payments of our social security payroll taxes for the period March 27, 2020 to December 31, 2020, with such deferral totaling $3.7 as of October 1, 2022. This amount is required to be paid by the end of 2022.

(17) FAIR VALUE

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

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

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

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

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

Valuation ~~Methodologies~~Methods 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. These guarantees and bonds 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 related to lease obligations and foreign tax matters in existence at the time of sale. Balcke Dürr and the acquirer of Balcke Dürr provided us an indemnity in the event that any of the bonds were called or payments were made under the guarantees. Also, at the time of sale, Balcke Dürr provided cash collateral of Euro 4.0 and the parent company of the buyer provided a guarantee of Euro 5.0 as a security for the above indemnifications (E~~uro~~uro 0.0 and Euro ~~1.0, respectively,~~0.0, respectively, at October ~~2, 2021)~~1, 2022). 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~~the change in the liability and asset during the nine months ended October 2, ~~2021 and September 26, 2020.~~2021.

Nine months ended
October 2, 2021 September 26, 2020
Guarantees and Bonds Liability (1)
Indemnification Assets (1)
Guarantees and Bonds Liability (1)
Indemnification Assets (1)
Balance at beginning of year
$ 1.8 $ — $ 2.0 $ 0.3
Reduction/Amortization for the period (2)
(1.7) — (0.3) (0.2)
Impact of changes in foreign currency rates (0.1) — 0.1 —
Balance at end of period $ — $ — $ 1.8 $ 0.1


		Nine months ended
	October 2, 2021
		Guarantees and Bonds Liability (1)		Indemnification Assets (1)
Balance at beginning of year		$	1.8	$	—
Reduction/Amortization for the period (2)		(1.7)		—
Impact of changes in foreign currency rates		(0.1)		—
Balance at end of period		$	—	$	—

___________________________

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

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

Contingent Consideration for Sensors & Software, ECS, and ~~ECS~~ULC Acquisitions — - In connection with the ~~acquisitions~~acquisition of Sensors & Software, ~~and ECS,~~ the ~~respective~~ sellers ~~are~~were eligible for additional cash consideration of up to ~~$3.9 and~~ $~~16.8, respectively,~~4.0, with payment of such contingent consideration dependent upon the achievement of certain milestones. The estimated fair value of such contingent consideration ~~is $0.7~~totaled $1.3, and was paid during the quarter ended April 2, 2022.

In connection with the acquisition of ECS, the seller was eligible for additional cash consideration of up to $13.5, with payment of such contingent consideration dependent upon the achievement of certain milestones. The estimated fair value of such contingent consideration was $8.2 reas of the date of acquisition. During the fourth quarter of 2021, we concluded that the probability of achieving the financial performance milestone had lessened due to a delay in the execution of certain large

~~spectively,~~

orders, resulting in a reduction of the contingent fair value/liability of $6.7. During the first and second quarters of 2022, we further reduced the fair value/liability by $0.9 and $0.4, respectively, with such amounts recorded to "Other operating (income) expense, net." The estimated fair value of such contingent consideration was $0.0 and $1.5 at October 1, 2022 and December 31, 2021, respectively, with the latter amount reflected as ~~liabilities~~a liability within ~~our~~the respective condensed consolidated balance ~~sheets.~~sheet. We estimated the fair value of the contingent consideration for ~~these acquisitions~~this acquisition based on the probability of ~~Sensors & Software and~~ ECS achieving the applicable milestones.

As relates to the ULC acquisition, and 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 recorded to “Other operating (income) expense, net.”

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.

During the quarter ended October 2, 2021, we concluded that the lack of achievement of the milestones mentioned above for the ULC acquisition, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill. As such, we performed a quantitative analysis on ULC’s indefinite-lived intangible assets and goodwill during the third quarter of 2021. Based on such analysis, 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 “Impairment of goodwill and intangible assets” of $24.3 during the quarter, with $23.3 related to goodwill and the remainder to trademarks. Refer to Note 9 for additional details.

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

As of October ~~2, 2021,~~1, 2022, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities. Similarly, there has been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risks.

Equity Security — We estimate the fair value of an equity security that we hold utilizing a practical expedient under existing guidance, with such estimated fair value based on our ownership percentage applied to the net asset value of the investee as presented in the investee’s most recent audited financial statements. During the three and nine months ended

October 1, 2022 and October 2, 2021, we recorded gains (losses) of $(7.4) and ~~September 26, 2020, we recorded a gain of~~$(3.0), respectively and $1.6 and $9.0, respectively ~~and $2.1 and $7.4, respectively,~~ to “~~Other~~“Other income ~~net~~”(expense), net” to reflect ~~an increase~~the change in the estimated fair value of the equity security. As of October ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, the equity security had an estimated fair value of ~~$36.0~~$35.8 and ~~$27.0,~~$38.8, respectively.

Indebtedness and Other — The estimated fair value of our debt instruments as of October ~~2, 2021~~1, 2022 and December 31, ~~2020~~2021 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments. See Note 12 for further details.

(18) SUBSEQUENT EVENT

On November 1, 2022, SPX divested three wholly-owned subsidiaries (“the subsidiaries”) that hold all of its asbestos liabilities and certain assets, including related insurance assets, to Canvas Holdco LLC (“Canvas”), an entity formed by a joint venture of Global Risk Capital LLC and an affiliate of Premia Holdings Ltd. In connection with the transaction, SPX contributed $138.8 in cash to the subsidiaries, financed with cash on hand; while Canvas made a capital contribution to the subsidiaries of $8.0. SPX anticipates that the divestiture will result in a loss of approximately $70.0 to be recorded in the fourth quarter of 2022, which will include the write-off of certain deferred income tax assets recorded by the subsidiaries.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (in ~~millions)~~millions, except share data)

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~~the impact of the COVID-19 pandemic and governmental and other actions taken in response; the uncertainty of claims resolution with respect to the large power projects in South Africa, as well as claims with respect to asbestos, environmental and other contingent liabilities; cyclical changes and specific industry events in our markets; economic impacts from continued or escalating geopolitical tensions; changes in anticipated capital investment and maintenance expenditures by customers; availability, limitations or cost increases of raw materials and/or commodities that cannot be recovered in product pricing; the impact of competition on profit margins and our ability to maintain or increase market share; inadequate performance by third-party suppliers and subcontractors for outsourced products, components and services and other supply-chain risks; cyber-security risks; risks ~~stemming from~~with respect to the protection of intellectual property, including with respect to our ~~internal operations,~~digitalization initiatives; the impact of overruns, inflation and the incurrence of delays with respect to long-term fixed-price contracts; defects or errors in current or planned products; domestic economic, political, legal, accounting and business developments adversely affecting our business, including regulatory ~~risks, and~~changes; changes in worldwide economic conditions; uncertainties with respect to ~~costs~~our ability to identify acceptable acquisition targets; uncertainties surrounding timing and successful completion of ~~raw materials, pricing pressures, pension funding requirements, integration of~~any announced acquisition or disposition transactions, including with respect to integrating acquisitions and ~~changes in~~achieving cost savings or other benefits from acquisitions; the ~~economy, as well as the impacts~~impact of ~~the coronavirus disease (the “COVID-19 pandemic”)~~retained liabilities of disposed businesses; potential labor disputes; and ~~governmental responses to stem further outbreaks of the COVID-19 pandemic, which is further discussed below~~extreme weather conditions and innatural and other ~~sections of this document.~~disasters. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors, and forward-looking statements should not be relied upon as a prediction of actual results. In addition, management’s estimates of future operating results are based on our current complement of businesses, which is subject to change as management selects strategic markets.

All the forward-looking statements are qualified in their entirety by reference to the factors discussed under the heading “Risk Factors” in our ~~2020~~2021 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.

COVID-19 PANDEMIC, SUPPLY CHAIN DISRUPTIONS, LABOR SHORTAGES, AND ~~OTHER ECONOMIC FACTORS~~COST INCREASES

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

POTENTIAL IMPACTS OF RUSSIA/UKRAINE CONFLICT

The Russia/Ukraine conflict, and governmental actions implemented in response to the conflict, have not had ana significant adverse impact on our ~~consolidated~~operating results ~~of operations in the first half of 2020, with diminishing impacts during the second half of 2020 and~~ during the first nine months of 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, thus, resulted in lower absorption of manufacturing costs and delays in shipments to customers during the quarter. Our businesses are also experiencing increased costs for certain components, commodities, and services and, in some cases, labor shortages.2022. We are ~~taking actions~~monitoring the availability of

certain raw materials that are supplied by businesses in these countries. However, at this time, we do not expect a significant adverse impact to ~~manage any additional costs and other potential impacts of these matters. We will continue to assess the actual and expected impacts and the need for further actions.~~our operating results.

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 Note 1 to our condensed consolidated financial statements for additional details.~~

▪~~Indefinite-Lived Intangible Assets and Goodwill~~

•We also concluded that the lack of achievement of the 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~~consideration of ~~$80.3~~,$81.6, net of cash acquired of $2.3.

▪~~Revenues for~~During the ~~twelve months prior~~third quarter of 2021, we agreed to a final adjustment of the ~~date~~purchase price, related to acquired working capital, resulting in our receipt of ~~acquisition totaled approximately $33.0~~.$1.3 of cash during the quarter.

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

◦Enterprise Control Systems Ltd (“ECS”)

▪Acquired on August 2, 2021 for cash ~~proceeds~~consideration 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 iswas eligible for additional cash consideration of up to ~~$16.8~~,$13.5, upon achievement of certain financial performance milestones.

•The estimated fair value of such contingent consideration was $8.2 as of the date of the acquisition.

•During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of certain large orders, resulting in a reduction of the estimated fair value/liability of $6.7.

•During the first and second quarters of 2022, we further reduced the estimated fair value/liability by $0.9 and $0.4, respectively, with such amounts recorded to “Other operating (income) expense, net.”

•As of October 1, 2022, the estimated fair value/liability related to the contingent consideration was $0.0.

▪Post-acquisition operating results of ECS are included within our Detection and Measurement reportable segment.

◦Cincinnati Fan & Ventilator Co., Inc. (“Cincinnati Fan”)

▪Acquired on December 15, 2021 for cash consideration of $145.2, net of cash acquired of $2.5.

▪During the second quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receipt of $0.4 of cash during the quarter.

▪Post-acquisition operating results of Cincinnati Fan are included within our HVAC reportable segment.

◦International Tower Lighting, LLC (“ITL”)

▪Acquired on March 31, 2022 for cash consideration of $41.8, net of cash acquired of $1.1.

▪During the third quarter of 2022, we agreed to a final adjustment of the purchase price, related to acquired working capital, resulting in the receipt of $1.4 of cash during the quarter.

▪Post-acquisition operating results of ITL are included within our Detection and Measurement reportable segment.

•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 during the third quarter of ~~$357.7~~2021 of $355.0 to “~~Gain~~“Gain (loss) on disposition of discontinued operations, net of tax.”

◦During the fourth quarter of 2021, we increased the gain by $27.2, with the additional gain related primarily to the utilization of income tax benefits associated with liquidating certain recently acquired entities.

◦During the first quarter of 2022, we paid $13.9 to the buyer of Transformer Solutions related primarily to the settlement of the final working capital balances of the business.

•~~Change in Segment Reporting Structure~~Transfer of Postretirement Life Insurance Benefit Obligation

◦On February 17, 2022, we transferred our obligation for life insurance benefits under our postretirement benefit plans to an insurance carrier for total cash consideration of $10.0.

◦We paid $9.0 at the time of the transfer and an additional $1.0 during the second quarter of 2022.

◦In connection with the ~~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.~~transfer, we:

▪~~In connection with the rulings, DBT received South African Rand~~ ~~126.6~~ ~~(or $8.6 at the time~~Recorded a net charge of ~~payment~~)$0.3 within our first quarter 2022 operating results; 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.~~

3337

▪~~Under~~Have eliminated the ~~terms of the bonds~~(i) third-party cost 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~~(ii) internal resource requirements associated with administering these ~~claimed damages.~~

benefits.

◦See Note 1511 to our condensed consolidated financial statements for additional details.

•~~Cash Receipts in the Third Quarter of 2021~~Settlement and Actuarial Losses - U.S. Pension Plan (“U.S. Plan”)

◦~~Received federal income tax refunds~~In connection with the sale of ~~$22.4.~~Transformer Solutions, a significant number of participants of the U.S. Plan who were employees of Transformer Solutions elected to receive lump-sum payments from the U.S. Plan.

◦~~Received~~The extent of these lump-sum payments, combined with other lump-sum payments that were made by the U.S. Plan during the first nine months of 2022, required us to record settlement and actuarial losses of $2.4 and $6.2 during the three and nine months ended October 1, 2022, respectively.

◦See Note 11 to our condensed consolidated financial statements for additional details.

•Repurchases of Common Stock — During the second quarter of 2022, we repurchased 706,827 shares of our common stock for $33.7.

•Changes in Estimated Fair Value of an Equity Security

◦We recorded losses of $7.4 and $3.0, respectively, for the three and nine months ended October 1, 2022.

◦See Note 17 to our condensed consolidated financial statements for additional details.

•Charge for Asbestos-Related Matter

•During the third quarter of 2022, we received a ruling from a North Carolina trial court that certain excess insurance ~~proceeds of $15.0~~carriers associated with our asbestos product liability matters are not required to cover the ~~settlement~~costs of defending suits that are dismissed without an ~~asbestos insurance coverage matter.~~indemnity payment.

•As a result of this ruling, we recorded charges of $21.7 during the quarter, with $16.5 reflected in “Income from continuing operations before income taxes” and the remainder in “Income (loss) on disposition of discontinued operations, net of tax.”

OVERVIEW OF OPERATING RESULTS

Revenues for the three and nine months ended October ~~2, 2021~~1, 2022 totaled ~~$285.8~~$370.5 and ~~$870.4,~~$1,031.6, respectively, compared to ~~$268.3~~$285.7 and ~~$783.1~~$869.5 during the respective periods in ~~2020.~~2021. The increase in revenues during the three and nine months ended October ~~2, 2021,~~1, 2022, compared to the respective prior-year periods, was due ~~primarily~~ to organic revenue growth within our HVAC and Detection and Measurement reportable segments and the impact of the ~~ULC, Sensors & Software,~~Cincinnati Fan, Sealite, ECS and ~~ECS acquisitions~~ ~~and an increase in organic revenue~~.ITL acquisitions. The increase in organic revenue within the HVAC reportable segment was ~~due primarily to higher~~driven by increased sales of heating and ~~underground pipe~~cooling products, associated primarily with price increases and, ~~locator products, partially offset by lower sales of bus fare collection systems. During~~to a lesser extent, volume increases. Organic growth within the ~~first half of 2020, sales of heating~~Detection and ~~underground pipe and locator products were impacted negatively by the COVID-19 pandemic. The decline in sales of bus fare collection systems~~Measurement reportable segment was due ~~primarily~~ to ~~the timing~~continued strong order trends for our short-cycled businesses and execution of large projects aswithin the ~~extent of such projects can fluctuate from period to period.~~fare collection, communication technologies and obstruction lighting businesses.

During the three and nine months ended October ~~2, 2021,~~1, 2022, we generated operating income of ~~$11.8~~$37.3 and ~~$44.7,~~$75.9, respectively, compared to ~~$20.4~~$17.7 and ~~$54.0~~$59.8 for the respective periods in ~~2020.~~2021. The ~~decrease~~increase in operating income during the three months ended October ~~2, 2021,~~1, 2022, compared to the respective ~~prior-year~~ period in 2021, was due primarily to ~~additional amortization expense~~ an increase in income within our HVAC and ~~one-time costs (e.g., charges for inventory adjusted to fair value at the acquisition date)~~Detection and Measurement reportable segments associated with ~~recent acquisitions~~the increase in revenue noted above. This increase in operating income was partially offset by higher corporate expense associated with investments in various strategic and ~~lower absorption of manufacturing costs at certain of our businesses due to disruptions in their supply chain.~~transformational initiatives. The ~~decrease~~increase in operating income during the nine months ended October ~~2, 2021,~~1, 2022, compared to the respective ~~prior-year~~ period in 2021, was due primarily to ~~higher~~the revenue increases noted above, offset by (i) lower absorption of manufacturing costs within the HVAC reportable segment during the first half of 2022 associated with supply chain delays and labor shortages and (ii) an increase in corporate expense ~~related~~ toassociated with increased investments in ~~continuous improvement~~various strategic and ~~other strategic initiatives and an increase in incentive compensation expense.~~transformational initiatives.

Cash flows ~~from~~used in operating activities associated with continuing operations totaled ~~$94.0~~$89.4 for the nine months ended October ~~2, 2021,~~1, 2022, compared to cash flows from operating activities of ~~$11.0~~$95.6 during the nine months ended ~~September 26, 2020.~~October 2, 2021. The ~~increase~~decrease in cash flows from operating activities was due primarily to ~~improved cash flows within our heating and underground pipe and locator businesses associated~~(i) income tax payments, net of refunds, of $55.7 (compared to income tax refunds, net, of $13.7 during the nine months ended October 2, 2021), with ~~improved profitability and decreases in working capital, as well as third quarter 2021 cash receipts~~a significant portion of the 2022 payments related to ~~federal tax refunds~~the gain on sale of ~~$22.4 and insurance proceeds~~Transformer Solutions; (ii) elevated purchases of ~~$15.0~~inventory components in order to manage the potential risk associated with the ~~settlement~~current supply chain environment; (iii) decreases in cash flows at certain of our project-related businesses, as cash receipts for these businesses are often subject to contractual milestones that can impact cash receipts from period to period; (iv) net payments for asbestos-related matters of $15.5 (compared to net recoveries of $4.7 during the nine months ended October 2, 2021); and (v) cash payments of $10.0 in connection with the transfer of our postretirement life insurance benefit obligation to an ~~asbestos~~ insurance ~~coverage matter.~~carrier.

RESULTS OF CONTINUING OPERATIONS

The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our ~~2020~~2021 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 ~~2021~~2022 are April 2, July 2 and October 1, compared to the respective April 3, July 3, and October 2, ~~compared to the respective March 28, June 27 and September 26, 2020~~2021 dates. We had ~~five more days~~one less day in the first quarter of ~~2021~~2022 and will have ~~six fewer days~~one more day in the fourth quarter of ~~2021~~2022 than in the respective ~~2020~~2021 periods. It is not practicable to estimate the impact of the ~~five additional days~~one less day on our consolidated operating results for the nine months ended October ~~2, 2021,~~1, 2022, when compared to the consolidated operating results for the ~~2020~~2021 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 heating 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/divestiture~~s, and ~~the impact of a reduction in revenue during the second quarter of 2021 associated with the settlement of claims on a legacy dry cooling project.~~ acquisitions/divestitures. We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented as, when 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 1, 2022 and October 2, 2021, ~~and September 26, 2020, respectively,~~ including the reconciliation of organic revenue increase to the net revenue ~~increase~~:increase:


		Three months ended							Nine months ended								Three months ended							Nine months ended
		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change		October 1, 2022			October 2, 2021			% Change	October 1, 2022			October 2, 2021			% Change
Revenues	Revenues	$	285.8		$	268.3		6.5	$	870.4		$	783.1		11.1	Revenues	$	370.5		$	285.7		29.7	$	1,031.6		$	869.5		18.6
Gross profit	Gross profit	94.0			91.7			2.5	300.0			269.7			11.2	Gross profit	133.1			95.8			38.9	361.7			302.5			19.6
% of revenues	% of revenues	32.9		%	34.2		%		34.5		%	34.4		%		% of revenues	35.9		%	33.5		%		35.1		%	34.8		%
Selling, general and administrative expense	Selling, general and administrative expense	76.2			67.7			12.6	234.7			206.2			13.8	Selling, general and administrative expense	89.1			72.7			22.6	261.6			223.3			17.2
% of revenues	% of revenues	26.7		%	25.2		%		27.0		%	26.3		%		% of revenues	24.0		%	25.4		%		25.4		%	25.7		%
Intangible amortization	Intangible amortization	5.5			3.3			66.7	16.0			8.3			92.8	Intangible amortization	6.7			5.5			21.8	23.1			16.0			44.4
Impairment of goodwill and intangible assets																Impairment of goodwill and intangible assets	—			24.3			*	—			24.3			*
Special charges, net	Special charges, net	0.5			0.3			66.7	1.9			1.6			18.8	Special charges, net	—			(0.1)			*	0.1			0.7			*
Other operating (income) expense		—			—			*	2.7			(0.4)			*
Other operating (income) expense, net																Other operating (income) expense, net	—			(24.3)			*	1.0			(21.6)			*

Other income, net		2.9			2.7			7.4	17.2			8.5			102.4
Other income (expense), net																Other income (expense), net	(24.6)			3.8			*	(19.8)			17.6			*
Interest expense, net	Interest expense, net	(3.3)			(4.4)			(25.0)	(10.7)			(13.8)			(22.5)	Interest expense, net	(1.6)			(3.4)			(52.9)	(5.9)			(10.7)			(44.9)

Loss on amendment/refinancing of senior credit agreement																Loss on amendment/refinancing of senior credit agreement	(1.1)			—			*	(1.1)			(0.2)			*
Income from continuing operations before income taxes	Income from continuing operations before income taxes	11.4			18.7			(39.0)	51.2			48.7			5.1	Income from continuing operations before income taxes	10.0			18.1			(44.8)	49.1			66.5			(26.2)
Income tax provision		(3.7)			(3.1)			19.4	(9.8)			(8.4)			16.7
Income tax (provision) benefit																Income tax (provision) benefit	2.5			(4.2)			*	(4.5)			(11.9)			(62.2)
Income from continuing operations	Income from continuing operations	7.7			15.6			(50.6)	41.4			40.3			2.7	Income from continuing operations	12.5			13.9			(10.1)	44.6			54.6			(18.3)

Components of revenue increase:	Components of revenue increase:															Components of revenue increase:
Organic	Organic							0.7							5.4	Organic							19.2							9.0
Foreign currency	Foreign currency							0.7							1.0	Foreign currency							(1.9)							(1.4)
Acquisitions	Acquisitions							5.1							5.3	Acquisitions							12.4							11.0
Settlement of legacy dry cooling contract								—							(0.6)

Net revenue increase	Net revenue increase							6.5							11.1	Net revenue increase							29.7							18.6

_________________________________

* Not meaningful for comparison purposes.

Revenues — For the three and nine months ended October ~~2, 2021,~~1, 2022, the increase in revenues, compared to the respective ~~period~~periods in ~~2020,~~2021, was due ~~primarily~~ to organic revenue growth within our HVAC and Detection and Measurement reportable segments and the impact of the ~~acquisitions~~Cincinnati Fan, Sealite, ECS and ITL acquisitions. The increase in organic revenue within the HVAC reportable segment was driven by increased sales of ~~Sealite, ULC, Sensors~~heating and ~~Software, and ECS~~cooling products, associated primarily with price increases and, to a lesser extent, ~~an increase in organic revenue~~volume increases. Organic growth within the Detection and ~~the favorable impact of foreign currency exchange rates. The increase in organic revenue~~Measurement reportable segment was due to ~~higher sales~~continued strong order trends for our short-cycled businesses and execution of ~~cooling products in~~large projects within the ~~Americas region, as well as higher sales of underground pipe and locator,~~fare collection, 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.~~ businesses.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 bus fare collection systems. During the first half of

2020, sales of heating and 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 timing of large projects, as the extent of such projects can fluctuate from period-to-period.

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

Gross Profit — For the three ~~and nine~~ months ended October ~~2, 2021,~~1, 2022, the increase in gross profit, compared to the respective ~~periods~~period in ~~2020,~~2021, was due primarily to the increase in revenues noted above. ~~The decrease in~~Gross profit and gross profit as a percentage of revenues, ~~during the three months ended October 2, 2021,~~ compared to the respective period in ~~2020,~~2021, were favorably impacted by (i) greater absorption of manufacturing costs due to improved productivity at certain businesses within the HVAC reportable segment and (ii) a favorable sales mix, as the revenue increase for the third quarter of 2022 was weighted towards high-margin products within our Detection and Measurement reportable segment. For the nine months ended October 1, 2022, the increase in gross profit and gross profit as a percentage of revenues, compared to the respective period in 2021, was due primarily to ~~lower absorption of manufacturing costs at~~ the ~~HVAC segment’s heating businesses associated with disruptions~~increase in ~~the supply chain.~~revenues noted above.

~~Selling,~~Selling, General and Administrative (“SG&A”) Expense — For the three and nine months ended October ~~2, 2021,~~1, 2022, the increase in SG&A expense, compared to the respective periods in ~~2020,~~2021, was 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~~above, higher corporate expense associated with ~~additional~~ increased investments in ~~connection with continuous improvement~~various strategic and ~~other strategic~~transformational initiatives, and ~~an increase~~higher travel expenses due to the easing of COVID-19 pandemic restrictions in ~~incentive compensation.~~2022.

Intangible Amortization — For the three and nine months ended October ~~2, 2021, the~~1, 2022, the increase in ~~intangible~~intangible amortization, compared to the respective periods in ~~2020,~~2021, was due to ~~the incremental~~ amortization ~~of $2.2 and $7.8, respectively,~~ related to the ~~acquisitions noted above.~~Cincinnati Fan and ITL acquisitions.

Impairment of Goodwill and Intangible Assets — Due to the lack of achievement of certain operational and financial milestones, along with lower than anticipated future cash flows, associated with our ULC acquisition, we tested ULC's goodwill and indefinite-lived intangible assets for impairment during the quarter ended October 2, 2021. 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 during the quarter ended October 2, 2021, with $23.3 related to goodwill and the remainder to trademarks.

Special Charges, net — Special charges, net, ~~related~~relate primarily to restructuring initiatives to consolidate manufacturing, distribution, sales and administrative facilities, reduce 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 ~~2021~~2022 and ~~2020.~~2021.

Other Operating (Income) Expense, net— Other operating expense, net, for the nine months ended October 1, 2022 related to asbestos-related charges of $2.3, partially offset by a reduction in the fair value/liability associated with the contingent consideration related to the ECS acquisition of $1.3. During the three and nine months ended October 2, 2021, due to the lack of achievement of certain operational and financial milestones associated with the ULC acquisition mentioned above, we concluded the seller of ULC was not entitled to any additional cash consideration (potentially up to $45.0). At the time of the acquisition, we recorded a liability of $24.3 related to the contingent consideration, which was reversed to earnings during the quarter ended October 2, 2021. Other operating income, net for the nine months ended October 2, 2021 also included charges of $2.7 related to ~~revisions~~a revision to recorded assets for asbestos-related claims. ~~Other operating income for the nine months ended September 26, 2020 related to revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.~~

Other Income (Expense), net — Other expense, net, for the three months ended October 1, 2022 was comprised primarily of (i) $16.5 of asbestos-related charges, (ii) a loss of $7.4 related to changes in the estimated fair value of an equity security we hold, (iii) pension and postretirement expense of $2.0 (inclusive of settlement and actuarial losses of $2.4), and (iv) environmental remediation charges of $1.1, partially offset by income of $1.3 derived from company-owned life insurance policies and $0.6 associated with a transition services agreement.

Other income, net, for the three months ended October 2, 2021 was ~~composed~~comprised primarily of a gain of $1.6 related to changes in the estimated fair value of an equity security we hold, and pension and postretirement income of $1.6.

Other expense, net, for the nine months ended October 1, 2022 was comprised primarily of $16.5 of asbestos-related charges, a loss of $3.0 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~~expense (inclusive of actuarial and settlement losses of $6.2) of $~~1.6,~~3.9, and environmental remediation charges of $1.1, partially offset by ~~foreign currency transaction losses~~income of$ $2.0 d~~0.8.~~erived from company-owned life insurance policies and $2.4 associated with a transition services agreement.

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

Other income, net, for the nine months ended October 2, 2021 was ~~composed~~comprised primarily of ~~a gain~~gains of $9.0 related to ~~a change~~changes in the estimated fair value of an equity ~~that~~ security we hold, pension and postretirement income of $~~4.8,~~$4.8, income derived from company-owned life insurance policies of $~~2.7~~,$2.7, and income of $~~1.7~~$1.7 related to a reduction of ~~the liability associated with~~ the parent company guarantees and bank surety bonds liability that were outstanding in connection with the 2016 sale of Balcke Dü~~rr, 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 a change in the estimated fair value of an equity security that we hold and pension and postretirement income of $2.9.rr.

Interest Expense, net — Interest expense, net, includes both interest ~~expense~~expense and interest income. The decrease in interest expense, net, during the three and nine months ended October ~~2, 2021,~~1, 2022, compared to the respective periods in ~~2020,~~2021, was primarily the result of ~~a lower average effective interest rate and~~ lower average debt balances and increased interest rates on cash balances during ~~2021.~~ the 2022 periods.

Loss on Amendment/Refinancing of Senior Credit Agreement — During the third quarter of 2022, we amended our senior credit agreement. In connection with the amendment, we recorded a charge $1.1, which consisted of the write-off of a portion of the unamortized deferred financing costs related to our senior credit facilities ($0.7) and certain expenses incurred in connection with the amendment ($0.4). During 2021, we reduced the issuance capacity of our then-existing foreign credit instrument facilities resulting in a charge of $0.2 associated with the write-off of unamortized deferred financing costs.

Income Tax ~~Provision~~(Provision) Benefit — For the three months ended October ~~2, 2021,~~1, 2022, we recorded an income tax ~~provision~~benefit of ~~$3.7~~$2.5 on ~~$11.4~~$10.0 of pre-tax income from continuing operations, resulting in an effective rate of ~~32.5%~~(25.0)%. This compares toto an income tax provision for the three months ended ~~September 26, 2020~~October 2, 2021 of ~~$3.1~~ $4.2 on ~~$18.7~~$18.1 of pre-tax income from continuing operations, resulting in an effective rate of ~~16.6%~~23.2%. The most significant item impacting the income tax benefit for the third quarter of 2022 was a tax benefit of $4.2 related to the release of valuation allowances recognized against certain deferred tax assets, as we now expect to be able to realize such deferred tax assets due to the recent Holding Company Reorganization (see Note 1 to our condensed consolidated financial statements). The most significant item impacting the income tax provision for the third quarter of 2021 was $0.7 of expense related to thethe 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.~~

3641

For the nine months ended October ~~2, 2021,~~1, 2022, we recorded an income tax provision of ~~$9.8~~of $4.5 on ~~$51.2~~$49.1 of pre-tax income from continuing operations, resulting in an effective rate of ~~19.1%~~9.2%. This compares to an income tax provision for the nine months ended ~~September 26, 2020~~October 2, 2021 of ~~$8.4~~$11.9 on ~~$48.7~~$66.5 of pre-tax income from continuing operations, resulting in an effective rate of ~~17.2%~~17.9%. The most significant items impacting the income tax provision during the first nine months of 2022 were (i) the $4.2 tax benefit noted above related to the release of valuation allowances resulting from the Holding Company Reorganization, (ii) $0.7 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, and (iii) $0.7 tax benefits related to revisions to liabilities for uncertain tax positions. 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) $1.5 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.

RESULTS OF REPORTABLE SEGMENTS ~~AND OTHER OPERATING 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 our reportable ~~segments and other operating segment.~~segments.

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

HVAC Reportable Segment


		Three months ended							Nine months ended								Three months ended							Nine months ended
		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change		October 1, 2022			October 2, 2021			% Change	October 1, 2022			October 2, 2021			% Change
Revenues	Revenues	$	179.3		$	182.6		(1.8)	$	540.3		$	510.6		5.8	Revenues	$	227.8		$	179.3		27.0	$	639.6		$	540.3		18.4
Income	Income	21.4			26.8			(20.1)	69.1			64.1			7.8	Income	30.9			23.0			34.3	71.7			71.2			0.7
% of revenues	% of revenues	11.9		%	14.7		%		12.8		%	12.6		%		% of revenues	13.6		%	12.8		%		11.2		%	13.2		%
Components of revenue increase (decrease):
Components of revenue increase:																Components of revenue increase:
Organic	Organic							(2.4)							6.0	Organic							16.3							8.6
Foreign currency	Foreign currency							0.6							0.7	Foreign currency							(0.6)							(0.4)
Settlement of legacy dry cooling contract								—							(0.9)
Net revenue increase (decrease)								(1.8)							5.8
Acquisition																Acquisition							11.3							10.2
Net revenue increase																Net revenue increase							27.0							18.4

Revenues — ForFor the three ~~months ended October 2, 2021, the decrease in revenues, compared to the respective period in 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,~~1, 2022, the increase in revenues, compared to the respective ~~period~~periods in ~~2020,~~2021, was due primarily to an increase in organic revenues within our heating business and, to a lesser extent, within our cooling business and the impact of the acquisition of Cincinnati Fan. The 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)~~was due primarily to increased pricing and, to 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.~~lesser extent, volume increases.

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 revenue decline noted above and a decline in manufacturing cost absorption at the segment’s heating businesses associated with disruptions in the supply chain.

~~For the nine months ended October 2, 2021,~~1, 2022, the increase in income and margin, compared to the respective period in ~~2020,~~2021, was due primarily to the increase in revenues noted ~~above.~~above and greater absorption of manufacturing costs at certain of the segment’s businesses due to improved productivity during the quarter, partially offset by an increase in amortization expense of $1.6 resulting from the Cincinnati Fan acquisition. For the nine months ended October 1, 2022, the increase in income, compared to the respective period in 2021, was due primarily to the increase in revenue noted above, while the decline in margin was due primarily to lower absorption of manufacturing costs during the first half of 2022 due to supply chain delays and labor shortages and an increase in amortization expense of $8.3 associated with the Cincinnati Fan acquisition.

Backlog — The segment had backlog of ~~$204.0~~$287.7 and ~~$182.6~~$204.0 as of October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ respectively. Backlog associated with Cincinnati Fan totaled $34.1 as of October 1, 2022.

3742

Detection and Measurement Reportable Segment


		Three months ended							Nine months ended								Three months ended							Nine months ended
		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change		October 1, 2022			October 2, 2021			% Change	October 1, 2022			October 2, 2021			% Change
Revenues	Revenues	$	106.4		$	85.2		24.9	$	329.2		$	269.2		22.3	Revenues	$	142.7		$	106.4		34.1	$	392.0		$	329.2		19.1
Income	Income	9.9			14.2			(30.3)	41.3			48.4			(14.7)	Income	25.7			9.9			159.6	63.2			41.3			53.0
% of revenues	% of revenues	9.3		%	16.7		%		12.5		%	18.0		%		% of revenues	18.0		%	9.3		%		16.1		%	12.5		%
Components of revenue increase:	Components of revenue increase:															Components of revenue increase:
Organic	Organic							7.6							5.2	Organic							24.0							9.6
Foreign currency	Foreign currency							1.1							1.6	Foreign currency							(4.3)							(2.9)
Acquisitions	Acquisitions							16.2							15.5	Acquisitions							14.4							12.4
Net revenue increase	Net revenue increase							24.9							22.3	Net revenue increase							34.1							19.1

Revenues — For the three and nine months ended October ~~2, 2021,~~1, 2022, the increase in revenues, compared to the respective periods in ~~2020,~~2021, was due primarily to organic growth across all product lines and the impact of the acquisitions of Sealite, ECS, ~~Sealite, ULC,~~ and ~~Sensors~~ITL. The organic growth was driven by continued strong order trends for our short-cycled businesses 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~~execution of ~~higher sales of underground pipe and locator products and, to a lesser extent, higher sales of~~large projects within our fare collection, 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.businesses.

Income — For the three and nine months ended October ~~2, 2021,~~1, 2022, the ~~decrease~~increase in income and margin, compared to the respective periods in ~~2020,~~2021, 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~~increase in ~~revenue~~revenues noted above.

Backlog — The segment had backlog of ~~$176.5~~$275.1 and ~~$89.5~~$176.5 as of October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ respectively. ~~Aggregate backlog related to Sensors and Software, Sealite and ECS, businesses acquired after September 26, 2020,~~Backlog associated with ITL totaled ~~$50.2~~$0.4 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 October 2, 2021, the decrease in revenues, compared to the respective periods in 2020, was due to lower sales related to the large power projects in South Africa, as these projects are in the latter stages of completion.1, 2022.

~~Loss~~ — For the three and nine months ended October 2, 2021, the loss decreased, compared to the respective periods in 2020, as a result of the wind-down activities noted above for 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~~ ~~— The operating segment had a backlog of~~ ~~$2.9~~ ~~and~~ ~~$3.9~~ ~~as of October 2, 2021 and September 26, 2020, respectively.~~

CORPORATE AND OTHER EXPENSES


		Three months ended							Nine months ended								Three months ended							Nine months ended
		October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change		October 1, 2022			October 2, 2021			% Change	October 1, 2022			October 2, 2021			% Change
Total consolidated revenues	Total consolidated revenues	$	285.8		$	268.3		6.5	$	870.4		$	783.1		11.1	Total consolidated revenues	$	370.5		$	285.7		29.7	$	1,031.6		$	869.5		18.6
Corporate expense	Corporate expense	11.5			11.8			(2.5)	39.0			33.8			15.4	Corporate expense	17.2			11.9			44.5	50.2			39.9			25.8
% of revenues	% of revenues	4.0		%	4.4		%		4.5		%	4.3		%		% of revenues	4.6		%	4.2		%		4.9		%	4.6		%
Long-term incentive compensation expense	Long-term incentive compensation expense	3.4			3.2			6.3	9.5			9.6			(1.0)	Long-term incentive compensation expense	2.1			3.4			(38.2)	7.7			9.4			(18.1)

Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters. The increase in corporate expense during the three and nine months ended October ~~2, 2021,~~1, 2022, compared to the respective periods in ~~2020,~~2021, was due primarily to increased investments in ~~continuous improvement~~various strategic and ~~other strategic initiatives and an increase in incentive compensation expense.~~transformational initiatives.

Long-Term Incentive Compensation Expense — Long-term incentive compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes. For the three and nine months ended October ~~2, 2021,~~1, 2022, the ~~increase~~decrease in long-term incentive compensation expense, compared to the respective ~~period~~periods in ~~2020,~~2021, 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~~forfeitures resulting from various participant resignations during the second and third quarters of ~~award forfeitures during 2021. See Note 14 to our condensed consolidated financial statements for additional details.~~2022.

LIQUIDITY AND FINANCIAL CONDITION

Listed below are the cash flows from (used in) operating, investing, and financing activities of continuing operations and cash flows from (used in) discontinued operations, as well as the net change in cash and equivalents for the nine months ended October 1, 2022 and October 2, ~~2021 and September 26, 2020.~~2021.


		Nine months ended					Nine months ended
		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021
Continuing operations:	Continuing operations:					Continuing operations:
Cash flows from operating activities		$	94.0	$	11.0
Cash flows from (used in) operating activities						Cash flows from (used in) operating activities	$	(89.4)	$	95.6
Cash flows used in investing activities	Cash flows used in investing activities	(119.3)		(99.3)		Cash flows used in investing activities	(45.4)		(119.3)
Cash flows from (used in) financing activities		(166.8)		64.5
Cash flows from discontinued operations		677.7		42.9
Cash flows used in financing activities						Cash flows used in financing activities	(41.2)		(166.5)
Cash flows from (used in) discontinued operations						Cash flows from (used in) discontinued operations	(34.0)		675.8
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	6.2		(3.1)		Change in cash and equivalents due to changes in foreign currency exchange rates	1.3		6.2
Net change in cash and equivalents	Net change in cash and equivalents	$	491.8	$	16.0	Net change in cash and equivalents	$	(208.7)	$	491.8

Operating Activities — ~~The increase~~The decrease in cash flows from operating activities of continuing operations during the nine months ended October 1, 2022, compared to the respective period in 2021, was due primarily to (i) income tax payments, net of refunds, of $55.7 (compared to income tax refunds, net of $13.7 during the nine months ended October 2, ~~2021, compared~~2021), with a significant portion of the 2022 payments related to the ~~respective period~~gain on sale of Transformer Solutions; (ii) elevated purchases of inventory components in ~~2020, was due primarily~~order to 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 2021 cash receipts related to federal tax refunds of ~~$22.4~~ ~~and insurance proceeds of~~ ~~$15.0~~manage the potential risk associated with the ~~settlement~~current supply chain environment; (iii) decreases in cash flows at certain of our project-related businesses, as cash receipts for these businesses are often subject to contract milestones that can impact the timing of cash flows from period to period; (iv) net payments for asbestos-related claims of $15.5 (compared to net recoveries of $4.7 during the nine months ended October 2, 2021); and (v) cash payments of $10.0 in connection with the transfer of our postretirement life insurance benefit obligation to an ~~asbestos~~ insurance ~~coverage matter.~~carrier.

Investing Activities — Cash flows used in investing activities of continuing operations for the nine months ended October 1, 2022 were comprised of cash utilized in the acquisition of ITL of $41.8 and capital expenditures of $10.0, partially offset by proceeds from company-owned life insurance policies of $4.6 and $1.8 received upon agreement with sellers on acquired working capital balances associated with the Cincinnati Fan and ITL acquisitions. Cash flows used in investing activities for the nine months ended October 2, 2021 were comprised primarily of cash utilized in the acquisitions of Sealite and ECS of $80.3 and $39.4, respectively, and capital expenditures of $7.5,~~, partially offset by proceeds from company-owned insurance policies of $8.2.~~

~~Cash flows used in investing activities for the nine months ended September 26, 2020 were comprised of cash utilized for the acquisition of ULC of $87.9 and capital expenditures of $12.5,~~ partially offset by proceeds from company-owned life insurance policies of ~~$1.1.~~$8.2.

Financing Activities — Cash flows used in financing activities of continuing operations for the nine months ended October 1, 2022 were comprised of repurchases of common stock of $33.7, minimum tax withholdings paid on behalf of employees on net-share settlements of long-term incentive awards, net of proceeds from options exercised, of $4.9, and contingent consideration paid of $1.3 related to a prior acquisition. Additionally, prior to the August 12, 2022 execution of our Amended and Restated Credit Agreement (the “Credit Agreement”), we made scheduled repayments under our then-existing term loan of $6.3 and in connection with entering the Credit Agreement, we received $245.0 under our new term loan and (i) repaid the remaining balance under the then-existing term loan of $237.4 and (ii) paid fees in connection with the refinancing of $1.9. Net repayments under our various other debt instruments totaled $0.7.

Cash 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 tax withholdings paid on behalf of employees on net-share settlements of 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, 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 and (ii) $1.5 related to contingent consideration paid in connection with the SGS acquisition.$3.7.

Discontinued Operations — Cash flows used in discontinued operations for the nine months ended October 1, 2022 related primarily to (i) disbursements for professional fees incurred in connection with the claims activities related to the large power projects in South Africa (see Note 15 to the condensed consolidated financial statements for additional details), (ii) disbursements related to asbestos product liability matters, (iii) a payment of $13.9 to the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business, and (iv) disbursements for liabilities retained in connection with dispositions, including fees associated with the sale of Transformer Solutions. These disbursements were partially offset by proceeds from options exercised of $1.0.

Cash flows from discontinued operations for the nine months ended October 2, 2021 ~~include~~included 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 include~~included cash flows from operations generated by Transformers Solutions, partially offset by cash disbursements related to liabilities retained in connection with dispositions.

Change in Cash and Equivalents due to Changes in Foreign Currency Exchange Rates — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during the first nine months of ~~2021~~2022 and ~~2020.~~2021.

Borrowings and Availability

Borrowings — The following summarizes our debt activity (both current and non-current) for the nine months ended October ~~2, 2021.~~1, 2022.


		December 31, 2020		Borrowings		Repayments		Other(5)		October 2, 2021			December 31, 2021		Borrowings		Repayments		Other		October 1, 2022
Revolving loans ~~(1)~~	Revolving loans ~~(1)~~	$	129.8	$	209.1	$	(338.9)	$	—	$	—	Revolving loans ~~(1)~~	$	—	$	—	$	—	$	—	$	—
Term loan(2)		248.6		—		(4.7)		0.3		244.2
Term loan(1)(2)												Term loan(1)(2)	242.7		245.0		(243.7)		0.3		244.3

Trade receivables financing arrangement(3)	Trade receivables financing arrangement(3)	28.0		179.0		(207.0)		—		—		Trade receivables financing arrangement(3)	—		—		—		—		—
Other indebtedness(4)	Other indebtedness(4)	6.0		0.6		(0.9)		(2.3)		3.4		Other indebtedness(4)	3.3		0.1		(0.8)		—		2.6
Total debt	Total debt	412.4		$	388.7	$	(551.5)	$	(2.0)	247.6		Total debt	246.0		$	245.1	$	(244.5)	$	0.3	246.9

Less: short-term debt	Less: short-term debt	101.2								2.3		Less: short-term debt	2.2								1.9
Less: current maturities of long-term debt	Less: current maturities of long-term debt	7.2								11.4		Less: current maturities of long-term debt	13.0								0.4
Total long-term debt	Total long-term debt	$	304.0							$	233.9	Total long-term debt	$	230.8							$	244.6

___________________________

(1)~~While not due for repayment until December 2024 under the terms of~~As noted below, we amended our senior credit agreement ~~we classify within current liabilities~~on August 12, 2022. The amendment made available a new term loan facility in the ~~portion~~amount of $245.0, the ~~outstanding~~proceeds of which were primarily used to prepay the remaining balance ~~that we believe will be repaid over~~of $237.4 under the ~~next year, with such amount based on an estimate of cash that is expected to be generated over such period.~~

then-existing term loan facility.

(3)Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses.At October 1, 2022, we had $30.3 of available borrowing capacity under this facility.

Senior Credit Facilities

~~(5)“Other” primarily includes debt assumed, foreign currency translation on any debt instruments denominated in currencies~~On August 12, 2022, we entered into the Credit Agreement to, among other ~~than the U.S. dollar, and the impact of amortization of debt issuance costs associated with~~things, extend the term ~~loan.~~

~~At October 2, 2021, we were in compliance~~of the facilities under the Credit Agreement and provide for committed senior secured financing with ~~all covenants~~an aggregate amount of ~~our senior credit agreement.~~$770.0. See Note 12 to the condensed consolidated financial statements for a further description of the Credit Agreement, which is incorporated by reference.

Availability — At October ~~2, 2021,~~1, 2022, we had ~~$437.8~~$489.0 of available borrowing capacity under our revolving credit facilities, after giving effect to ~~$12.2~~$11.0 reserved for ~~domestic~~ letters of credit. ~~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~~In addition, at October ~~2, 2021,~~1, 2022, we had ~~$31.2~~$12.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to ~~$23.8~~$12.8 reserved for outstanding letters of credit.

At October 1, 2022, we were in compliance with all covenants of the Credit Agreement.

In connection with the August 2022 amendment of the Credit Agreement, we recorded charges of $1.1 to “Loss on amendment/refinancing of senior credit agreement” related to the write-off of unamortized deferred financing costs ($0.7) and certain expenses incurred in connection with the amendment ($0.4).

Financing instruments may be used from time to time including, but not limited to, public and private debt and equity offerings, operating leases, 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 contracts. These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions and insurance companies throughout the world. We periodically evaluate the credit standing of these financial institutions and insurance companies.

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

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

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

Concentrations of credit risk arising from trade accounts receivable are due to selling to customers in a particular industry. Credit risks are mitigated by performing ongoing credit evaluations of our customers’ financial conditions and obtaining collateral, advance payments, or other security when appropriate. No one customer, or group of customers that to our knowledge are under common control, accounted for more than 10% 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 ~~2020~~2021 Annual Report on Form 10-K. Our total net liabilities for unrecognized tax benefits including

interest were ~~$8.9~~$9.1 as of October ~~2, 2021.~~1, 2022. Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up toto $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), including claims with respect to the large power projects in South Africa, environmental matters, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate. We accrue for these contingencies when we believe a liability is probable and can be reasonably estimated. As events change and resolutions occur, these accruals may be adjusted and could differ materially from amounts originally estimated. See Note 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 ~~2020~~2021 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 ~~2020~~2021 Annual Report on Form 10-K, the discussion within which is incorporated herein by reference. We have affected no material change in either our critical accounting policies or use of estimates since the filing of our ~~2020~~2021 Annual Report on Form 10-K.

4246

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Management does not believe our exposure to market risk has significantly changed since December 31, ~~2020~~2021 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 October ~~2, 2021.~~1, 2022. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of October ~~2, 2021.~~1, 2022 due to the material weakness discussed below related to the accounting for asbestos-related insurance recovery assets.

Previously Identified Material Weakness in Internal Control Over Financial Reporting

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

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

Status of Remediation

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

•Reconciling data used in our accounting assessments to the records of external legal counsel and third-party administrators to verify the completeness of recorded insurance recovery assets associated with alleged exposure to asbestos-containing materials.

•Monitoring changes in available insurance and, if applicable, confirming any changes with external legal counsel and third-party administrators to verify that such changes are properly reflected in the insurance availability reports.

On November 1, 2022 we divested three subsidiaries that hold all liabilities for alleged exposure to asbestos containing materials and related insurance assets. To the extent applicable, we will document policies and procedures for, and test the implementation and operating effectiveness of, the newly-designed controls in future periods. The material weakness in our internal control over financial reporting will not be considered remediated until sufficient time has passed to allow management to test the design and operational effectiveness of the corrective actions.

Changes in Internal Control Over Financial Reporting

In connection with the evaluation by SPX management, including the Chief Executive Officer and the Chief Financial Officer, of our internal control over financial reporting, pursuant to Exchange Act Rule 13a-15(d), no changes during the quarter ended October ~~2, 2021~~1, 2022 were identified that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4347

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

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 ~~2020~~2021 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 and Plan of Merger, dated as of August 11, 2022, by and among SPX Corporation, SPX ~~Transformer Solutions, Inc., GE Prolec Transformers,~~Technologies, Inc. and ~~Prolec GE Internacional, S. DE RL. DE CV. dated as of June 8, 2021,~~SPX Merger, LLC, incorporated by reference ~~from~~to Exhibit 2.1 to our Current Report on Form 8-K filed on ~~June 9, 2021 (File no. 1-6948).~~August 15, 2022

3.1			Amended and Restated Certificate of Incorporation of SPX Technologies, Inc., dated August 15, 2022, incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on August 15, 2022

3.2			Amended and Restated By-Laws of SPX Technologies, Inc., dated August 15, 2022, incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on August 15, 2022

10.1			Amended and Restated Credit Agreement, dated as of August 12, 2022, by and among SPX Enterprises, LLC, as the U.S. Borrower, SPX Corporation, as the Parent, the Foreign Subsidiary Borrowers party thereto, Bank of America, N.A., as the Administrative Agent and the Swingline Lender, Deutsche Bank AG, as the Foreign Trade Facility Agent, and the Issuing Lenders, FCI Issuing Lenders and Lenders party thereto, incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 15, 2022

10.2			Amendment to Confidentiality Agreement, Employment Agreement and Change of Control Agreement dated October 5, 2022 between Eugene J. Lowe III and SPX Technologies, Inc.

10.3			Form of Amendment to Confidentiality Agreement, Severance Benefit Agreement and Change of Control Agreement between SPX Enterprises, LLC and certain officers of SPX Technologies, Inc.

10.4			Form of Change-in Control Agreement

10.5			Form of Confidentiality and Non-Competition Agreement

10.6			Form of Officer Severance Benefit Agreement


10.7			SPX Supplemental Retirement Savings Plans (as amended and restated effective August 15, 2022), incorporated by reference to Exhibit 10.7 of our Current Report on Form 8-K filed on November 2, 2022

10.8			SPX Supplemental Individual Account Retirement Plan (as amended and restated effective August 15, 2022), incorporated by reference to Exhibit 10.8 of our Current Report on Form 8-K filed on November 2, 2022

10.9			SPX Supplemental Retirement Plan for Top Management (as amended and restated effective August 15, 2022), incorporated by reference to Exhibit 10.6 of our Current Report on Form 8-K filed on November 2, 2022

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~~101.INS*			~~SPX Corporation financial information from its Form 10-Q for the quarterly period ended October 2, 2021, formatted in~~ Inline XBRL ~~including: (i) Condensed Consolidated Statements of Operations and Comprehensive Income for~~Instance Document (the instance document does not appear in the three and nine months ended October 2, 2021 and September 26, 2020; (ii) Condensed Consolidated Balance Sheets at October 2, 2021 and December 31, 2020; (iii) Condensed Consolidated Statements of Equity forInteractive Data File because its XBRL tags are embedded within the three and nine months ended October 2, 2021 and September 26, 2020; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2021 and September 26, 2020; and (v) Notes to Condensed Consolidated Financial Statements.Inline XBRL)
101.SCH*			Inline XBRL Taxonomy Extension Schema Document
101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*			Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit ~~101.1)~~101.*)

4449

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~~TECHNOLOGIES, INC.
		(Registrant)

Date: November 3, ~~2021~~2022	By		/s/ Eugene J. Lowe, III
			President and Chief Executive Officer


Date: November 3, ~~2021~~2022	By		/s/ ~~James E. Harris~~Michael A. Reilly
			~~Vice President,~~Interim Chief Financial Officer and Treasurer, Chief Accounting Officer and Vice President, Finance

4550


	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