SPX FLOW, Inc. and its consolidated subsidiaries (“SPX FLOW,” ‘‘the Company,’’ “we,” “us,” or “our”) operate in three business segments and were wholly-owned by SPX Corporation (the “former Parent”) until September 26, 2015, at which time the former Parent distributed 100% of our outstanding common stock to its shareholders through a tax-free spin-off transaction (the “Spin-Off”).

We prepared the condensed consolidated and combined financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"“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. InThe financial statements represent our accounts after the elimination of intercompany transactions and, in our opinion, these financial statements include the adjustments (consisting only of normal and recurring items) necessary for their fair presentation.

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 estimatesestimates. The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated and interimcombined financial statements contained in our 2016 Annual Report on Form 10-K. Interim results are not necessarily indicative of full year results. Theresults and the condensed consolidated and combined financial statements may not be indicative of the Company’s future performance.

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 20162017 are April 1, July 1, and September 30, compared to the respective April 2, July 2, and October 1, compared to the respective March 28, June 27, and September 26, 20152016 dates. We had six moretwo less days in the first quarter of 20162017 and will have five less daysone more day in the fourth quarter of 20162017 than in the respective 20152016 periods.

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

In May 2014, and as subsequently amended, in the first six months of 2016, the Financial Accounting Standards Board (the "FASB") issued a new standard on revenue recognition that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in accordance with the transfer of control over those goods and services and in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also requires a number of disclosures intended to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue, and the related cash flows. The standard is effective for interim and annual reporting periods beginning after December 15, 2017. We are currently evaluatingplan to adopt the effect that this new revenue standard will have on our condensed consolidated financial statements.

Amongst other impacts, the amended revenue recognition guidance has the potential to affect our current practice of accounting for certain contracts of specific product lines as revenue using the completed contract method under existing guidance. In certain instances, we engineer and manufacture goods that may have no alternative use (absent significant costs to re-engineer the goods) and we have an enforceable right to payment for our performance over the life of the project. For such contracts, we expect to recognize revenue over time under the new guidance as compared with our current practice of using the completed contract method. In addition, we are reviewing our accounting policies to determine whether any changes may be necessary in order to ensure proper recognition of such obligations that we consider perfunctory in nature and/or qualitatively and quantitatively immaterial under existing revenue guidance, but which may be considered significant within the context of the contract under the new revenue standard. Our preliminary assessments of the potential impacts of the new revenue recognition standard did not have a material impact on our condensed consolidated financial statements.are subject to change.

In January 2016, the FASB issued an amendment to existing guidance which revises entities’ accounting related to: (i) the classification and measurement of investments in equity securities, and (ii) the presentation of certain fair value changes for financial liabilities measured at fair value. The amendment also changes certain disclosure requirements associated with the fair value of financial instruments. The amended guidance is effective for interim and annual reporting periods beginning after December 15, 2017 and requires a modified retrospective approach to adoption. Early adoption is only permitted for a provision

In February 2016, the FASB issued a new standard which requires a lessee to recognize on its balance sheet the assets and liabilities associated with the rights and obligations created by leases with terms that exceed twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of costs and cash flows arising from a lease. The new guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and requires a modified retrospective approach to adoption for lessees related to capital and operating leases existing at, or entered into after, the earliest comparative period presented in the financial statements, with certain practical expedients available. Early adoption is permitted. We are currently evaluating the effect that this new standard will have on our condensed consolidated financial statements.

In March 2016, the FASB issued an amendment to clarify that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require de-designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendment is effective for interim and annual reporting periods beginning after December 15, 2016 and may be applied on either a prospective or modified retrospective basis. The impact of the prospective adoption of this amendment had no effect on our first quarter 2017 condensed consolidated financial statements will be based on any future events that impact our hedging relationships.

In March 2016, the FASB issued an amendment which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, classification of awards as either equity or liabilities, as well as classification in the statement of cash flows. This amendment is effective for prospective interim and annual reporting periods beginning after December 15, 2016. We plan on adoptingadopted this amendment atduring the first quarter of 2017. We recognized a tax charge of $1.3 in our income tax provision during the six months ended July 1, 2017 related to the vesting of certain restricted stock shares and restricted stock units during the period which, under previous guidance, would have been recognized as a reduction of paid-in capital. Consistent with our previous policy, we have elected to continue to accrue share-based compensation cost based on the number of awards that timeare expected to vest (i.e., by assuming a forfeiture rate in our accrual of such cost). See Note 12 for additional information related to our adoption of this amendment.

In January 2017, the FASB issued an amendment to post-acquisition accounting for goodwill which eliminates the requirement to perform a Step 2 impairment analysis to determine the implied fair value of goodwill. Rather, goodwill impairment charges will be calculated as the amount by which a reporting unit's carrying amount exceeds its effectfair value. This amendment is effective for any annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019, with early adoption permitted. We adopted this amendment in the first quarter of 2017 and will perform our annual goodwill impairment test in accordance with the amended guidance, as well as any interim impairment tests, should facts and circumstances necessitate such a test.

In March 2017, the FASB issued an amendment to guidance on the presentation of net periodic pension and other postretirement benefit costs. Under the new rules, entities that sponsor defined benefit plans will present service costs with

We are a global supplier of highly specialized, engineered solutions with operations in over 3530 countries and sales in over 150 countries around the world.  Many of our solutions play a role in helping to meet global demand for processed foods and beverages and power and energy, particularly in emerging markets.

We have three reportable segments: Food and Beverage, Power and Energy, and Industrial. In determining our segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification to operating income or loss of each segment before considering impairment and special charges, pension and postretirement expenseservice costs and other indirect corporate expenses (including corporate stock-based compensation). This is consistent with the way our CODMchief operating decision maker evaluates the results of each segment.

The Food and Beverage reportable segment operates in a regulated, global industry with customers who demand highly engineered, turn-key solutions. Key demand drivers include dairy consumption, emerging market capacity expansion, sustainability and productivity initiatives, customer product innovation and food safety. Key products for the segment include mixing, drying, evaporation and separation systems and components, heat exchangers, and reciprocating and centrifugal pump technologies. We also design and construct turn-key systems that integrate many of these products for our customers. Our core brands include Anhydro, APV, Bran+Luebbe, Gerstenberg Schroeder, LIGHTNIN, Seital, and Waukesha Cherry-Burrell.

The Power and Energy reportable segment primarily serves customers in the oil and gas industry and, to a lesser extent, the nuclear and other conventional power industries. A large portion of the segment's revenues are concentrated in oil extraction, production and transportation at existing wells, and in pipeline applications. The underlying driver of this segment includes demand for power and energy. Key products for the segment include pumps, valves and related accessories, while the core brands include APV, Bran+Luebbe, ClydeUnion Pumps, Copes-Vulcan, Dollinger Filtration, LIGHTNIN, M&J Valve, Plenty, and Vokes.

The Industrial reportable segment primarily serves customers in the chemical, air treatment, mining, pharmaceutical, marine, shipbuilding, infrastructure construction, general industrial and water treatment industries. Key demand drivers of this segment are tied to macroeconomic conditions and growth in the respective end markets we serve. Key products for the segment are air dryers, filtration equipment, mixers, pumps, hydraulic technologies and heat exchangers. Core brands include Airpel, APV, Bolting Systems, Delair, Deltech, Hankison, Jemaco, Johnson Pump, LIGHTNIN, Power Team, and Stone.

Financial data for our reportable segments for the three and six months ended July 1, 2017 and July 2, 2016 and June 27, 2015 were as follows:

Special charges net, for the three and six months ended July 1, 2017 and July 2, 2016 and June 27, 2015 were as follows:

Charges for the three and six months ended July 2, 2016 related primarily to severance and other costs, associated with the global realignment program, including (i) the consolidation and relocation of a manufacturing facility in Germany to an existing facility in Poland and of other facilities in Europe, and (ii) various other restructuring initiatives in Europe, the U.S., China and Brazil.

Charges for the three months ended July 2, 2016 reflected primarily (i) asset impairment charges of $0.6 related to certain long-lived assets (but unrelated to the global realignment program) and (ii) revisions of estimates for severance and other costs associated with the global realignment program which were previously recorded in the first quarter of 2016. Charges for the six months ended July 2, 2016 related primarily

Expected charges still to be incurred under actions approved as of July 2, 20161, 2017 were approximately $2.3.

The following is an analysis of our restructuring liabilities for the six months ended July 1, 2017 and July 2, 2016 and June 27, 2015:2016:

Inventories at July 2, 20161, 2017 and December 31, 20152016 comprised the following:

Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated net realizable values. Certain domestic inventories are valued using the last-in, first-out (“LIFO”) method. These inventories were approximately 7% and 5%6% of total inventory at July 2, 20161, 2017 and December 31, 2015.2016, respectively. Other inventories are valued using the first-in, first-out (“FIFO”) method.

The changes in the carrying amount of goodwill by reportable segment forduring the six months ended July 2, 20161, 2017 were as follows:

OverA change in any of the courseassumptions used in testing Power and Energy's goodwill for impairment (e.g., projected order, revenue and profit growth rates, discount rate, industry valuation multiples, expected control premium, etc.) could result in Power and Energy's estimated fair value being less than the carrying value of its net assets.  For example, a one-hundred basis point increase in the discount rate used in determining Power and Energy's discounted cash flows in our 2016 annual goodwill impairment test would have resulted in Power and Energy's fair value being approximately $27 lower than the carrying value of its net assets as of the date of that fourth quarter test.

During the second quarter of 2016, we recorded an interim goodwill impairment charge of $252.8 as a future impairment.

Identifiable intangible assets were as follows:

During the second quarter of 2016, as described in the “Goodwill” section above, we observed sustained quarterly order rates for Power and Energy below order intake levels in the fourth quarter of 2015 and operating results below our expectations, and thus determined an interim test of recoverability was required for the definite and indefinite-lived intangibles of that reporting segment. Based on market conditions as of July 2, 2016 and backlog positions falling below prior periods, we reduced our estimates of the expected future revenues from recorded intangible assets in the Power and Energy reporting unit.

PensionSPX FLOW sponsors a number of defined benefit pension plans and a postretirement plan. For all of these plans, changes in the fair value of plan assets and actuarial gains and losses are recognized to earnings in the fourth quarter of each year, unless earlier remeasurement is required. The remaining components of pension and postretirement expense, includes net periodic benefit expense associated with defined benefit pensionprimarily service and postretirement plans we sponsorinterest costs and in 2015, an allocation ofexpected return on plan assets, are recorded on a portion of the net periodic benefit expense associated with defined benefit pension and postretirement plans sponsored by the former Parent.quarterly basis.

Net periodic benefit cost allocated to the Company related to theexpense (income) for our foreign pension plans sponsored by the former Parent was $0.2 and $0.4our domestic pension and postretirement plans for the three and six months ended June 27, 2015, respectively.July 1, 2017 and July 2, 2016 included the following components:

During the six months ended July 1, 2017 and July 2, 2016, contributions to the foreign and domestic pension plans we sponsor were less than $0.1.

A detailed description of our senior credit facilities and senior notes is included in our consolidated and combined financial statements included in our 20152016 Annual Report on Form 10-K.

The weighted-average interest rate of outstanding borrowings under our senior credit facilities was approximately 2.2%4.0% at July 2, 2016.1, 2017.

At July 2, 2016,1, 2017, we had $438.5$441.5 of available borrowing capacity under our revolving credit facilities after giving effect to borrowings of $2.0$1.0 under the domestic revolving loan facility and $9.5$7.5 reserved for outstanding letters of credit. At July 2, 2016,1, 2017, we also had $7.7$31.9 of available borrowing capacity under our trade receivables financing arrangement after giving effect to borrowings of $11.0.arrangement. Our trade receivables financing arrangement provides for a total commitment of $50.0 from associated lenders, depending upon our trade receivables balance and other factors. In addition, at July 2, 2016,1, 2017, we had $244.4$297.5 of available issuance capacity under our foreign credit instrument facilities after giving effect to $255.6$202.5 reserved for outstanding bank guarantees and standby letters of credit.

At July 2, 2016,1, 2017, in addition to the revolving lines of credit described above, we had approximately $6.2$5.5 of letters of credit outstanding under separate arrangements in China and India.

At July 2, 2016,1, 2017, we were in compliance with all covenants of our senior credit facilities and our senior notes.

Prior to the Spin-Off,September 26, 2015, at which time SPX Corporation (the "former Parent") distributed 100% of our outstanding common stock to its shareholders through a tax-free spin-off transaction (the "Spin-Off"), eligible employees of the Company participated in theour former Parent’s share-based compensation plan pursuant to which they were granted share-based awards of the former Parent'sits stock. TheOur former Parent’s share-based compensation plan included awards for restricted stock shares, restricted stock units and stock options. Compensation expense for share-based awards recorded by the Company prior to the Spin-Off includes the expense associated with the employees historically attributable to the Company’s operations, as well as an allocation of stock-based compensation expense for the former Parent’s corporate employees who provided certain centralized support functions.

In connection with the Spin-Off, outstanding equity-based awards granted to SPX FLOW employees under theour former Parent's plan were converted into awards of the Company using a formula designed to preserve the intrinsic value of the awards immediately prior to the Spin-Off. This conversion did not result in additional compensation expense. Additionally, certain restricted stock units granted to employees in 2013 and 2014, none of whom were named executive officers at the time, were modified at the Spin-Off date to provide a minimum vesting equivalent to 50% of the underlying units at the end of the applicable remaining service periods. Compensation expense of $0.3 and $0.6 related to the modification was recognized in the three and six months ended July 2, 2016, and the remainingcompensation expense of $0.6 related to the modification will bewas recognized overduring the remaining service periodsremainder of the related awards.2016.

Since the Spin-Off, SPX FLOW stock-based compensation awards may be granted to certain eligible employees or non-employee directors under the SPX FLOW Stock Compensation Plan (the “Stock Plan”).  Under the Stock Plan, up to 2.0821.327 unissued shares of our common stock were available for future grant as of July 2, 2016.1, 2017. The Stock Plan permits the issuance of authorized but unissued shares or shares from treasury upon the exercise of options, vesting of restricted stock units, or granting of restricted stock shares.shares or exercise of stock options. Each stock option, restricted stock share, and restricted stock unit and stock option granted reduces share availability under the Stock Plan by one share.

Restricted stock shares or restricted stock units may be granted to certain eligible employees or non-employee directors in accordance with the Stock Plan and applicable award agreements. Subject to participants' continued service and other award

Eligible employees, including officers, receivedwere granted 2017 target performance awards primarily during the three months ended April 2, 20161, 2017 in which the employee can earn between 50% and 150% of the target performance award in the event, and to the extent, the award meets the required performance vesting criteria. Such awards are generally subject to the employees’ continued employment during the three-year vesting period, and may be completely forfeited if the threshold performance criteria are not met. Vesting for the 20162017 target performance awards is based on SPX FLOW shareholder return versus the performance of a composite group of companies, as established under the awards (the "Composite Group"), over the three-year period from January 1, 20162017 through December 31, 2018.2019. In addition, certain eligible employees, including officers, were granted 2017 awards during the three months ended April 1, 2017 that vest subject to attainment of stated improvements in a three-year average annual return on invested capital (as defined) measured at the conclusion of the measurement period ending December 31, 2019 (including eligible employees’ continued employment during the measurement period). These target performance and internal performance metric awards were issued as restricted stock units to eligible non-officer employees and restricted stock shares to eligible officers.

Eligible non-officer employees also receivedwere granted 2017 restricted stock unit awards primarily during the three months ended April 2, 20161, 2017 that vest ratably over three years, subject to the passage of time and the employees’ continued employment during such period. In some instances, such as death, disability, or retirement, awards may vest concurrently with or following an employee's termination. Eligible officers receivedwere granted restricted stock share awards in the three months ended April 2, 20161, 2017 that vest subject to an internal performance metric during the first year of the award and thenthat also require the completion ofcontain a two-yearthree-year holding period afterfrom the first yeargrant of the award (including eligible officers’whereby the holding period is generally released ratably over the three years (subject to a participant's continued employment during that period), before issuance to the eligible officers..

Restricted stock shares and restricted stock units that do not vest within the applicable vesting period are forfeited.

Stock options may be granted to eligible employees in the form of incentive stock options or nonqualified stock options. The option price per share may be no less than the fair market value of our common stock at the close of business on the date of grant. Upon exercise, the employee has the option to surrender previously owned shares at current value in payment of the exercise price and/or for withholding tax obligations.

The Monte Carlo simulation model valuation technique was used to determine the fair value of our restricted stock shares and restricted stock units that contain a “market condition.” The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculates the fair value of each restricted stock share and restricted stock unit award.

The following table summarizes the unvested restricted stock share and restricted stock unit activity for the six months ended July 2, 2016, for the Company's employees:1, 2017:

As of July 2, 2016,1, 2017, there was $22.7$23.0 of unrecognized compensation cost related to SPX FLOW's restricted stock share and restricted stock unit compensation arrangements, including the effect of the modification discussed above.arrangements. We expect this cost to be recognized over a weighted-average period of 1.91.8 years.

On January 2, 2015, eligible employeesThere were 0.355 and 0.371 of the Company were granted 0.034SPX FLOW stock options in the former Parent's stock, alloutstanding as of which were outstanding (but not exercisable) from that date upJuly 1, 2017 and December 31, 2016, respectively, after giving effect to the Spin-Off.forfeiture and expiration of 0.016 during the first six months of 2017. Of the 0.355 stock options outstanding, 0.322 were exercisable as of July 1, 2017. The weighted-average exercise price per share of these options was $85.87 and the maximum term of these options is 10 years.

As of July 2, 2016,1, 2017, there was $0.7$0.2 of unrecognized compensation cost related to SPX FLOW stock options. We expect this cost to be recognized over a weighted-average period of 1.60.6 years.

The primary component of accumulated other comprehensive loss as of July 2, 2016 and December 31, 2015, and in the changes thereof during the three and six months then ended, was foreign currency translation adjustment of $(52.8) and $(40.7), respectively. The unrealized losses, net of tax, recorded in accumulated other comprehensive loss related to FX forward contracts were less than $0.1 as of July 2, 2016 and December 31, 2015.