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”) 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 will 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 a material impact onno alternative use (absent significant costs to re-engineer the goods) and we have an enforceable right to payment for our condensed consolidated financial statements.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 revising our accounting policies 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.

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 related to instrument-specific credit risk. We are currently evaluating the effect that this amendment will have on our condensed consolidated financial statements.

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 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 iswas 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 nine months ended September 30, 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 time and are currently evaluating its effect onexpected to vest (i.e., by assuming a forfeiture rate in our condensed consolidated financial statements.accrual of such cost). See Note 12 for additional information related to our adoption of this amendment.

In November 2016, the FASB issued an amendment to guidance for statement of cash flow presentation, which requires that entities explain the change during the period in the total of cash, cash equivalents, and amounts generally described as to how certainrestricted cash receipts and payments should be presented and classified pertaining to, among other items, debt, contingent considerationor restricted cash equivalents in business combinations, proceeds from certain insurance settlements, distributions received from equity method investees, securitization transactions, and separately identifiablethe statement of cash flows. TheEntities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. This amendment is intended to reduce the existing diversity in practice and is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, including retrospective application. We haveexpect to adopt this amendment in the first quarter of 2018 and do not expect a material impact to our consolidated financial statements.

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 fair 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 asin the first quarter of 2017 and will perform our 2017 annual goodwill impairment test in accordance with the amended guidance.

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 other employee compensation costs within operating income (or capitalize on the balance sheet, when applicable), while other components of net benefit cost will be presented separately (in one or more line items) outside of operating income and will not be eligible for capitalization. This update is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted if adopted in the first interim period of the early-adopt fiscal year. We adopted this amendment in the first quarter of 2017 and have accordingly reclassified non-service pension and postretirement costs from “Selling, general and administrative” expense to “Other income (expense), net” in our condensed consolidated statements of operations for the three and nine months ended September 30, 2017 and October 1, 2016, respectively, as we believe this classification provides investors a more comparative presentation of our selling, general and have accordingly reflectedadministrative expense and operating results from period to period. As permitted by the amended guidance, we used amounts disclosed in our debt prepayment premiumsemployee benefit plans footnote for the

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

Financial data for our reportable segments for the three and nine months ended September 30, 2017 and October 1, 2016 and September 26, 2015 were as follows:

As disclosed in our 20152016 Annual Report on Form 10-K, we are currently executing a multi-year plan to transition our enterprise to an operating company. As part of this plan, we announced our intent to further optimize our global footprint, streamline business processes and reduce selling, general and administrative expense through a global realignment program. The realignment program is intended to reduce costs across operating sites and corporate and global functions, in part by making structural changes and process enhancements which allow us to operate more efficiently. Special charges for the three and nine months ended September 30, 2017 and October 1, 2016 were substantially associated with this program and included costs

Charges for the three months ended October 1, 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, to a lesser extent, (ii) a reorganization of the segment’ssegment's management structure.

Expected charges still to be incurred under actions approved as of October 1, 2016September 30, 2017 were approximately $2.4.$2.5.

The following is an analysis of our restructuring liabilities for the nine months ended September 30, 2017 and October 1, 2016 and September 26, 2015:2016:

Inventories at October 1, 2016September 30, 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 8% and 5%6% of total inventory at October 1, 2016September 30, 2017 and December 31, 2015, respectively.2016. 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 nine months ended October 1, 2016September 30, 2017 were as follows:

Over the courseA change in any of the fourth quarter of 2015, global oil prices continued to decline, resultingassumptions used in delayed customertesting Power and Energy's goodwill for impairment (e.g., projected order, patterns.  Based on these slower order rates at the end of the fourth quarter, we lowered the 2016 forecasted revenue and profitability of ourprofit growth rates, discount rate, industry valuation multiples, expected control premium, etc.) could result in Power and Energy segment. The combination of adverse market conditions, lower order trends, and resultant impact to our 2016 forecast subsequent to our annual goodwill impairment test led management to conclude an interim impairment test of our Power and Energy reporting unit was necessary as of December 31, 2015. 

As of October 1, 2016,September 30, 2017, there were no indicators necessitating an interim impairment test of any of our reporting units, based on management's review of operating performance.

Identifiable intangible assets were as follows:

At October 1, 2016,As of September 30, 2017, the net carrying value of intangible assets with determinable lives consisted of the following by reportable segment: $79.0$76.4 in Power and Energy, $66.0$53.7 in Food and Beverage, and $28.5$25.0 in Industrial. During the three months ended October 1, 2016, $5.2 of technology assets were reclassified from the Industrial segment to the Food and Beverage segment in connection with the relocation of a manufacturing facility in Denmark to an existing facility in Poland, as also discussed in Note 4. Trademarks with indefinite lives consisted of the following by reportable segment: $99.5$101.4 in Food and Beverage, $60.6$61.4 in Industrial, and $45.7$35.6 in Power and Energy.

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 previous 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.

SPX FLOW sponsors a number of defined benefit pension plans and a postretirement plan. For all of these plans, changes in the difference between fair value and carrying value. The fair value of the reporting unit’s trademarks was estimated using assumed royalty rates appliedplan assets and actuarial gains and losses are recognized to expected future cash flows of the respective product lines of the reporting unit, discounted at a rate of return reflecting current market conditions.

In connection with the Spin-Off, we assumed certain domestic nonqualified pension obligations from the former Parent and formed a new nonqualified plan, resulting in the remeasurement of such obligations as of September 26, 2015 and recognition of an actuarial loss of $7.4. This actuarial loss was recorded as a component of "Selling, general, and administrative" expense during the three and nine months ended September 26, 2015 in the accompanying condensed consolidated and combined statements of operations. In addition to the actuarial loss recognized, we recorded $0.0 and $0.2 of netNet periodic benefit expense related to the(income) for our foreign pension plans and our domestic pension and postretirement plan we sponsorplans for the three and nine months ended September 26, 2015, respectively.

During the nine months ended September 30, 2017 and October 1, 2016, contributions to the foreign and domestic pension plans we sponsor were less than $0.1.

Debt at October 1, 2016September 30, 2017 and December 31, 20152016 comprised the following:

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. Our senior notes are discussed further below.

The weighted-average interest rate of outstanding borrowings under our senior credit facilities was approximately 2.6%4.0% at October 1, 2016.September 30, 2017.

At October 1, 2016,September 30, 2017, we had $367.5$442.5 of available borrowing capacity under our revolving credit facilities after giving effect to borrowings of $73.0 under the domestic revolving loan facility and $9.5$7.5 reserved for outstanding letters of credit. At October 1, 2016,September 30, 2017, we had no$33.1 of available borrowing capacity under our trade receivables financing arrangement after giving effect to borrowings of $26.2.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 October 1, 2016,September 30, 2017, we had $245.6$301.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to $254.4$198.8 reserved for outstanding bank guarantees and standby letters of credit.

At October 1, 2016,September 30, 2017, in addition to the revolving lines of credit described above, we had approximately $5.4$6.5 of letters of credit outstanding under separate arrangements in China and India.

At October 1, 2016,September 30, 2017, we were in compliance with all covenants of our senior credit facilities and our senior notes.

We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency ("FX") 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 Euro, Chinese Yuan and Great BritainBritish Pound.

We had FX forward contracts with an aggregate notional amount of $41.8$36.1 and $44.7$28.0 outstanding as of October 1, 2016September 30, 2017 and December 31, 2015,2016, respectively, with all such contracts scheduled to mature within one year. We also had FX embedded derivatives with an aggregate notional amount of $26.9 and $31.6 at October 1, 2016 and December 31, 2015, respectively, with scheduled maturities of $22.6, $3.3 and $1.0 within one, two and three years, respectively. The unrealized losses, net of tax,

We enter into arrangements designed to provide the right of setoff in the event of counterparty default or insolvency, and have elected to offset the fair values of our FX forward contracts in our condensed consolidated balance sheets. The gross fair values of our FX forward contracts and FX embedded derivatives, in aggregate, were $3.3$2.2 and $2.0$2.9 (gross assets) and $1.2$0.1 and $1.5$0.1 (gross liabilities) at October 1, 2016September 30, 2017 and December 31, 2015,2016, respectively.

Prior to the Spin-Off, SPX FLOW had no common shares outstanding. On September 26, 2015, 41.322 SPX FLOW common shares were distributed to the former Parent's shareholders in conjunction with the Spin-Off. For comparative purposes, basic shares outstanding reflect this amount in all periods presented prior to the Spin-Off.  For purposes of computing dilutive shares, unvested SPX FLOW awards at the Spin-Off date were assumed to have been issued and outstanding from January 1, 2015.  The resulting number of weighted-average dilutive shares has been used for the three and nine months ended September 26, 2015. The following table sets forth the number of weighted average shares outstanding used in the computation of basic and diluted income (loss) per share: 

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 $0.9 related to the modification was recognized in the three and nine months ended October 1, 2016, and the remainingcompensation expense of $0.3 related to the modification will bewas recognized overduring the remaining service periodsremainder of the related awards.

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 2.1071.354 unissued shares of our common stock were available for future grant as of October 1, 2016.September 30, 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

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 terms and conditions, the restrictions lapse and awards generally vest over a period of time, generally three years (or one year for awards to non-employee directors). In some instances, such as death, disability, or retirement, awards may vest concurrently with or following an employee's termination. Approximately half of thesuch restricted stock shares and restricted stock unit awards vest based on performance thresholds, while the remaining portion vest based on the passage of time since grant date.

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 recognition of compensation expense for share-based awards is based on their grant-date fair values. The fair value of each award is amortized over the lesser of the award's requisite or derived service period, which is generally up to three years as noted above. For the three and nine months ended September 30, 2017 and October 1, 2016, and September 26, 2015, we recognized compensation expense related to share-based programs in “Selling, general and administrative” expense in the accompanying condensed consolidated and combined statements of operations as follows: