What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-04 compared with 2021-08-06 · 267 added, 251 removed, 745 unchanged (41% of the section changed)

3 unchanged sentences

in millions, except per share amounts)

Three months ended Six months ended

2021 June 27,

Three months ended Nine months ended

2021 September 26,

2020 October 2,

2021 September 26,

Revenues $ 285.8 $ 268.3 $ 870.4 $ 783.1

12 unchanged sentences

Income from continuing operations 7.7 15.6 41.4 40.3

Income from discontinued operations, net of tax 42.7 13.2 51.3 26.4

Income (loss) from discontinued operations, net of tax ( 31.0 ) 7.1 20.3 33.5

Gain (loss) on disposition of discontinued operations, net of tax 354.4 0.1 357.7 ( 1.2 )

22 unchanged sentences

Inventories, net 170.3 143.1

Other current assets (includes income taxes receivable of $ 30.1 and $ 27.3 at July 3, 2021 and December 31, 2020, respectively)

Other current assets (includes income taxes receivable of $ 2.6 and $ 27.3 at October 2, 2021 and December 31, 2020, respectively)

Assets of discontinued operations — 121.6

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Commitments and contingent liabilities (Note 15)

Common stock ( 52,855,255 and 45,304,445 issued and outstanding at July 3, 2021, respectively, and 52,704,973 and 45,032,325 issued and outstanding at December 31, 2020, respectively)

Common stock ( 52,921,832 and 45,372,991 is sued and outstanding at October 2, 2021, respectively, and 52,704,973 and 45,032,325 issued and outstanding at December 31, 2020, respectively)

Paid-in capital 1,328.2 1,319.9

1 unchanged sentence

Accumulated other comprehensive income 244.5 248.5

Common stock in treasury ( 7,550,810 and 7,672,648 shares at July 3, 2021 and December 31, 2020, respectively)

Common stock in treasury ( 7,548,841 an d 7,672,648 shares at October 2, 2021 and December 31, 2020, respectively)

( 444.2 ) ( 451.6 )

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three months ended July 3, 2021

Three months ended October 2, 2021

Stock Paid-In

4 unchanged sentences

Shareholders’

Balance at April 3, 2021 $ 0.5 $ 1,315.8 $ ( 461.3 ) $ 251.2 $ ( 445.4 ) $ 660.8

Balance at July 3, 2021 $ 0.5 $ 1,321.2 $ ( 399.8 ) $ 250.6 $ ( 444.3 ) $ 728.2

Net income — — 331.1 — — 331.1

5 unchanged sentences

Restricted stock unit vesting — ( 0.2 ) — — 0.1 ( 0.1 )

Balance at July 3, 2021 $ 0.5 $ 1,321.2 $ ( 399.8 ) $ 250.6 $ ( 444.3 ) $ 728.2

Six months ended July 3, 2021

Balance at October 2, 2021 $ 0.5 $ 1,328.2 $ ( 68.7 ) $ 244.5 $ ( 444.2 ) $ 1,060.3

Nine months ended October 2, 2021

Common Stock Paid-In Capital Retained Deficit Accum.

2 unchanged sentences

Net income — — 419.4 — — 419.4

Other comprehensive income, net — — — 2.1 — 2.1

Other comprehensive loss, net — — — ( 4.0 ) — ( 4.0 )

Incentive plan activity — 9.8 — — — 9.8

1 unchanged sentence

Restricted stock unit vesting — ( 12.3 ) — — 7.4 ( 4.9 )

Balance at July 3, 2021 $ 0.5 $ 1,321.2 $ ( 399.8 ) $ 250.6 $ ( 444.3 ) $ 728.2

Three months ended June 27, 2020

Balance at October 2, 2021 $ 0.5 $ 1,328.2 $ ( 68.7 ) $ 244.5 $ ( 444.2 ) $ 1,060.3

Three months ended September 26, 2020

Common Stock Paid-In Capital Retained Deficit Accum.

Other Comprehensive Income Common Stock In Treasury SPX Corporation Shareholders’ Equity

Balance at March 28, 2020 $ 0.5 $ 1,298.5 $ ( 562.6 ) $ 231.4 $ ( 452.7 ) $ 515.1

Balance at June 27, 2020 $ 0.5 $ 1,303.4 $ ( 535.5 ) $ 235.3 $ ( 451.6 ) $ 552.1

Net income — — 22.8 — — 22.8

3 unchanged sentences

Restricted stock unit vesting — — — — — —

Balance at June 27, 2020 $ 0.5 $ 1,303.4 $ ( 535.5 ) $ 235.3 $ ( 451.6 ) $ 552.1

Six months ended June 27, 2020

Balance at September 26, 2020 $ 0.5 $ 1,309.7 $ ( 512.7 ) $ 237.2 $ ( 451.6 ) $ 583.1

Nine months ended September 26, 2020

Common Stock Paid-In Capital Retained Deficit Accum.

7 unchanged sentences

Restricted stock unit vesting — ( 12.7 ) — — 8.4 ( 4.3 )

Balance at June 27, 2020 $ 0.5 $ 1,303.4 $ ( 535.5 ) $ 235.3 $ ( 451.6 ) $ 552.1

Balance at September 26, 2020 $ 0.5 $ 1,309.7 $ ( 512.7 ) $ 237.2 $ ( 451.6 ) $ 583.1

The accompanying notes are an integral part of these statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended

2021 June 27,

Nine months ended

2021 September 26,

Cash flows from (used in) operating activities:

2 unchanged sentences

Income from continuing operations 41.4 40.3

Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:

Adjustments to reconcile income from continuing operations to net cash from operating activities:

Special charges, net 1.9 1.6

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Cash spending on restructuring actions ( 2.4 ) ( 2.3 )

Net cash from (used in) continuing operations 38.9 ( 9.9 )

Net cash from continuing operations 94.0 11.0

Net cash from discontinued operations 59.8 45.4

5 unchanged sentences

Net cash used in continuing operations ( 119.3 ) ( 99.3 )

Net cash used in discontinued operations ( 1.2 ) ( 1.1 )

Net cash used in investing activities ( 83.4 ) ( 8.3 )

Net cash from (used in) discontinued operations 617.9 ( 2.5 )

Net cash from (used in) investing activities 498.6 ( 101.8 )

Cash flows from (used in) financing activities:

6 unchanged sentences

Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options ( 4.0 ) ( 1.8 )

Net cash from continuing operations 0.9 119.8

Net cash from (used in) continuing operations ( 166.8 ) 64.5

Net cash used in discontinued operations — —

Net cash from financing activities 0.9 119.8

Net cash from (used in) financing activities ( 166.8 ) 64.5

Change in cash and equivalents due to changes in foreign currency exchange rates 6.2 ( 3.1 )

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All of our VIEs are considered immaterial, individually and in aggregate, to our condensed consolidated financial statements.

Agreement for Sale of Transformers Solutions Business

On June 8, 2021, we entered into a definitive agreement to sell our SPX Transformer Solutions, Inc.

subsidiary (“Transformer Solutions”), a business that engineers, designs, manufactures, and services transformers for the U.S.

power transmission and distribution market, to GE-Prolec Transformers, Inc.

and Prolec GE Internacional, S.

for cash proceeds of $ 645.0 .

The sale is subject to normal closing conditions and a potential adjustment to the sales price based on cash, debt, and working capital at the date of closing, with the closing expected to occur in the fourth quarter of 2021.

After the sale of Transformer Solutions, we will have only a limited presence in the power generation markets and will focus our efforts and investments on the HVAC and detection and measurement markets.

Sale of Transformers 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.

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 $ 620.6 .

After the 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.

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 will have a consequential presence in the power generation markets, and given its significance to our historical consolidated financial results, we have concluded that the sale of Transformer Solutions represents a strategic shift.

Accordingly, we have classified the business as a discontinued operation in the accompanying condensed consolidated financial statements.

As we no longer have a consequential presence in the power generation markets, and given Transformer Solutions' significance to our historical consolidated financial results, we have concluded that the sale of Transformer Solutions represents a strategic shift.

Accordingly, we have classified the business as a discontinued operation in the accompanying condensed consolidated financial statements for all periods presented.

See Note 3 for additional details.

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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 the 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.

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 Business

As a continuation of our strategic shift away from power-generation markets, during the fourth quarter of 2020, we completed the wind-down of the SPX Heat Transfer business (“Heat Transfer”), which included providing all products and services on the business’s remaining contracts with customers.

As a result, we are reporting Heat Transfer as a discontinued operation in the accompanying condensed consolidated financial statements.

As a result, we are reporting Heat Transfer as a discontinued operation in the accompanying condensed consolidated financial statements for all periods presented.

See Note 3 for additional details.

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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 is 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.

The estimated fair value of such contingent consideration is $ 24.3 , which is reflected as a liability in our condensed consolidated balance sheets as of July 3, 2021 and December 31, 2020.

Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $ 45.0 , with payments scheduled to be made upon successful achievement of certain operational and financial performance milestones.

At the time of the acquisition, we recorded a liability of $ 24.3 , which

represented the estimated fair value of the contingent consideration.

During the third quarter of 2021, we concluded that the operational and financial milestones noted above would not be achieved.

As a result, we reversed the liability of $ 24.3 during the quarter, with the offset recorded to “Other operating (income) expense” (See Note 9 for further discussion of this matter).

The post-acquisition operating results of ULC are reflected within our Detection and Measurement reportable segment.

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(“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 $ 4.0 , with payment scheduled to be made in 2021 upon successful achievement of a financial performance milestone during the twelve months following the date of acquisition.

The estimated fair value of such contingent considerat ion is $ 0.7 , whic h is reflected as a liability in the accompanying condensed consolidated balance sheets as of July 3, 2021 and December 31, 2020.

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.

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We purchased Sealite for cash proceeds of $ 80.3 , net of cash acquired of $ 2.3 .

The post-acquisition results of Sealite are reflected within our Detection and Measurement Reportable segment.

The assets acquired and liabilities assumed in the ULC, Sensors & Software, and Sealite 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.

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

We experienced adverse impacts of the COVID-19 pandemic during the first half of 2020 with diminishing impacts in the second half of 2020 and through the first half of 2021.

There have been no indications that the COVID-19 pandemic has resulted in a material decline in the carrying value of any assets, or a material change in the estimate of any contingent amounts, recorded in our condensed consolidated balance sheet as of July 3, 2021.

However, there is uncertainty as to the duration and overall impact of the COVID-19 pandemic, which could result in an adverse material change in a future period to the estimates we have made for the valuation of assets and contingent amounts.

The post-acquisition operating results of Sealite are reflected within our Detection and Measurement Reportable segment.

Acquisition of ECS

On August 2, 2021, we completed the acquisition of Enterprise Control Systems Ltd (“ECS”), a leader in the design and manufacture of highly-engineered tactical datalinks and radio frequency (“RF”) countermeasures, including counter-drone and counter-IED RF jammers.

We purchased ECS for cash proceeds of $ 39.4 , net of cash acquired of $ 5.1 .

Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $ 16.8 , with payment to be made in 2022 upon successful achievement of certain financial performance milestones.

The estimated fair value of such contingent consideration is $ 8.2 , which is reflected as a liability in our condensed consolidated balance sheet as of October 2, 2021.

The post-acquisition operating results of ECS are reflected within our Detection and Measurement reportable segment.

The assets acquired and liabilities assumed in the Sensors & Software, Sealite and ECS transactions have been recorded at estimates of fair value as determined by management, based on information available and assumptions as to future operations and are subject to change, primarily for the final assessment and valuation of certain income tax amounts.

Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

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We had five more days in the first quarter of 2021 and will have six fewer days in the fourth quarter of 2021 than 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 six months ended July 3, 2021, when compared to the consolidated operating results for the 2020 respective period.

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

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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.

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 .

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2019-12, Simplifying the Accounting for Income Taxes (Topic 740).

date loss limitations and changes in tax laws, and clarifying the accounting for the step-up in the tax basis of goodwill.

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.

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(3) ACQUISITIONS AND DISCONTINUED OPERATIONS

As indicated in Note 1, on September 2, 2020, November 11, 2020 and April 19, 2021, we completed the acquisitions of ULC, Sensors & Software and Sealite, respectively.

The pro forma effects of these acquisitions are not material to the condensed consolidated results of operations for the three and six months ended June 27, 2020.

Agreement to Sell Transformer Solutions Business

As discussed in Note 1, on June 8, 2021, we entered into a definitive agreement to sell Transformer Solutions and, in connection with such, are reporting the business as a discontinued operation in the accompanying condensed consolidated financial statements.

Major line items constituting pre-tax income and after-tax income of Transformer Solutions for the three and six months ended July 3, 2021 and June 27, 2020 are shown below:

Three months ended Six months ended

July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020

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

As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer Solutions for net cash proceeds of $ 620.6 .

In connection with the sale, we recorded a gain of $ 357.7 to “ Gain (loss) on disposition of discontinued operations, net of tax ” within our condensed consolidated statements of operations for the three and nine months ended October 2, 2021.

The final sales price for Transformer Solutions is subject to adjustment based on cash, debt and working capital existing at the closing date, as well as for specified transaction expenses and other specified items, and is subject to agreement with the Purchaser, with final agreement of these items yet to occur.

Accordingly, it is possible that the sales price and resulting gain for this divestiture may be materially adjusted in subsequent periods.

The results of Transformer Solutions are presented as a discontinued operation for all periods presented.

Major line items constituting pre-tax income and after-tax income (loss) of Transformer Solutions for the three and nine months ended October 2, 2021 and September 26, 2020 are shown below:

Three months ended Nine months ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Revenues $ 94.4 $ 95.1 $ 313.5 $ 319.6

4 unchanged sentences

Income before income tax 2.8 9.9 27.1 44.0

Income tax (provision) benefit (1)

29.9 ( 4.1 ) 27.0 ( 7.8 )

Income from discontinued operations, net of tax $ 42.7 $ 13.5 $ 51.3 $ 26.3

___________________________

(1) During the three and six months ended July 3, 2021, we recorded tax benefits of $ 33.0 in “Income from discontinued operations, net of tax” including (i) $ 28.6 for the excess tax basis in the stock of Transformer Solutions and (ii) $ 4.4 for previously unrecognized state net operating losses, each as a result of the definitive agreement to sell the business.

The assets and liabilities of Transformer Solutions have been classified as assets and liabilities of discontinued operations as of July 3, 2021 and December 31, 2020.

The major line items constituting Transformer Solutions assets and liabilities as of July 3, 2021 and December 31, 2020 are shown below:

July 3, 2021 December 31, 2020

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:

Accounts receivable, net $ 50.9

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As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all prior periods presented.

Major line items constituting pre-tax income (loss) and after-tax income (loss) of Heat Transfer for the three and six months ended June 27, 2020, are shown below:

Three months ended Six months ended

June 27, 2020 June 27, 2020

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

Three months ended Nine months ended

September 26, 2020 September 26, 2020

Revenues $ — $ 3.2

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

We recognized net gains of $ 4.1 and $ 3.3 during the three and six months ended July 3, 2021 and a net loss of $ 1.3 during the three and six months ended June 27, 2020 within “Gain (loss) on disposition of discontinued operations, net of tax” resulting primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior businesses classified as discontinued operations.

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

(4) REVENUES FROM CONTRACTS

Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments and our other operating 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 six months ended July 3, 2021 and June 27, 2020:

Three months ended July 3, 2021

Three months ended October 2, 2021

Reportable Segments and Other HVAC Detection and Measurement Other Total

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equipment, and robotic systems — 60.1 — 60.1

Signal monitoring, obstruction lighting, and bus fare collection systems — 45.3 — 45.3

Communication technologies, obstruction lighting, and bus fare collection systems — 46.3 — 46.3

South African projects — — 0.1 0.1

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$ 179.3 $ 106.4 $ 0.1 $ 285.8

Six months ended July 3, 2021

Nine months ended October 2, 2021

Reportable Segments and Other HVAC Detection and Measurement Other Total

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equipment, and robotic systems — 193.4 — 193.4

Signal monitoring, obstruction lighting, and bus fare collection systems — 89.5 — 89.5

Communication technologies, obstruction lighting, and bus fare collection systems — 135.8 — 135.8

South African projects — — 0.7 0.7

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$ 540.3 $ 329.2 $ 0.9 $ 870.4

Three months ended June 27, 2020

Three months ended September 26, 2020

Reportable Segments and Other HVAC Detection and Measurement Other Total

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Boilers, comfort heating, and ventilation 74.9 — — 74.9

Underground locators and inspection and rehabilitation

equipment — 47.3 — 47.3

Signal monitoring, obstruction lighting, and bus fare collection systems — 44.8 — 44.8

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

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$ 182.6 $ 85.2 $ 0.5 $ 268.3

Six months ended June 27, 2020

Nine months ended September 26, 2020

Reportable Segments and Other HVAC Detection and Measurement Other Total

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Boilers, comfort heating, and ventilation 191.2 — — 191.2

Underground locators and inspection and rehabilitation

equipment — 96.0 — 96.0

Signal monitoring, obstruction lighting, and bus fare collection systems — 88.0 — 88.0

Underground locators, inspection and rehabilitation

equipment, and robotic systems — 148.0 — 148.0

Communication technologies, obstruction lighting, and bus fare collection systems — 121.2 — 121.2

South African projects — — 2.7 2.7

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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 July 3, 2021 and December 31, 2020:

Contract Balances July 3, 2021 December 31, 2020 Change

Our contract balances consisted of the following as of October 2, 2021 and December 31, 2020:

Contract Balances October 2, 2021 December 31, 2020 Change

Contract Accounts Receivable (1)

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

T he $ 19.0 decrease in our net contract balance from December 31, 2020 to July 3, 2021 was due primarily to cash payments received from customers during the period, partially offset by revenue recognized during the period.

During the three and six months ended July 3, 2021, we recognized revenues o f $ 23.2 and $ 38.3 , r espectively, related to our contract liabilities at December 31, 2020.

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

During the three and nine months ended October 2, 2021, we recognized revenues of $ 8.6 and $ 31.8 , r espectively, related to our contract liabilities at December 31, 2020.

Performance Obligations

As of July 3, 2021, the aggre gate amount allocated to remaining performance obligations was $ 103.4 .

As of October 2, 2021, the aggre gate amount allocated to remaining performance obligations was $ 102.5 .

We expect to recognize revenue on approximately 63 % and 86 % of remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

There have been no material changes to our operating and finance leases during the three and six months ended July 3, 2021.

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

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

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In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification.

Operating income or loss for each of our operating segments is determined before considering impairment and special charges, long-term incentive compensation, certain other operating expenses, and other indirect corporate expenses.

This is consistent with the way our Chief Operating Decision Maker evaluates the results of each segment.

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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 six months ended July 3, 2021 and June 27, 2020 are presented below:

Three months ended Six months ended

2021 June 27,

Financial data for our reportable segments and our other operating segment for the three and nine months ended October 2, 2021 and September 26, 2020 are presented below:

Three months ended Nine months ended

2021 September 26,

2020 October 2,

2021 September 26,

HVAC reportable segment $ 179.3 $ 182.6 $ 540.3 $ 510.6

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___________________________

(1) For the three and six months ended July 3, 2021, includes a charge of $ 2.7 related to revisions of recorded assets for asbestos-related claims.

For the six months ended June 27, 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.

(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 six months ended July 3, 2021 and June 27, 2020 are described in more detail below:

Three months ended Six months ended

2021 June 27,

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

Three months ended Nine months ended

2021 September 26,

2020 October 2,

2021 September 26,

HVAC reportable segment $ — $ — $ 0.2 $ 0.5

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Total $ 0.5 $ 0.3 $ 1.9 $ 1.6

HVAC — Charges for the three and six months ended July 3, 2021 related to severance costs associated with a restructuring action at one of the segment's heating businesses.

Charges for the three and six months ended June 27, 2020 related primarily to severance costs associated with restructuring actions at the segment's Patterson-Kelley and Cooling Americas businesses.

Detection and Measurement — Charges for the three and six months ended July 3, 2021 related to severance costs for restructuring actions at the segment's location and inspection businesses .

Charges for the three and six months ended June 27, 2020 related to severance costs for a restructuring action at the segment's bus fare collection systems business.

Other — Charges for the three and six months ended July 3, 2021 and the six months ended June 27, 2020 related to severance costs incurred in connection with the wind-down activities at DBT, our South African subsidiary.

Corporate — Charges for the three and six months ended June 27, 2020 related to asset impairment and other charges associated with the move to a new corporate headquarters.

No significant future charges are expected to be incurred under actions approved as of July 3, 2021.

The following is an analysis of our restructuring liabilities for the six months ended July 3, 2021 and June 27, 2020:

Six months ended

2021 June 27,

HVAC — Charges for the nine months ended October 2, 2021 related to severance costs associated with a restructuring action at one of the segment's heating businesses.

Charges for the nine months ended September 26, 2020 related primarily to severance costs associated with restructuring actions at one 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.

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

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

Nine months ended

2021 September 26,

Balance at beginning of year $ 1.5 $ 1.7

4 unchanged sentences

___________________________

(1) For the six months ended June 27, 2020, excludes $ 0.2 of non-cash charges that impacted “Special charges” but not the restructuring liabilities.

(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.

(8) INVENTORIES, NET

Inventories at July 3, 2021 and December 31, 2020 comprised the following:

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

2021 December 31,

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Certain inventories are valued using the last-in, first-out (“LIFO”) method.

These inventories were approximately 31 % and 35 % of total inventory at July 3, 2021 and December 31, 2020, respectively.

These inventories were approximately 31 % and 35 % of total inventory at October 2, 2021 and December 31, 2020, respectively.

Other inventories are valued using the first-in, first-out (“FIFO”) method.

(9) GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the six months ended July 3, 2021 were as follows:

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

2020 Goodwill

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Combinations (1)

Impairments Foreign

Translation July 3,

Impairments (2)

Translation October 2,

HVAC reportable segment

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___________________________

(1) Reflects (i) goodwill acquired with the Sealite acquisition of $ 39.6 , (ii) an increase in ULC's goodwill during 202 1 of $ 0.8 resulting from revisions to the valuation of certain assets and liabilities, and (iii) an increase in Sensors & Software's goodwill of $ 2.4 resulting from revisions to the valuation of certain assets and income tax accounts.

As indicated in Note 1, the acquired assets, in cluding goodwill, and liabilities assumed in the Sealite, ULC and Sensors & Software acquisitions have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

(1) Reflects (i) goodwill acquired with the Sealite and ECS acquisitions of $ 38.5 and $ 20.6 , re spectively, (ii) an increase in ULC's goodwill during 202 1 of $ 3.1 resulting from revisions to the valuation of certain assets and liabilities and income tax accounts, and (iii) an increase in Sensors & Software's goodwill of $ 2.0 resulting from revisions to the valuation of certain assets and liabilities and income tax accounts.

As indicated in Note 1, the acquired assets, in cluding goodwill, and liabilities assumed in the Sealite, ECS and Sensors & Software acquisitions have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

(2) As indicated in Note 1, we concluded during the third quarter of 2021 that the operating and financial milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $ 24.3 , with the offset to “Other operating (income) expense .

” We also concluded that the lack of achievement of these milestones, along with lower than anticipated future cash flows, are indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill.

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

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

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

Other Intangibles, Net

Identifiable intangible assets at July 3, 2021 and December 31, 2020 comprised the following:

July 3, 2021 December 31, 2020

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

October 2, 2021 December 31, 2020

Value Accumulated

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(1) The identifiable intangible assets associated with the Sealite acquisition consist of customer backlog of $ 1.9 , customer relationships of $ 12.1 and technology of $ 6.6 .

(2) Changes during the six months ended July 3, 2021 related primarily to the acquisition of Sealite trademarks of $ 11.6 .

In connection with the acquisition of Sealite, which has definite-lived intangibles as noted above, we updated our estimated annual amortization expense related to intangible assets to approximately $ 20.0 for the full year 2021, and $ 17.0 for 2022 and each of the four years thereafter.

At July 3, 2021, the net carrying value of intangible assets with determinable lives consisted of $ 23.1 in the HVAC reportable segment and $ 127.7 in the Detection and Measurement reportable segment.

At July 3, 2021, trademarks with indefinite lives consisted of $ 105.6 in the HVAC reportable segment and $ 69.4 in the Detection and Measurement reportable segment.

(1) The identifiable intangible assets as sociated with the Sealite and ECS acquisitions 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 definite-lived trademarks of $ 0.0 and $ 1.2 , respectively.

(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 of Sealite and ECS, which have definite-lived intangible assets as noted above, we increased our estimated annual amortization expense related to intangible assets to approximately $ 21.0 for the full year 2021, and $ 19.0 for 2022 and each of the four years thereafter.

At October 2, 2021, the net carrying value of intangible assets with determinable lives consisted of $ 22.4 in the HVAC reportable segment and $ 141.6 in the Detection and Measurement reportable segment.

At October 2, 2021, trademarks with indefinite lives consisted of $ 105.5 in the HVAC reportable segment and $ 67.7 in the Detection and Measurement reportable segment.

We perform our annual goodwill impairment testing during th e 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.

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(“Cues”), Patterson-Kelley, LLC ( “Patterson-Kelley”) and ULC, exceeded the carrying value of their respective net assets by over 75 %.

The estimated fair values of Cues and Patterson-Kelley exceeded the carrying value of their respective net assets by approximately 12 % and 3 %, while given the recent acquisition of ULC, its fair value approximated the carrying value of its net assets.

The total goodwill for Cues, Patterson-Kelley and ULC was $ 47.9 , $ 14.2 and $ 38.4 , respectively, as of July 3, 2021.

The estimated fair values of Cues and Patterson-Kelley exceeded the carrying value of their respective net assets by approximately 12 % and 3 %, while ULC's fair value approximates the carrying value of its net assets.

The total goodwill for Cues, Patterson-Kelley and ULC was $ 47.9 , $ 14.2 and $ 17.1 , respectively, as of October 2, 2021.

A change in assumptions used in valuing Cues, Patterson-Kelley, or ULC (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in these reporting units estimated fair value being less than the respective carrying value of their net assets.

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The primary basis for these projected revenues is the annual operating plan for each of the related businesses, which is prepared in the fourth quarter of each year.

As indicated in Note 1, the COVID-19 pandemic could have an adverse impact on our future operating results.

As of July 3, 2021, there are no indications that the carrying value of our goodwill and other intangible assets may not be recoverable.

However, a prolonged adverse impact of the COVID-19 pandemic on our future operating results may require an impairment charge related to one or more of these assets in a future period.

(10) WARRANTY

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

Six months ended

2021 June 27,

Nine months ended

2021 September 26,

Balance at beginning of year $ 35.3 $ 31.8

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Domestic Pension Plans

Three months ended Six months ended

2021 June 27,

Three months ended Nine months ended

2021 September 26,

2020 October 2,

2021 September 26,

Service cost $ — $ — $ — $ —

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Foreign Pension Plans

Three months ended Six months ended

2021 June 27,

Three months ended Nine months ended

2021 September 26,

2020 October 2,

2021 September 26,

Service cost $ — $ — $ — $ —

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Postretirement Plans

Three months ended Six months ended

2021 June 27,

Three months ended Nine months ended

2021 September 26,

2020 October 2,

2021 September 26,

Service cost $ — $ — $ — $ —

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(12) INDEBTEDNESS

The following summarizes our debt activity (both current and non-current) for the six months ended July 3, 2021:

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

2020 Borrowings Repayments Other (5)

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(1) While not due for repayment until December 2024 under the terms of our senior credit agreement, we have classified within current liabilities the portion of the outstanding balance that we believe will be repaid over the next year, with such amount based on an estimate of cash that is expected to be generated over such period, including proceeds from the expected sale of Transformer Solutions in the fourth quarter of 2021.

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

(2) The term loan is repayable in quarterly installments beginning in the first quarter of 2021, with the quarterly installments equal to 0.625 % of the initial term loan balance of $ 250.0 during 2021, 1.25 % in each of the four quarters of 2022 and 2023, and 1.25 % during the first three quarters of 2024.

The remaining balance is payable in full on December 17, 2024.

Balances are net of unamortized debt issuance costs of $ 1.2 and $ 1.4 at July 3, 2021 and December 31, 2020, respectively.

Balances are net of unamortized debt issuance costs of $ 1.1 and $ 1.4 at October 2, 2021 and December 31, 2020, respectively.

(3) Under this arrangement, we can borrow, on a continuous basis, up to $ 50.0 , as available.

At July 3, 2021, we had $ 24.0 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $ 26.0 .

Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses.

(4) Primarily includes balances under a purchase card program of $ 2.3 and $ 1.7 and finance lease obligations of $ 2.7 and $ 2.6 at July 3, 2021 and December 31, 2020, respectively.

(4) Primarily includes balances under a purchase card program of $ 2.3 and $ 1.7 and finance lease obligations of $ 1.1 and $ 2.6 at October 2, 2021 and December 31, 2020, respectively.

The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program.

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On May 24, 2021 we elected to reduce our participating foreign credit instrument facility and bilateral foreign credit instrument facility, available for performance letters of credit and guarantees, by an aggregate amount of $ 20.0 and $ 25.0 , respectively.

The facility reduction resulted in a write-off of deferred finance costs of $ 0.2 , recorded to “Interest expense” in the condensed consolidated statement of operations for the three and six months ended July 3, 2021.

At July 3, 2021, we had $ 297.8 of available borrowing capacity under our revolving credit facilities after giving effect to borrowings under the domestic revolving loan facility of $ 140.0 and $ 12.2 reserved for domestic letters of credit.

In addition, at July 3, 2021, we had $ 28.8 of available issuance capacity under our foreign credit instrument facilities after giving effect to $ 26.2 reserved for outstanding letters of credit.

The weighted-average interest rate of outstanding borrowings under our senior credit agreement was approximately 1.5 % at July 3, 2021.

At July 3, 2021, we were in compliance with all covenants of our senior credit agreement.

The facility reduction resulted in a write-off of deferred finance costs of $ 0.2 , recorded to “Interest expense” in the condensed consolidated statement of operations for nine months ended October 2, 2021.

At October 2, 2021, we had $ 437.8 of available borrowing capacity under our revolving credit facilities, after giving effect to $ 12.2 reserved for domestic letters of credit.

In addition, at October 2, 2021, we had $ 31.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to $ 23.8 reserved for outstanding letters of credit.

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

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

Off Balance Sheet Arrangements

As of October 2, 2021, in connection with the sale of Transformer Solutions and pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021, surety bonds totaling approximately $ 27.4 remained in place at the time of sale .

Transformer Solutions and the Purchaser provided us an indemnity in the event that any of the bonds are called.

Under the Stock Purchase Agreement, the Purchaser has 90 days to arrange for substitute surety bonds.

(13) DERIVATIVE FINANCIAL INSTRUMENTS

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We have designated and are accounting for our interest rate swap agreements as cash flow hedges.

As of July 3, 2021 and December 31, 2020, the unrealized loss, net of tax, recorded in AOCI was $ 2.5 and $ 5.9 , respectively.

In addition, as of July 3, 2021, the fair value of our interest rate swap agreements totaled $ 3.3 , with $ 2.4 recorded as a current liability and the remainder in long-term liabilities, and $ 7.8 at December 31, 2020 (with $ 1.4 recorded as a current liability and the remainder in long-term liabilities).

As of October 2, 2021 and December 31, 2020, the unrealized loss, net of tax, recorded in accumulated other comprehensive income ( “ AOCI ”) was $ 2.2 and $ 5.9 , respectively.

In addition, as of October 2, 2021, the fair value of our interest rate swap agreements totaled $ 2.9 , with $ 2.4 recorded as a current liability and the remainder in long-term liabilities, and $ 7.8 at December 31, 2020 (with $ 1.4 recorded as a current liability and the remainder in long-term liabilities).

Changes in fair value of our interest rate swap agree ments are reclassified into earnings as a component of interest expense, when the forecasted transaction impacts earnings.

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None of our FX forward contracts are designated as cash flow hedges.

We had FX forward contracts with an aggregate notional amount of $ 22.8 and $ 6.3 outstanding as of July 3, 2021 and December 31, 2020, respectively, with all of the $ 22.8 scheduled to mature within one year.

We had FX forward contracts with an aggregate notional amount of $ 8.6 and $ 6.3 outstanding as of October 2, 2021 and December 31, 2020, respectively, with all of the $ 8.6 scheduled to mature within one year.

Commodity Contracts

From time to time, we ent er into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials.

At July 3, 2021 and December 31, 2020, the outstanding notional amount of commodity contracts, which relate solely to Transformer Solutions, were 3.0 and 3.2 pounds of copper, respectively.

We designate and account for these contracts as cash flow hedges and, to the extent the commodity contracts are effective in offsetting the variability of the forecasted purchases, the change in fair value is included in AOCI.

We reclassify amounts associated with our commodity contracts out of AOCI when the forecasted transaction impacts earnings.

As of July 3, 2021 and December 31, 2020, the fair value of these contracts were current assets of $ 0.6 and $ 2.4 , respectively.

Since these commodity contracts relate to our Transformer Solutions business, the amounts have been recorded within assets of discontinued operations in the accompanying condensed consolidated balance sheets.

The unrealized gains, net of taxes, recorded in AOCI were $ 0.5 and $ 1.5 as of July 3, 2021 and December 31, 2020, respectively.

The commodity contracts relate solely to Transformer Solutions.

As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer Solutions.

Immediately prior to the sale, we extinguished the existing commodity contracts and reclassified from AOCI a net loss of $ 0.6 to “ Gain (loss) on disposition of discontinued operations, net of tax ” within our condensed consolidated statements of operations for the three and nine months ended October 2, 2021.

At 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.

(14) EQUITY AND LONG-TERM INCENTIVE COMPENSATION

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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 Six months ended

2021 June 27,

Three months ended Nine months ended

2021 September 26,

2020 October 2,

2021 September 26,

Weighted-average number of common shares used in basic income per share 45.331 44.708 45.244 44.538

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Weighted-average number of common shares and dilutive securities used in diluted income per share 46.650 45.894 46.455 45.694

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 0.307 and 0.652 , respectively, for the three months ended July 3, 2021, and 0.269 and 0.632 , respectively, for the six months ended July 3, 2021.

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period were 0.409 and 0.944 , respectively, for the three months ended June 27, 2020, and 0.345 and 0.803 , respectively, for the six months ended June 27, 2020.

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period w ere 0.222 and 0.631 , respectively, for the three months ended October 2, 2021, and 0.261 and 0.631 , re spectively, for the nine months ended October 2, 2021.

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

Long-Term Incentive Compensation

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

C ompensation expense within income from continuing operations related to long-term incentive awards totaled $ 3.3 a nd $ 3.1 for the three months ended July 3, 2021 and June 27, 2020 and $ 6.1 and $ 6.4 for the six months ended July 3, 2021 and June 27, 2020, respectively.

The related tax benefit was $ 0.6 and $ 0.8 for the three months ended July 3, 2021 and June 27, 2020 and $ 1.0 and $ 1.6 for the six months ended J uly 3, 2021 and June 27, 2020, respectively.

C ompensation expense within income from continuing operations related to long-term incentive awards totaled $ 3.4 and $ 3.2 for the three months ended October 2, 2021 and September 26, 2020 and $ 9.5 and $ 9.6 for the nine months ended October 2, 2021 and September 26, 2020, respectively.

The related tax benefit was $ 0.6 and $ 0.8 for the three months ended October 2, 2021 and September 26, 2020 and $ 1.6 and $ 2.4 for the nine months ended October 2, 2021 and September 26, 2020, respectively.

Accumulated Other Comprehensive Income

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended July 3, 2021 were as follows:

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

Adjustment Net Unrealized Losses

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Balance at beginning of period $ 240.1 $ ( 2.0 ) $ 12.5 $ 250.6

Other comprehensive income before reclassifications 0.9 0.2 — 1.1

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 income (loss) 0.9 ( 0.6 ) ( 0.9 ) ( 0.6 )

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 and $ 0.4 as of July 3, 2021 and April 3, 2021, respectively.

(2) Net of tax provision of $ 4.3 and $ 4.6 as of July 3, 2021 and April 3, 2021, respectively.

The balances as of July 3, 2021 and April 3, 2021 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the six months ended July 3, 2021 were as follows:

(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:

Adjustment Net Unrealized

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Balance at beginning of period $ 238.6 $ ( 4.4 ) $ 14.3 $ 248.5

Other comprehensive income before reclassifications 1.5 3.5 — 5.0

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 )

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(1) Net of tax benefit of $ 0.7 and $ 1.4 as of July 3, 2021 and December 31, 2020, respectively.

(2) Net of tax provision of $ 4.3 and $ 4.9 as of July 3, 2021 and December 31, 2020, respectively.

The balances as of July 3, 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 June 27, 2020 were as follows:

(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:

Adjustment Net Unrealized

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Balance at beginning of period $ 227.2 $ ( 8.0 ) $ 16.1 $ 235.3

Other comprehensive income (loss) before reclassifications 4.9 ( 1.4 ) ( 0.1 ) 3.4

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 )

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(1) Net of tax benefit of $ 2.6 and $ 2.7 as of June 27, 2020 and March 28, 2020, respectively.

(2) Net of tax provision of $ 5.5 and $ 5.8 as of June 27, 2020 and March 28, 2020, respectively.

The balances as of June 27, 2020 and March 28, 2020 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the six months ended June 27, 2020 were as follows:

(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:

Adjustment Net Unrealized

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Balance at beginning of period $ 228.0 $ ( 1.6 ) $ 17.9 $ 244.3

Other comprehensive loss before reclassifications ( 0.8 ) ( 8.2 ) — ( 9.0 )

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 loss ( 0.8 ) ( 6.4 ) ( 1.8 ) ( 9.0 )

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 $ 2.6 and $ 0.5 as of June 27, 2020 and December 31, 2019, respectively.

(2) Net of tax provision of $ 5.5 and $ 6.1 as of June 27, 2020 and December 31, 2019, respectively.

The balances as of June 27, 2020 and December 31, 2019 include unamortized prior service credits.

The following summarizes amounts reclassified from each component of accumulated comprehensive income for the three months ended July 3, 2021 and June 27, 2020:

(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

July 3, 2021 June 27, 2020 Affected Line Item in the Condensed

October 2, 2021 September 26, 2020 Affected Line Item in the Condensed

Consolidated Statements of Operations

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Income taxes ( 0.1 ) ( 0.2 )

$ ( 0.8 ) $ 1.4

Gains on pension and postretirement items:

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$ ( 0.9 ) $ ( 0.9 )

The following summarizes amounts reclassified from each component of accumulated comprehensive income for the six months ended July 3, 2021 and June 27, 2020:

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

Amount Reclassified from AOCI

Six months ended

July 3, 2021 June 27, 2020 Affected Line Item in the Condensed

Nine months ended

October 2, 2021 September 26, 2020 Affected Line Item in the Condensed

Consolidated Statements of Operations

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Also, while we believe we are entitled to indemnification from third parties for some of these claims, these rights may be insufficient or unavailable to protect us against potential loss exposures.

Our recorded liabilities related to these matters totaled $ 551.1 and $ 575.7 at July 3, 2021 and December 31, 2020, respectively.

Of these amounts, $ 477.1 and $ 499.8 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at July 3, 2021 and December 31, 2020, 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.

Our recorded liabilities related to these matters totaled $ 540.4 and $ 575.7 at October 2, 2021 and December 31, 2020, respectively.

Of these amounts, $ 469.5 and $ 499.8 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at October 2, 2021 and December 31, 2020, 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.

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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 July 3, 2021 and December 31, 2020:

July 3, 2021 December 31, 2020

Our recorded assets and liabilities related to asbestos-related claims were as follows at October 2, 2021 and December 31, 2020:

October 2, 2021 December 31, 2020

Insurance recovery assets (1)

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(1) Of these amounts , $ 428.7 and $ 446.4 are included in "Other assets" at July 3, 2021 and December 31, 2020, respectively, while the remainder is included in “ Other current assets.

(2) Of these amounts, $ 458.1 a nd $ 479.9 are included in “ Other long-term liabilities" at July 3, 2021 and December 31, 2020, respectively, while the remainder is included in “ Accrued expenses.

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

(2) Of these amounts, $ 444.8 a nd $ 479.9 are included in “ Other long-term liabilities ” at October 2, 2021 and December 31, 2020, respectively, while the remainder is included in “ Accrued expenses.

The liabilities we record for asbestos-related claims are based on a number of assumptions.

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• 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 six months ended July 3, 2021 and June 27, 2020:

Six months ended Six months ended

July 3, 2021 June 27, 2020

The following table presents information regarding activity for the asbestos-related claims for the nine months ended October 2, 2021 and September 26, 2020:

Nine months ended Nine months ended

October 2, 2021 September 26, 2020

Pending claims, beginning of period 9,782 11,079

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These variances relative to current expectations could have a material impact on our financial position and results of operations.

During the six months ended July 3, 2021 and June 27, 2020, our payments for asbestos-related claims, net of respective insurance recoveries of $ 15.3 and $ 16.3 , were $ 8.1 and $ 11.8 , respectively.

During the nine months ended October 2, 2021 and September 26, 2020, our (receipts) payments for asbestos-related claims, net of respective insurance recoveries of $ 39.8 and $ 23.3 , were $( 2.2 ) and $ 15.8 , respectively.

The nine months ended October 2, 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 months and six months ended July 3, 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 six months ended July 3, 2021, nor were there any such changes during the three and six months ended June 27, 2020.

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

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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 534.2 (or $ 37.4 ), which is inclusive of the amounts awarded in the adjudications referred to below, are currently proceeding through contractual dispute resolution processes and DBT is likely to initiate additional dispute resolution processes in 2021.

Of these claims, South African Rand 566.5 (or $ 37.4 ), which is inclusive of the amounts awarded in the adjudications referred to below, are currently proceeding through contractual 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.

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In connection with the ruling, MHI paid DBT South African Rand 126.6 (or $ 8.6 at the time of payment).

This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our condensed consolidated statement of operations for the six months ended July 3, 2021.

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

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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 financial statements of operations for the three and six months ended July 3, 2021.

Claims by MHI - On February 26, 2019, DBT received notification of an interim claim consisting of both direct and consequential damages from MHI alleging, among other things, that DBT (i) provided defective product and (ii) failed to meet certain project milestones.

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As such, no loss has been recorded in the condensed consolidated financial statements with respect to these claims.

Bonds Issued in Favor of MHI - We are obligated with respect to bonds issued by banks in favor of MHI.

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.

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However, given the extent and complexities of the claims between DBT and MHI, reimbursement of the South African Rand 418.3 (or $ 27.6 ) is unlikely to occur over the next twelve months.

As such, we have reflected the South African Rand 418.3 (or $ 29.3 ) as a non-current asset within our condensed consolidated balance sheet as of July 3, 2021.

As such, we have reflected the South African Rand 418.3 (or $ 27.6 ) as a non-current asset within our condensed consolidated balance sheet as of October 2, 2021.

The remaining bond of $ 1.9 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 respective issuing bank.

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 bond, SPX Corporation 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 of operations for the six months ended July 3, 2021.

Litigation Matters

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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 July 3, 2021, we had liabilities for site investigation and/or remediation at 25 sites ( 25 sites at December 31, 2020) that we own or control, or formerly owned and controlled.

As of October 2, 2021, we had liabilities for site investigation and/or remediation at 25 sites ( 25 sites at December 31, 2020) that we own or control, or formerly owned and controlled.

In addition, while we believe that we maintain adequate accruals to cover the costs of site investigation and/or remediation, we cannot provide assurance that new matters, developments, laws and regulations, or stricter interpretations of existing laws and regulations will not materially affect our business or operations in the future.

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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 July 3, 2021, we have been notified th at we are potentially responsible and have received other notices of potential liability pursuant to various environme ntal la ws at 11 si tes at which the liability has not been settled, of which 9 sites have been active in the past few years.

These laws ma y 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.

In the case of contamination at offsite, third-party disposal sites, as of October 2, 2021, we have been notified th at we are potentially responsible and have received other notices of potential liability pursuant to various environme ntal la ws at 11 sites at which the liability has not been settled, 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.

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Uncertain Tax Benefits

As of July 3, 2021 , we had gross unrecognized tax benefits of $ 7.3 (net unrecognized tax benefits of $ 6.4 ).

As of October 2, 2021 , we had gross unrecognized tax benefits of $ 7.3 (net unrecognized tax benefits of $ 6.4 ).

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 July 3, 2021, gross accrued interest totaled $ 3.0 (net accrued interest of $ 2.4 ).

As of July 3, 2021, we had no accrual for penalties included in our unrecognized tax benefits.

As of October 2, 2021, gross accrued interest totaled $ 3.1 (net accrued interest of $ 2.5 ).

As of October 2, 2021, 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 .

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Other Tax Matters

For the three months ended July 3, 2021, we recorded an income tax provision of $ 2.0 on $ 16.7 of pre-tax income from continuing operations, resulting in an effective rate of 12.0 %.

This compares to an income tax provision for the three months ended June 27, 2020 of $ 3.0 on $ 18.2 of pre-tax income from continuing operations, resulting in an effective rate of 16.5 %.

The most significant item impacting the income tax provision for the second quarter of 2021 was a benefit of $ 2.2 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims.

The most significant items impacting the income tax provision for the second quarter of 2020 were (i) $ 0.5 of tax benefits associated with statute expirations in certain jurisdictions and (ii) $ 0.3 of excess tax benefits resulting from stock option awards that were exercised during the period.

For the six months ended July 3, 2021, we recorded an income tax provision o f $ 6.1 on $ 39.8 of pre-tax income from continuing operations, resulting in an effective rate of 15.3 %.

This compares to an income tax provision for the six months ended June 27, 2020 of $ 5.3 on $ 30.0 of pre-tax income from continuing operations, resulting in an effective rate of 17.7 %.

The most significant items impacting the income tax provision for the first half of 2021 were (i) a benefit of $ 2.2 noted above recorded during the second quarter of 2021 and (ii) $ 1.0 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period.

The most significant items impacting the income tax provision for the first half of 2020 were (i) $ 1.5 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period and (ii) the $ 0.5 of tax benefits associated with the statute expirations noted above.

For the three months ended October 2, 2021, we recorded an income tax pro vision of $ 3.7 on $ 11.4 of pre-tax income from continuing operations, resulting in an effective rate of 32.5 %.

This compares t o an income tax provision for the three months ended September 26, 2020 of $ 3.1 on $ 18.7 of pre-tax income from continuing operations, resulting in an effective rate of 16.6 % .

The most significant item impacting the income tax provision for the third quarter of 2021 was $ 0.7 of expense related to th e 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, we recorded an income tax provision o f $ 9.8 on $ 51.2 of pre-tax income from continuing operations, resulting in an effective rate of 19.1 % .

This compares to an income tax provision for the nine months ended September 26, 2020 of $ 8.4 on $ 48.7 of pre-tax income from continuing operations, resulting in an effective rate of 17.2 % .

The most significant items impacting the income tax provision for the first nine months of 2021 were (i) a benefit of $ 2.2 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims and (ii) $ 1.0 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, partially offset by (iii) $ 1.3 of expense related to the revaluation of deferred tax liabilities due to an enacted tax rate increase.

The most significant items impacting the income tax provision for the first nine months of 2020 were (i) $ 1.5 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.

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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 0.0 and Euro 1.0 , r espectively, at July 3, 2021).

In connection with the sale, we recorded a liability for the estimated fair value of the guarantees and bonds and an asset for the estimated fair value of the cash collateral and indemnities provided.

Since the sale of Balcke Dürr, the guarantees expired and bonds have been periodically returned.

As of July 3, 2021, all remaining bonds have been returned.

Summarized below are changes in the liability and asset during the six months ended July 3, 2021 and June 27, 2020.

Six months ended

July 3, 2021 June 27, 2020

Since the sale of Balcke Dürr, the guarantees have expired and bonds have been periodically returned.

As of October 2, 2021, all remaining bonds have been returned.

Summarized below are changes in the liability and asset during the nine months ended October 2, 2021 and September 26, 2020.

Nine months ended

October 2, 2021 September 26, 2020

Guarantees and Bonds Liability (1)

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We recorded the reduction of the liability and the amortization of the asset to “Other income, net.”

Contingent Consideration for ULC and Sensors & Software Acquisitions - In connection with the acquisition of ULC and Sensors & Software, the respective sellers are eligible for additional cash consideration of up to $ 45.0 and $ 4.0 , respectively, with payment of such contingent consideration dependent upon the achievement of certain milestones.

The estimated fair value of such contingent consideration i s $ 24.3 and $ 0.7 , re spectively, with such amounts reflected as liabilities within our condensed consolidated balance sheets as of July 3, 2021 and December 31, 2020.

We estimated the fair value of the contingent consideration for these acquisitions based on the probability of ULC and Sensors & Software achieving these milestones.

Contingent Consideration for Sensors & Software and ECS Acquisitions - In connection with the acquisitions of Sensors & Software and ECS, the respective sellers are eligible for additional cash consideration of up to $ 3.9 and $ 16.8 , respectively, with payment of such contingent consideration dependent upon the achievement of certain milestones.

The estimated fair value of such contingent consideration is $ 0.7 and $ 8.2 , re spectively, with such amounts reflected as liabilities within our condensed consolidated balance sheets.

We estimated the fair value of the contingent consideration for these acquisitions based on the probability of Sensors & Software and ECS achieving the applicable milestones.

Goodwill, Indefinite-Lived Intangible and Other Long-Lived Assets — Certain of our non-financial assets are subject to impairment analysis, including long-lived assets, indefinite-lived intangible assets and goodwill.

We review the carrying

amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually for indefinite-lived intangible assets and goodwill.

We review the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually for indefinite-lived intangible assets and goodwill.

Any resulting asset impairment would require that the instrument be recorded at its fair value.

Valuation Methodologies Used to Measure Fair Value on a Recurring Basis

Derivative Financial Instruments — Our financial derivative assets and liabilities include interest rate swaps, FX forward contracts, and commodity contracts, valued using valuation models based on observable market inputs such as forward rates, inte rest rates, our own credit risk and the credit risk of our counterparties, which comprise investment-grade financial institutions.

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, inte rest 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.

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We primarily use the income approach, which uses valuation techniques to convert future amounts to a single present amount.

As of July 3, 2021, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities.

As of October 2, 2021, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities.

Similarly, there has been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risks.

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

During the three and six months ended July 3, 2021 and June 27, 2020, we recorded a gain of $ 2.2 and $ 5.3 , respectively and $ 7.4 and $ 5.3 , respectively, to “ Other income, net ” to reflect an increase in the estimated fair value of the equity security.

As of July 3, 2021 and December 31, 2020, the equity security had an estimated fair value of $ 34.4 and $ 27.0 , respectively.

Indebtedness and Other — The estimated fair value of our debt instruments as of July 3, 2021 and December 31, 2020 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments.

During the three and nine months ended

October 2, 2021 and September 26, 2020, we recorded a gain of $ 1.6 and $ 9.0 , respectively and $ 2.1 and $ 7.4 , respectively, to “ Other income, net ” to reflect an increase in the estimated fair value of the equity security.

As of October 2, 2021 and December 31, 2020, the equity security had an estimated fair value of $ 36.0 and $ 27.0 , respectively.

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

Se e Note 12 f or further details.

(18) SUBSEQUENT EVENT

On August 2, 2021, we completed the acquisition of Enterprise Control Systems Ltd (“ECS”).

ECS is 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 net cash proceeds of GBP 27.5 (or $ 38.2 at the time of payment).

Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to GBP 12.5 , with payment to occur in 2022 upon successful achievement of certain financial performance milestones.

The post-acquisition results of ECS will be reflected within our Detection and Measurement reportable segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements