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The COVID-19 pandemic has had, and could continue to have, an adverse impact on our business.
−Removed: During March 2020, our business began to experience the adverse impacts of the COVID-19 pandemic, including a modest impact on our consolidated financial results for year ended December 31, 2020.
−Removed: In response, we have taken a number steps to protect our employees, customers, and business, including:
−Removed: • The implementation of a COVID-19 task force, which, among other things, is monitoring the impacts of the COVID-19 pandemic on a regular basis;
−Removed: • The adoption of practices that promote social distancing and prevent the spread of the COVID-19 pandemic (e.g., visitor access restrictions at our facilities, the use of masks and, in most cases, temperature checks at our facilities, remote work arrangements where feasible, staggered work shifts, travel restrictions, etc.);
−Removed: • Enhanced workplace hygiene and sanitary processes at our facilities;
−Removed: • Modified/enhanced employee benefits to better support employee needs in the current environment.
−Removed: The COVID-19 pandemic could continue to have an adverse impact on our business and consolidated financial results during 2021 and we are unable to determine the extent, duration, or nature at this time.
−Removed: The intensity, duration and governmental response to the pandemic, as well as the pace of vaccination efforts, are all highly uncertain and could contribute to the ultimate impact on our business.
+Added: The COVID-19 pandemic had an adverse impact on our consolidated results of operations in the first half of 2020, with diminishing impacts during the second half of 2020 and during 2021.
+Added: The COVID-19 pandemic could have an adverse impact on our business and consolidated financial results during 2022 and we are unable to determine the extent, duration, or nature at this time.
+Added: The intensity, duration and governmental responses to the pandemic, as well as the pace of vaccination efforts and the emergence of new variants of the virus that cause COVID-19, are all highly uncertain and could contribute to the ultimate impact on our business.
Specifically, the COVID-19 pandemic could impact:
+Added: • Our suppliers’ ability to perform and the availability of materials and subcontractors’ services;
• Our customers’ ability to access credit and to pay amounts due to us;
• Our distributors’ ability to perform;
−Removed: • Our suppliers’ ability to perform and the availability of materials and subcontractors’ services;
• Our ability to:
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◦ Meet the financial covenants under our senior credit and other debt agreements.
−Removed: The impact of the COVID-19 pandemic could also result in:
+Added: The impact of the COVID-19 pandemic has resulted, and could continue to result, in:
+Added: • Disruptions in our supply chain or increased costs for certain components or commodities;
+Added: • Labor shortages and difficulties filling the positions within our organization;
• A prolonged reduction in the demand for certain of our products;
• A prolonged shut-down of one or more of our facilities either due to exposure to the COVID-19 pandemic or to further restrictive government orders;
−Removed: • Disruptions in our supply chain or increased costs for certain components or commodities;
• Asset impairment charges;
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Risks Related to Contingent Liabilities
−Removed: We are subject to various claims, disputes, enforcement actions, litigation, arbitration and other legal proceedings related to two large power projects in South Africa that could ultimately be resolved against us.
−Removed: Since 2008, DBT has been executing contracts on two large power projects in South Africa (Kusile and Medupi).
−Removed: Over such time, the business environment surrounding these projects has been difficult, as DBT, along with many other contractors on the projects, have experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including DBT and its subcontractors), and various suppliers.
+Added: Our South African subsidiary is subject to various claims, disputes, enforcement actions, litigation, arbitration and other legal proceedings related to two large power projects in South Africa that could ultimately be resolved against it.
+Added: Since 2008, DBT had been executing on two large power projects in South Africa (Kusile and Medupi), on which it has now substantially completed its scope of work.
+Added: Over such time, the business environment surrounding these projects was difficult, as DBT, along with many other contractors on the projects, experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various
+Added: subcontractors (including DBT and its subcontractors), and various suppliers.
DBT is currently involved in a number of claims relating to these challenges and may be subject to other claims, which could be significant.
−Removed: We cannot give assurance that these claims and the costs to assert our claims and defend claims against us will not have a material adverse effect on our financial position, results of operations, or cash flows.
+Added: SPX has provided parent company guarantees to certain counterparties in connection with these projects.
+Added: We cannot give assurance that these claims and the costs to assert DBT's claims and defend claims against DBT will not have a material adverse effect on our financial position, results of operations, or cash flows.
See “MD&A - Critical Accounting Estimates - Contingent Liabilities” and Note 15 to our consolidated financial statements for further discussion.
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Numerous claims, complaints, and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”).
−Removed: These claims relate to litigation matters (e.g., class actions and contracts, intellectual property, and competitive claims), environmental matters, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims).
+Added: These claims relate to litigation matters ( e.g., class actions and contracts, intellectual property, and competitive claims), environmental matters, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management ma tters (e.g., general liability, automobile, and workers’ compensation claims).
Periodically, claims, complaints and proceedings arising other than in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (e.g.
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We devote significant time and expense to defend against the various claims, complaints, and proceedings brought against us.
−Removed: In addition, from time to time, we bring actions to enforce our rights against customers, suppliers, insurers, and other third
+Added: In addition, from time to time, we bring actions to enforce our rights against customers, suppliers, insurers, and other third parties.
We cannot assure you that the expenses or distractions from operating our businesses arising from these defenses and actions will not increase materially.
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In addition, certain of our businesses are subject to market-specific cycles.
−Removed: Furthermore, contract timing on projects, including those relating to power transmission and distribution systems, communication technologies, fare collection systems, and process cooling systems and towers may cause significant fluctuations in revenues and profits from period to period.
+Added: Furthermore, contract timing on projects, including those relating to communication technologies, fare collection systems, and process cooling systems and towers may cause significant fluctuations in revenues and profits from period to period.
The businesses of many of our customers are to varying degrees cyclical and have experienced, and may continue to experience, periodic downturns.
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Historically, many of our key businesses generally have tended to have stronger performance in the second half of the year.
−Removed: See “MD&A - Results of Continuing Operations and Results of Reportable Segments and Other Operating Segment.”
+Added: See “MD&A - Results of Continuing Operations and Results of Reportable Segments.”
Our business depends on capital investment and maintenance expenditures by our customers.
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In addition, competitive environments in slow-growth markets, to which some of our businesses have exposure, have been inherently more influenced by pricing and domestic and global economic conditions.
−Removed: To remain competitive, we need to invest in manufacturing,
−Removed: marketing, customer service and support, and our distribution networks.
+Added: To remain competitive, we need to invest in manufacturing, marketing, customer service and support, and our distribution networks.
No assurances can be made that we will have sufficient resources to continue to make the investment required to maintain or increase our market share or that our investments will be successful.
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We are exposed to a variety of risks relating to the price and availability of raw materials and components.
−Removed: In recent years, we have faced volatility in the prices of many key raw materials (e.g., copper, steel and oil) and key components (e.g.
−Removed: circuit boards), including price increases in response to trade laws and tariffs.
+Added: In recent years, we have faced volatility in the prices of many key raw materials (e.g., steel and oil) and key components (e.g.
+Added: circuit boards), including price increases in response to trade laws and tariffs and shortages related to the COVID-19 pandemic.
Increases in the prices of raw materials and components, including as a result of new or increased tariffs or the impact of new trade laws, or shortages or allocations of materials and components may have a material adverse effect on our financial position, results of operations or cash flows, as there may be delays in our ability, or we may not be able, to pass cost increases on to our customers, or our sales may be reduced.
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These threats pose a risk to the security of our systems and networks, and those of our business partners and third-party service providers, and to the confidentiality, availability, and integrity of our data.
−Removed: Despite our implementation of security measures, cybersecurity threats, such as malicious software, phishing attacks, computer viruses, and attempts to gain unauthorized access, cannot be completely mitigated.
−Removed: Our business, reputation, operating results, and financial condition could be materially adversely affected if, as a result of a significant cyber event or otherwise, our operations are disrupted or shutdown;
+Added: Despite our implementation of security measures, cybersecurity threats, such as malicious software, ransomware, phishing attacks, computer viruses, and attempts to gain unauthorized access, cannot be completely mitigated.
+Added: Our business, reputation, operating results, and financial condition could be materially adversely affected if, as a result of a significant cyber event or otherwise, our operations or industrial processes are disrupted or shutdown;
our confidential, proprietary information is stolen or disclosed;
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we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information;
−Removed: we must dedicate
−Removed: significant resources to system repairs or increase cyber security protection;
+Added: we must dedicate significant resources to system repairs or increase cyber security protection;
or we otherwise incur significant litigation or other costs.
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Cost overruns, inflation, delays and other risks could significantly impact our results, particularly with respect to fixed-price contracts.
−Removed: A portion of our revenues and earnings is generated through fixed-price contracts, particularly within our Engineered Solutions reportable segment.
+Added: A portion of our revenues and earnings is generated through fixed-price contracts, particularly within our HVAC reportable segment.
We recognize revenues for certain of these contracts over-time whereby revenues and expenses, and thereby profit, in a given period are determined based on our estimates as to the project status and the costs remaining to complete a particular project.
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The occurrence of any defects, errors, failures or quality issues could result in cancellation of orders, product returns, diversion of our resources, legal actions by our customers or our customers’ end users and other losses to us or to any of our customers or end users, and could also result in the loss of or delay in market acceptance of our products and loss of sales, which would harm our business and adversely affect our revenues, profitability and cash flows.
−Removed: Risks Related to Macro-Economic, Domestic and World Political Events
+Added: Risks Related to Macro-Economic, Domestic and World Events
Governmental laws and regulations could negatively affect our business.
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manufacturing bases exposes us to a number of risks, including:
−Removed: • Government embargoes or foreign trade restrictions such as antidumping duties, as well as the imposition of trade sanctions by the United States against a class of products imported from or sold and exported to, or the loss of “normal trade relations” status with, countries in which we conduct business, could significantly increase our cost of products imported into or exported from the United States or reduce our sales and harm our business and the relaxation of embargoes and foreign trade restrictions, including antidumping duties on transformers, by the United States could adversely affect the market for our products in the United States;
+Added: • Government embargoes or foreign trade restrictions such as antidumping duties, as well as the imposition of trade sanctions by the United States against a class of products imported from or sold and exported to, or the loss of “normal trade relations” status with, countries in which we conduct business, could significantly increase our cost of products imported into or exported from the United States or reduce our sales and harm our business and the relaxation of embargoes and foreign trade restrictions, by the United States could adversely affect the market for our products in the United States;
• Customs and tariffs may make it difficult or impossible for us to move our products or assets across borders in a cost-effective manner and may increase the cost of our raw materials, including raw materials sourced domestically;
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• Complications related to shipping, including delays due to weather, labor action, or customs, may impact our profit margins or lead to lost business;
−Removed: • Local, regional or worldwide hostilities could impact our operations;
+Added: • Local, regional or worldwide hostilities, including armed conflicts, could impact our operations;
• Distance and language and cultural differences may make it more difficult to manage our business and employees and to effectively market our products and services;
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Any of the above factors or other factors affecting social and economic activity in the United Kingdom, China, and South Africa or affecting the movement of people and products into and from these countries to our major markets, could have a significant negative effect on our operations.
+Added: Climate change and legal or regulatory responses thereto may have an adverse impact on our business and results of operations.
+Added: There is growing concern that increases in global average temperatures as a result of increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant adverse long-term climate changes, as well as more near-term changes in weather patterns that could adversely impact our operations.
+Added: Moreover, growing concern over climate change may result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment.
+Added: Many of our manufacturing plants and the products we manufacture, particularly in the HVAC reportable segment, use significant amounts of electricity generated by burning fossil fuels, which releases carbon dioxide.
+Added: Additionally, many of the products we manufacture in the HVAC reportable segment use natural gas or oil as a fuel source and may be subject to increasing regulatory restrictions aimed at “de-carbonization” or the elimination of such fuel sources.
+Added: Increased energy or compliance costs and expenses as a result of increased legal or regulatory requirements may cause disruptions in, or an increase in the costs associated with, the manufacturing and distribution of our products and we may be required to develop product improvements to satisfy developing energy-efficiency targets in order to remain competitive.
+Added: In addition, the impacts of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations.
+Added: If we fail to achieve or improperly report on our progress on environmental and sustainability programs and initiatives or fail to develop product improvements to satisfy developing energy-efficiency targets, the results could have an adverse impact on our business, results of operations and financial condition.
Risks Related to Acquisitions and Dispositions
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Our dispositions involve a number of risks and present financial, managerial and operational challenges, including diversion of management attention from running our core businesses, increased expense associated with the dispositions, potential disputes with the customers or suppliers of the disposed businesses, potential disputes with the acquirers of the disposed businesses and a potential dilutive effect on our earnings per share.
−Removed: In addition, we have agreed to retain certain liabilities in connection with the disposition of certain businesses, including the Balcke Dürr business.
−Removed: These liabilities may be significant and could negatively impact our business.
+Added: In addition, we have agreed to retain certain liabilities in connection with the disposition of certain bus inesses.
+Added: These l iabilities may be significant and could negatively impact our business.
If dispositions are not completed in a timely manner, there may be a negative effect on our cash flows and/or our ability to execute our strategy.
In addition, we may not realize some or all of the anticipated benefits of our dispositions.
−Removed: See “Business,” “MD&A - Results of Discontinued Operations,” and Notes 4 and 17 to our consolidated financial statements for the status of our divestitures, including liabilities retained in connection with such dispositions.
+Added: See “Business,”
+Added: “MD&A - Results of Discontinued Operations,” and Note 4 to our consolidated financial statements for the status of our divestitures.
Risks Related to Human Capital Resources
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We are subject to work stoppages, union negotiations, labor disputes and other matters associated with our labor force, which may adversely impact our operations and cause us to incur incremental costs.
−Removed: At December 31, 2020, we had eight domestic collective bargaining agreements covering approximately 1,100 of our over 4,500 employees.
+Added: At December 31, 2021, we had six domestic collective bargaining agreements covering approximately 300 of our over 3,100 employees.
Three of these collective bargaining agreements expire in 2022 and are scheduled for negotiation and renewal.
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Risks Related to Financial Matters
−Removed: Our indebtedness may affect our business and may restrict our operating flexibility.
−Removed: At December 31, 2020, we h ad $412.4 in total indebtedness.
−Removed: On that same date, we had $302.9 of available borrowing capacity under our revolving credit facilities, after giving effect to $17.3 reserved for outstanding letters of credit and $129.8 of borrowings under the revolving credit agreement, and $11.5 of available borrowing capacity under our trade receivables financing arrangement.
−Removed: In addition, at December 31, 2020, we had $11.0 of available issuance capacity under our foreign credit instrument facilities after giving effect to $89.0 reserved for outstanding letters of credit.
−Removed: At December 31, 2020, our cash and equivalents balance was $68.3.
−Removed: See MD&A and Note 13 to our consolidated financial statements for further discussion.
−Removed: We may incur additional indebtedness in the future, including indebtedness incurred to finance, or assumed in connection with, acquisitions.
−Removed: We may renegotiate or refinance our senior credit facilities or other debt facilities, or enter into additional agreements that have different or more stringent terms.
−Removed: The level of our indebtedness could:
−Removed: • Impact our ability to obtain new, or refinance existing, indebtedness, on favorable terms or at all;
−Removed: • Limit our ability to obtain, or obtain on favorable terms, additional debt financing for working capital, capital expenditures or acquisitions;
−Removed: • Limit our flexibility in reacting to competitive and other changes in the industry and economic conditions;
−Removed: • Limit our ability to pay dividends on our common stock in the future;
−Removed: • Coupled with a substantial decrease in net operating cash flows due to economic developments or adverse developments in our business, make it difficult to meet debt service requirements;
−Removed: • Expose us to interest rate fluctuations to the extent existing borrowings are, and any new borrowings may be, at variable rates of interest, which could result in higher interest expense and interest payments in the event of increases in interest rates.
−Removed: Our ability to make scheduled payments of principal or pay interest on, or to refinance, our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which may be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control.
−Removed: In addition, we cannot assure you that future borrowings or equity financing will be available for the payment or refinancing of our indebtedness.
−Removed: If we are unable to service our indebtedness, whether in the ordinary course of business or upon an acceleration of such indebtedness, we may pursue one or more alternative strategies, such as restructuring or refinancing our indebtedness, selling assets, reducing or delaying capital expenditures, revising implementation of or delaying strategic plans or seeking additional equity capital.
−Removed: Any of these actions could have a material adverse effect on our business, financial condition, results of operations and stock price.
−Removed: In addition, we cannot assure that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements, or that these actions would be permitted under the terms of our various debt agreements.
−Removed: Numerous banks in many countries are syndicate members in our credit facility.
−Removed: Failure of one or more of our larger lenders, or several of our smaller lenders, could significantly reduce availability of our credit, which could harm our liquidity.
We may not be able to finance future needs or adapt our business plan to react to changes in economic or business conditions because of restrictions placed on us by our senior credit facilities and any existing or future instruments governing our other indebtedness.
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In addition, our senior credit facilities and agreements governing our other indebtedness contain or may contain additional affirmative and negative covenants.
−Removed: Material existing restrictions are described more fully in the MD&A and Note 13 to our consolidated financial statements.
+Added: Material existing restrictions are described more fully in the “MD&A - Liquidity and Financial Condition - Senior Credit Facilities” and Note 13 to our consolidated financial statements.
Each of these restrictions could affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities, such as acquisitions.
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dollar will increase the effective price of our products sold in U.S.
−Removed: dollars into other countries, including countries utilizing the Euro, which may have a material adverse effect on sales or require us to lower our prices, and also decrease our reported revenues or margins related to sales conducted in foreign currencies to the extent we are unable or determine not to increase local currency prices.
+Added: dollars into other countries, including countries utilizing the Euro, which may have a material adverse effect on sales or require us to lower our
+Added: prices, and also decrease our reported revenues or margins related to sales conducted in foreign currencies to the extent we are unable or determine not to increase local currency prices.
Likewise, the increased strength of the U.S.
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Although we believe that current tax laws and regulations support our positions, there can be no assurance that tax authorities will agree with our positions.
−Removed: In the event tax authorities
−Removed: were to challenge one or more of our tax positions, an unfavorable outcome could have a material adverse impact on our financial position, results of operations, and cash flows.
+Added: In the event tax authorities were to challenge one or more of our tax positions, an unfavorable outcome could have a material adverse impact on our financial position, results of operations, and cash flows.
If the fair value of any of our reporting units is insufficient to recover the carrying value of the goodwill and other intangibles of the respective reporting unit, a material non-cash charge to earnings could result.
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We monitor impairment indicators across all of our businesses.
−Removed: Significant changes in market conditions and estimates or judgments used to determine expected future cash flows that indicate a reduction in carrying value may give, and have given, rise to impairments in the period that the change becomes known.
+Added: Significant changes in market conditions and estimates or judgments used to determine expected
+Added: future cash flows that indicate a reduction in carrying value may give, and have given, rise to impairments in the period that the change becomes known.
Cost reduction actions may affect our business.
9 unchanged sentences
For example, see “MD&A - Critical Accounting Estimates” for the impact that changes in certain assumptions used in the calculation of our costs and obligations associated with these plans could have on our results of operations and financial position.
+Added: Our incurrence of additional indebtedness may affect our business and may restrict our operating flexibility.
+Added: At December 31, 2021, we h ad $246.0 in total indebtedness.
+Added: On that same date, we had $437.8 of available borrowing capacity under our revolving credit facilities, after giving effect to $12.2 reserved for outstanding letters of credit.
+Added: In addition, at December 31, 2021, we had $30.3 of available issuance capacity under our foreign credit instrument facilities after giving effect to $24.7 reserved for outstanding letters of credit.
+Added: At December 31, 2021, our cash and equivalents balance was $396.0.
+Added: See “ MD&A - Liquidity and Financial Condition - Borrowings ” and Note 13 to our consolidated financial statements for further discussion.
+Added: We may incur additional indebtedness in the future, including indebtedness incurred to finance, or assumed in connection with, acquisitions.
+Added: We may renegotiate or refinance our senior credit facilities or other debt facilities, or enter into additional agreements that have different or more stringent terms.
+Added: Increases in the level of our indebtedness relative to our cash balances could:
+Added: • Impact our ability to obtain new, or refinance existing, indebtedness, on favorable terms or at all;
+Added: • Limit our ability to obtain, or obtain on favorable terms, additional debt financing for working capital, capital expenditures or acquisitions;
+Added: • Limit our flexibility in reacting to competitive and other changes in the industry and economic conditions;
+Added: • Limit our ability to pay dividends on our common stock in the future;
+Added: • Coupled with a substantial decrease in net operating cash flows due to economic developments or adverse developments in our business, make it difficult to meet debt service requirements;
+Added: • Expose us to interest rate fluctuations to the extent existing borrowings are, and any new borrowings may be, at variable rates of interest, which could result in higher interest expense and interest payments in the event of increases in interest rates.
+Added: Our ability to make scheduled payments of principal or pay interest on, or to refinance, our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which may be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control.
+Added: In addition, we cannot assure you that future borrowings or equity financing will be available for the payment or refinancing of our indebtedness.
+Added: If we are unable to service our indebtedness, whether in the ordinary course of business or upon an acceleration of such indebtedness, we may pursue one or more alternative strategies, such as restructuring or refinancing our indebtedness, selling assets, reducing or delaying capital expenditures, revising implementation of or delaying strategic plans or seeking additional equity capital.
+Added: Any of these actions could have a material adverse effect on our business, financial condition, results of operations and stock price.
+Added: In addition, we cannot assure that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements, or that these actions would be permitted under the terms of our various debt agreements.
+Added: Numerous banks in many countries are syndicate members in our credit facility.
+Added: Failure of one or more of our larger lenders, or several of our smaller lenders, could significantly reduce availability of our credit, which could harm our liquidity.
+Added: Failure of our internal control over financial reporting could adversely affect our business and financial results.
+Added: Our management is responsible for establishing and maintaining effective internal control over financial reporting.
+Added: Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States (“GAAP”).
+Added: Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our financial statements or fraud.
+Added: Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud.
+Added: The identification of a material weakness could indicate a lack of controls adequate to generate accurate financial statements that, in turn, could cause a loss of investor confidence and decline in the market price of our common stock.
+Added: We cannot assure you that we will be able to timely remediate any material weaknesses that may be identified in future periods or maintain all of the controls necessary for continued compliance.
+Added: We have identified a material weakness in our internal control over financial reporting.
+Added: If this material weakness is not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.
+Added: Management identified a material weakness in our internal control over financial reporting related to the available insurance coverage for liabilities associated with alleged exposure to asbestos-containing materials.
+Added: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
+Added: As discussed in Item 9A.
+Added: “Controls and Procedures” of this filing, management has evaluated its assessment of the effectiveness of internal control over financial reporting and our disclosure controls and procedures and concluded that they were not effective as of December 31, 2021.
+Added: We are committed to remediating the material weakness as promptly as possible, and management is in the process of implementing the remediation plan;
+Added: however, there can be no assurance as to when the material weaknesses will be remediated or that additional material weaknesses will not arise in the future.
+Added: If we are unable to maintain effective internal control over financial reporting, our ability to record, process and report financial information timely and accurately could be adversely affected.
Risks Related to Ownership of Our Common Stock
11 unchanged sentences
In addition, we are afforded the protections of Section 203 of the Delaware General Corporation Law, which could have similar effects.
−Removed: In general, Section 203 prohibits us from engaging in a “business combination” with an “interested stockholder” (each as defined in Section 203) for at least three years after the time the person
−Removed: became an interested stockholder unless certain conditions are met.
+Added: In general, Section 203 prohibits us from engaging in a “business combination” with an “interested stockholder” (each as defined in Section 203) for at least three years after the time the person became an interested stockholder unless certain conditions are met.
These protective provisions could result in our not consummating a transaction that our stockholders consider favorable or discourage entities from attempting to acquire us, potentially at a significant premium to our then-existing stock price.
4 unchanged sentences
Additional shares issued would have a dilutive effect on our earnings per share.
−Removed: The Spin-Off of SPX FLOW could result in substantial tax liability to us and our stockholders .
−Removed: In connection with the Spin-Off of SPX FLOW, we received opinions of tax counsel satisfactory to us as to the tax-free treatment of the Spin-Off and certain related transactions.
−Removed: However, if the factual assumptions or representations upon which the opinions are based are inaccurate or incomplete in any material respect, we will not be able to rely on the opinions.
−Removed: Furthermore, the opinions are not binding on the Internal Revenue Service (“IRS”) or the courts.
−Removed: Accordingly, the IRS may challenge the conclusions set forth in the opinions and any such challenge could prevail.
−Removed: If, notwithstanding the opinions, the Spin-Off or a related transaction is determined to be taxable, we could be subject to a substantial tax liability.
−Removed: In addition, if the Spin-Off is determined to be taxable, each holder of our common stock who received shares of SPX FLOW would generally be treated as having received a taxable distribution of property in an amount equal to the fair market value of the shares received.
−Removed: The Spin-Off may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements.
−Removed: The Spin-Off is subject to review under various state and federal fraudulent conveyance laws.
−Removed: Fraudulent conveyance laws generally provide that an entity engages in a constructive fraudulent conveyance when (1) the entity transfers assets and does not receive fair consideration or reasonably equivalent value in return, and (2) the entity (a) is insolvent at the time of the transfer or is rendered insolvent by the transfer, (b) has unreasonably small capital with which to carry on its business, or (c) intends to incur or believes it will incur debts beyond its ability to repay its debts as they mature.
−Removed: An unpaid creditor or an entity acting on behalf of a creditor (including, without limitation, a trustee or debtor-in-possession in a bankruptcy by us or SPX FLOW or any of our respective subsidiaries) may bring a lawsuit alleging that the Spin-Off or any of the related transactions constituted a constructive fraudulent conveyance.
−Removed: If a court accepts these allegations, it could impose a number of remedies, including, without limitation, voiding the distribution and returning SPX FLOW’s assets or SPX FLOW’s shares and subject us to liability.
−Removed: The measure of insolvency for purposes of the fraudulent conveyance laws will vary depending on which jurisdiction’s law is applied.
−Removed: Generally, an entity would be considered insolvent if (1) the present fair salable value of its assets is less than the amount of its liabilities (including contingent liabilities);
−Removed: (2) the present fair salable value of its assets is less than its probable liabilities on its debts as such debts become absolute and matured;
−Removed: (3) it cannot pay its debts and other liabilities (including contingent liabilities and other commitments) as they mature;
−Removed: or (4) it has unreasonably small capital for the business in which it is engaged.
−Removed: We cannot assure you what standard a court would apply to determine insolvency or that a court would determine that we, SPX FLOW or any of our respective subsidiaries were solvent at the time of or after giving effect to the Spin-Off.
−Removed: The distribution of SPX FLOW common stock is also subject to review under state corporate distribution statutes.
−Removed: Under the General Corporation Law of the State of Delaware (the “DGCL”), a corporation may only pay dividends to its stockholders either (1) out of its surplus (net assets) or (2) if there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.
−Removed: Although we believe that we and SPX FLOW were each solvent at the time of the Spin-Off (including immediately after the distribution of shares of SPX FLOW common stock), that we are able to repay our debts as they mature and have sufficient capital to carry on our businesses, and that the distribution was made entirely out of surplus in accordance with Section 170 of the DGCL, we cannot assure you that a court would reach the same conclusions in determining whether SPX FLOW or we were insolvent at the time of, or after giving effect to, the Spin-Off, or whether lawful funds were available for the separation and the distribution to our stockholders.
Unresolved Staff Comments
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.