What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-02-25 compared with 2021-02-26 · 315 added, 294 removed, 504 unchanged (55% of the section changed)

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Unless otherwise indicated, amounts provided in Item 7 pertain to continuing operations only.

Impact of the COVID-19 Pandemic

As further discussed below, the COVID-19 pandemic had a modest adverse impact on our consolidated results of operations during 2020.

This impact is primarily evident in the decline in revenues at certain of our businesses due to a reduction in customer demand and order delays.

These adverse impacts could continue during 2021.

Although certain of our businesses have been, and could be, impacted more than others in our portfolio, we believe that our diverse set of businesses, along with our strong balance sheet and available liquidity, position us well to manage the potential adverse impacts of the COVID-19 pandemic.

For example, the products we manufacture and services we provide fall under the definition of “critical” or “essential” under various federal guidelines and state/local governmental orders that otherwise restrict business activities.

These include products and services that enable the operation and maintenance of communication networks, the electrical grid, water and wastewater systems, and other key elements of infrastructure.

Our manufacturing facilities have not experienced material interruptions in operations.

If incidents of the COVID-19 pandemic increase, we may temporarily close facilities, if necessary, to address employee safety matters.

In terms of liquidity, we generated $131.1 of cash flows from operating activities associated with continuing operations during 2020 and have experienced no consequential delays in collecting outstanding amounts due from our customers.

In addition, as of December 31, 2020, we had over $350.0 o f availability from cash on-hand and aggregate borrowing capacity under our senior credit facilities and trade receivable financing arrangement.

Lastly, scheduled repayments over the next twelve months for our long-term debt arrangements totaled only $7.2 as of December 31, 2020.

We also have taken actions to manage near-term costs and cash flows, including reducing discretionary expenses, and implemented actions to address potential material sourcing challenges.

We will continue to assess the actual and expected impacts of the COVID-19 pandemic and the need for further actions.

See Notes 2 and 10 to our consolidated financial statements and “Risk Factors” for additional considerations regarding the current and potential impacts of the COVID-19 pandemic.

COVID-19 Pandemic, Supply Chain Disruptions and Labor Shortages, and the Related Impacts to Our Business

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.

During the second half of 2021, certain of our businesses began to experience supply chain disruptions and labor shortages, which have negatively impacted their production of goods and, thus, resulted in lower absorption of manufacturing costs and, in some cases, delays in shipments to customers.

We are taking actions to manage the potential impacts of these matters and we will continue to assess the actual and expected impacts and the need for further actions.

Change in Accounting Method

Historically, certain of our domestic businesses within our HVAC reportable segment accounted for their inventories under the last-in, last-out (“LIFO”) method.

During the fourth quarter of 2021, as a means of harmonizing our accounting method for inventories across all of our businesses, we converted the inventory accounting for these businesses to the first-in, first-out (“FIFO”) method.

This change in accounting has been retrospectively applied to our consolidated financial statements.

See Note 9 to our consolidated financial statements for further discussion of this change, including the impact of the change on our prior years’ consolidated financial statements.

Executive Overview

Revenues for 2021 totaled $1,219.5, compared to $1,128.1 in 2020 (and $1,123.6 in 2019).

The increase in revenues in 2020, compared to 2019, was due primarily to (i) the impact of the acquisitions of SGS and Patterson-Kelley during 2019 and ULC and Sensors & Software during 2020 and (ii) adjustments which resulted in reductions to the cumulative revenue associated with variable consideration on the large power projects in South Africa of $23.5 during 2019, partially offset by a decline in organic revenue in 2020.

The decline in organic revenue was due primarily to lower sales of HVAC heating products, HVAC domestic cooling products, and communication technologies products, partially offset by higher sales of HVAC cooling products in the international markets and power transformers.

A portion of the organic revenue decline is attributable to a decline in customer demand and order delays caused by the COVID-19 pandemic.

The increase in revenues in 2019, compared to 2018, was due to increases in revenues associated with the acquisitions of Schonstedt and Cues in 2018 and Sabik, SGS, and Patterson-Kelley during 2019, partially offset by (i) a decline in organic revenue, (ii) the adjustments of $23.5 noted above related to our large power projects in South Africa, and (iii) a stronger U.S.

dollar during 2019.

The decline in organic revenue was attributable to lower sales related to the large power projects in South Africa, as these projects have been in the latter stages of completion, partially offset by increases in organic revenue for all three of our reportable segments.

The increase in revenues during 2021, compared to 2020, was due primarily to (i) the impact of the ULC and Sensors & Software acquisitions in 2020 and the Sealite, ECS and Cincinnati Fan acquisitions in 2021 and (ii) an increase in organic revenue.

The increase in organic revenue was due primarily to higher sales of heating and underground pipe and locator products, partially offset by lower sales of cooling products.

During the first half of 2020, sales of heating and underground pipe and locator products were impacted negatively by the COVID-19 pandemic.

Sales of cooling products declined in 2021, as several large cooling projects favorably impacted sales in 2020.

The increase in revenues in 2020, compared to 2019, was due to the impact of the acquisitions of SGS and Patterson-Kelley during 2019 and ULC and Sensors & Software during 2020, partially offset by a decline in organic revenue in 2020.

The decline in organic revenue during 2020 was due primarily to lower sales of heating products, domestic cooling products, and communication technologies products, partially offset by higher sales of cooling products in the international markets.

A portion of the organic revenue decline in 2020 was attributable to a decline in customer demand and order delays caused by the COVID-19 pandemic.

For 2021, operating income totaled $73.7, compared to $96.9 in 2020 (and $114.0 in 2019).

The increase in operating income in 2020, compared to 2019, was due primarily to (i) the impact of the reduction in revenues during 2019 of $23.5 noted above associated with the large power projects in South Africa and (ii) increases in profitability at our power transformer and cooling products businesses.

These increases in operating income were partially offset by declines in profitability associated with lower sales of heating products and high-margin communication technologies products.

The decrease in operating income during 2019, compared to 2018, was due primarily to increased losses associated with the large power projects in South Africa, with such losses impacted by the reductions in revenues/profits of $23.5 noted above, partially offset by improved operating results across all three reportable segments.

The decrease in operating income in 2021, compared to 2020, was due primarily to increases in asbestos product liability charges of $16.9 and corporate expense of $10.8.

The increase in asbestos product liability charges was due primarily to a continuing unfavorable trend in the percentage of claims with payment (versus claims dismissed without payment), while the increase in corporate expense was due to additional investments in continuous improvement and strategic initiatives and higher incentive compensation expense in 2021.

The decrease in operating income in 2020, compared to 2019, was due primarily to declines in profitability associated with lower sales of heating products and higher-margin communication technologies products.

Operating cash flows from continuing operations totaled $131.2 in 2021, compared to $105.2 in 2020 (and $110.0 in 2019).

The decrease in operating cash flows from continuing operations, compared to 2019, was due primarily to a decline in cash flows at certain of our project-related businesses during 2020, as cash receipts for these project-related businesses are often subject to contractual milestones that can impact the timing of cash flows from period-to-period.

The increase in operating cash flows from continuing operations in 2019, compared to 2018, was due primarily to higher cash flows at certain of our project-related businesses due to the timing of contractual milestone payments and a decline cash outflows related to the large power

projects in South Africa, as these projects have been in the latter stages of completion.

These improvements in operating cash flows were offset partially by a decline in net income tax refunds (net tax payments of $7.0 in 2019 versus net tax refunds of $44.3 in 2018).

The increase in operating cash flows from continuing operations in 2021, compared to 2020, was due primarily to (i) improved cash flows within our heating and underground pipe and locator businesses associated with improved profitability, (ii) a decline in working capital at certain of our businesses, (iii) insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter, and (iv) income tax refunds, net of tax payments, of $5.5 in 2021 (compared to income tax payments, net of refunds, of $7.6 in 2020).

The decrease in operating cash flows from continuing operations in 2020, compared to 2019, was due primarily to a decline in cash flows at certain of our project-related businesses during 2020, as cash receipts for these project-related businesses are often subject to contractual milestones that can impact the timing of cash flows from year-to-year.

Additional details on certain matters noted above as well as significant items impacting the financial results for 2021, 2020, and 2019 are as follows:

• On April 19, 2021, we completed the acquisition of Sealite.

◦ The purchase price for Sealite was $80.3, net of cash acquired of $2.3.

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

• On August 2, 2021, we completed the acquisition of ECS.

◦ The purchase price for ECS was $39.4 , net of cash acquired of $5.1 .

◦ The seller is eligible for additional cash consideration of up to $16.8 , upon achievement of certain financial performance milestones.

▪ The estimated fair value of such contingent consideration was $8.2 as of the date of acquisition, which we reflected as a liability in our condensed consolidated balance sheet as of the end of the third quarter of 2021.

▪ During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of a large order, resulting in a reduction of the estimated fair value/liability of $ 6.7 , with such amount recorded to "Other operating expenses, net" during the quarter.

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

• O n December 15, 2021 , we completed the acquisition of Cincinnati Fan.

◦ The purchase price for Cincinnati Fan was $145.2, net of cash acquired of $2.5.

◦ The post-acquisition operating results of Cincinnati Fan are included within our HVAC reportable segment.

• On October 1, 2021, we completed the sale of Transformer Solutions.

◦ Transformer Solutions is included in discontinued operations for all periods presented.

◦ We received net cash proceeds of $620.6 and recorded a gain of $382.2 to “Gain (loss) on disposition of discontinued operations, net of tax.”

• Change in Segment Reporting Structure:

◦ In connection with the disposition of Transformer Solutions and its classification as a discontinued operation, we have eliminated the Engineered Solutions reportable segment.

◦ The remaining operations of the former Engineered Solutions reportable segment have been reflected within our HVAC reportable segment for all periods presented.

• DBT (our South Africa subsidiary):

◦ Large Power Projects

▪ On February 22, 2021 and April 28, 2021, DBT received favorable rulings from dispute adjudication panels.

• In connection with the rulings, DBT received South African Rand 126.6 ($8.6 at time of payment) and South African Rand 82.0 ($6.0 at the time of payment), respectively.

• As the rulings are subject to further arbitration, such amounts have not been reflected in our consolidated statement of operations.

• On July 5, 2021, DBT received notice from Mitsubishi Heavy Industries Power – ZAF (or “MHI”) of its intent to seek final and binding arbitration on the matter related to the February 22, 2021 dispute adjudication panel's ruling.

▪ In May 2021, and in connection with certain claims made by MHI, MHI made a demand and received payment of South African Rand 178.7 (or $12.5 at the time of payment) on bonds issued by a bank.

• Under the terms of the bonds and our senior credit agreement, we were required to fund the payment.

• DBT denies liability for these claims and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand 178.7.

• As such, the amount has been reflected as a non-current asset in our consolidated balance sheet as of December 31, 2021.

▪ On June 4, 2021, DBT received a revised version of the interim claim from MHI that was provided on February 26, 2019.

DBT has numerous defenses and, thus, does not believe it has a probable liability associated with these claimed damages.

◦ In the fourth quarter of 2021, we completed the wind-down of DBT.

▪ The wind-down was a culmination of a strategic shift away from the power generation markets.

▪ As a result of completing the wind-down plan, we are now reporting DBT as a discontinued operation for all periods presented.

• Asbestos Product Li ability Matters:

◦ During 2021, we recorded charg es of $51.2 related to asbestos product liability matters, with such charges related primarily to a continuing unfavorable trend in the percentage of claims with payment (versus dismissed without payment).

◦ Of such charges, $48.6 were reflected in “Income from continuing operations before income taxes” and the remainder in “Gain (loss) on disposition of discontinued operations, net of tax.”

◦ Insurance recoveries for asbestos product liability matters, net of payments, totaled $0.3 in 2021.

◦ Insurance recoveries included $15.0 associated with the settlement of an insurance coverage matter.

◦ See Note 15 to our consolidated financial statements for additional details.

• Actuarial Losses on Pension and Postretirement Plans:

◦ We recorded net actuarial gains o f $9.9 in t he fourth quarter of 2021 in connection with the annual remeasurement of our pension and postretirement plans, with such gains resulting primarily from increases in discount rates.

◦ See Notes 1 and 11 to our consolidated financial statements for additional details.

• Changes in the Estimated Fair Value of an Equity Security:

◦ Recorded gains of $11.8 within “Other income (expense), net” related to increases in the estimated fair value of an equity security that we hold.

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

• ULC Contingent Consideration, Indefinite-Lived Intangible Assets, and Goodwill:

◦ The seller of ULC was eligible for additional cash consideration of up to $45.0, upon achievement of certain operating and financial performance milestones.

◦ During the third quarter of 2021, we concluded that the operating and financial milestones associated with the ULC contingent consideration would not be achieved.

◦ As a result, we reversed the related liability of $24.3, with the offset to “Other operating expenses, net.”

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

◦ As such, we tested ULC’s infinite-lived intangible assets and goodwill for impairment during the third quarter of 2021.

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

◦ As a result, we recorded an impairment charge of $24.3 to “Other operating expenses, net,” with $23.3 related to goodwill and the remainder to trademarks.

◦ During the fourth quarter of 2021, we performed our annual analysis of ULC’s indefinite-lived intangible assets and goodwill.

As a result of such analysis, we recorded impairment charges of $5.2, with $0.3 related to trademarks and $4.9 to goodwill.

◦ See Note 1 and 10 to our consolidated financial statements for additional details.

• Sensors & Software Contingent Consideration:

◦ The seller of Sensors & Software was eligible for additional cash consideration of up to $3.9, upon achievement of certain financial performance milestones.

◦ During the fourth quarter of 2021, we concluded that certain of the financial milestones associated with the Sensors & Software contingent consideration had been achieved.

◦ As a result, we recorded an additional charge of $0.6 to “Other operating expenses, net.”

◦ The estimated fair value of such contingent consideration is $1.3 and $0.7, which is reflected as a liability in our consolidated balance sheets at December 31, 2021 and 2020, respectively.

• In February 2020, and as a result of the December 2019 amendment that extended the maturity date of our senior credit facilities to December 17, 2024, we entered into additional interest rate swap agreements.

These additional swaps:

◦ Have a notional amount of $248.4;

◦ Had an initial notional amount of $248.4;

◦ Cover the period March 2021 to November 2024;

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◦ The purchase price for ULC was $89.2, net of cash acquired of $4.0.

◦ The seller is eligible for additional cash consideration of $45.0.

▪ Payments of the contingent consideration are scheduled to be made in 2021 and 2022 upon successful achievement of certain operational and financial milestones.

▪ The estimated fair value of such contingent consideration is $24.3, which is reflected as a liability in our consolidated balance sheet at December 31, 2020.

◦ ULC’s revenues for the twelve months prior to the date of acquisition were approximately $40.0 .

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

• In September 2020, Mitsubishi Heavy Industries Power—ZAF (f.k.a.

Mitsubishi-Hitachi Power Systems Africa (PTY) LTD) (“MHI”), one of the prime contractors on the large power projects in South Africa, made a demand and received payment of South African Rand 239.6 (or $ 14.3 at the time of payment) on certain bonds that were issued by a bank in favor of MHI.

• In September 2020, MHI made a demand and received payment of South African Rand 239.6 (or $14.3 at the time of payment) on certain bonds that were issued by a bank in favor of MHI.

◦ As required under the terms of the bonds and our senior credit agreement, we funded the South African Rand 239.6.

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◦ DBT denies liability and, thus, intends to seek, and believes it is fully entitled to, reimbursement of the South African Rand 239.6 that has been paid.

◦ As such, we have reflected the South African Rand 239.6 (or $16.3 at December 31, 2020) as a non-current asset with in our consolidated balance sheet as of December 31, 2020.

◦ As such, we have reflected the South African Rand 239.6 (or $ 15.0 and $16.3 at December 31, 2021 and 2020, respectively) within non-current assets on our consolidated balance sheets as of December 31, 2021 and 2020.

◦ See Note 15 to our consolidated financial statements for additional details.

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◦ The purchase price for Sensors & Software was $15.5, net of cash acquired of $0.3.

◦ The seller is eligible for additional cash consideration of up to $3.9.

▪ Payment of the contingent consideration is scheduled to be made in 2021 upon successful achievement of a financial milestone during the twelve months following the date of acquisition.

▪ The estimated fair value of such contingent consideration is $0.7, which is reflected as a liability in our consolidated balance sheet at December 31, 2020.

◦ Sensors & Software’s revenues for the twelve months prior to the date of acquisition were approximately $7.0.

◦ The post-acquisition operating results of Sensors & Software are reflected within our Detection and Measurement reportable segment.

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◦ The wind-down was initiated in 2018 after an unsuccessful attempt to sell the business.

◦ The wind-down is part of a strategic shift away from the power generation markets.

◦ As part of this strategic shift, we sold our dry cooling and Balcke Dürr businesses.

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

◦ The wind-down was part of a strategic shift away from the power generation markets.

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

• Asbestos Product Liability Matters:

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◦ The purchase price for Sabik was $77.2, net of cash acquired of $0.6.

◦ Sabik’s revenues for the twelve months prior to the date of acquisition were approximately $28.0.

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

• Adjustments to Revenues and Profits on the Large Power Projects in South Africa:

◦ During the first quarter of 2019, in consideration of recent claims received from the prime contractors on the projects, and in accordance with ASC 606, we analyzed the risk of a significant revenue reversal associated with the amount of variable consideration recorded for the projects.

Based on such analysis, we reduced the amount of cumulative revenue associated with the variable consideration on the projects by $17.5.

◦ On June 28, 2019, DBT reached an agreement with Alstom/GE, one of the prime contractors on the projects, to, among other things, settle all material outstanding claims between the parties (other than certain pass-through claims related to third-parties).

In connection with the agreement, we reduced the revenues associated with the projects by $6.0 during the second quarter of 2019.

◦ See Notes 5 and 15 to our consolidated financial statements for additional details.

• On July 3, 2019, we completed the acquisition of SGS.

◦ The purchase price for SGS was $11.5, including contingent consideration of $1.5 that was paid during 2020.

◦ SGS’s revenues for the twelve months prior to the date of acquisition were approximately $12.0.

◦ The post-acquisition operating results of SGS are reflected within our HVAC reportable segment.

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◦ The purchase price for Patterson-Kelley was $59.9.

◦ Patterson-Kelley’s revenues for the twelve months prior to the date of acquisition were approximately $35.0.

◦ The post-acquisition operating results of Patterson-Kelley are reflected within our HVAC reportable segment.

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In connection with the amendment, we recorded a charge of $0.6 associated with the write-off of a portion of deferred financing costs associated with the senior credit agreement.

◦ See Note 13 to our consolidated financial statements for additional details.

• Asbestos Product Liability Matters:

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• Actuarial Losses on Pension and Postretirement Plans:

◦ We recorded net actuarial losses of $10.0 in t he fourth quarter of 2019 in connection with the annual remeasurement of our pension and postretirement plans.

◦ See Notes 1 and 11 to our consolidated financial statements for additional details, with such losses resulting primarily from declines in discount rates on our unfunded pension and postretirement plans.

◦ We recorded net actuarial losses of $10.0 in t he fourth quarter of 2019 in connection with the annual remeasurement of our pension and postretirement plans, with such losses resulting primarily from declines in discount rates on our unfunded pension and postretirement plans.

◦ See Notes 1 and 11 to our consolidated financial statements for additional details.

• Changes in the Estimated Fair Value of an Equity Security:

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

• On March 1, 2018, we completed the acquisition of Schonstedt.

◦ The purchase price for Schonstedt was $16.4, net of cash acquired of $0.3.

◦ Schonstedt’s revenues for the twelve months prior to the date of acquisition were approximately $9.0.

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

• On June 7, 2018, we completed the acquisition of Cues.

◦ The purchase price for Cues was $164.4, net of cash acquired of $20.6.

◦ Cues’ revenues for the twelve months prior to the date of acquisition were approximately $84.0.

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

◦ See Notes 1 and 4 to our consolidated financial statements for additional details.

• Asbestos Product Liability Matters:

◦ During 2018, we recorded charges of $4.8 related to asbestos product liability matters.

◦ Of such charges, $4.4 were reflected in “Income from continuing operations before income taxes” and the remainder in “Gain (loss) on disposition of discontinued operations, net of tax.”

◦ Payments for asbestos product liability matters, net of insurance recoveries, totaled $9.7 in 2018.

• Actuarial Losses on Pension and Postretirement Plans:

◦ We recorded net actuarial losses of $6.6 in the fourth quarter of 2018 in connection with the annual remeasurement of our pension and postretirement plans, with such losses resulting primarily from negative returns on assets of our foreign pension plans.

◦ See Notes 1 and 11 to our consolidated financial statements for additional details.

Results of Continuing Operations

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We believe we compete effectively on the basis of each of these factors.

Non-GAAP Measures — Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations, acquisitions/divestitures, and the impact of the reduction to revenues on the large power projects in South Africa during 2019 and 2018 of $23.5 and $2.7, respectively.

We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented, as, when read in conjunction with our revenues, it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period.

Non-GAAP Measures — Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations, acquisitions/dives titures, and the impact of a reduction in revenue during 2021 associated with the settlement of claims on a legacy dry cooling project.

We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods pre sented, as, when read in conjunction with our revenues, it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period.

In addition, organic revenue growth (decline) is one of the factors we use in internal evaluations of the overall performance of our business.

This metric, however, is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”), should not be

considered a substitute for net revenue growth (decline) as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.

The following table provides selected financial information for the years ended December 31, 2020, 2019, and 2018, including the reconciliation of organic revenue decline to net revenue increase:

This metric, however, is not a measure of financial performance under GAAP, should not be considered a substitute for net revenue growth (decline) as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.

The following table provides selected financial information for the years ended December 31, 2021, 2020, and 2019, including the reconciliation of organic revenue increase (decline) to net revenue increase:

Year ended December 31, 2021 vs 2020 vs

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Intangible amortization 21.6 14.0 8.9 54.3 57.3

Impairment of intangible assets 0.7 — — * *

Impairment of goodwill and intangible assets 5.7 0.7 — * *

Special charges, net 1.0 2.4 1.5 (58.3) 60.0

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Foreign currency 0.7 —

South Africa revenue adjustments 1.6 (1.4)

Settlement of legacy dry cooling contract (0.4) —

Acquisitions 5.2 5.1

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* Not meaningful for comparison purposes.

Revenues - For 2020, the increase in revenues, compared to 2019, was due primarily to (i) the impact of the acquisitions of SGS and Patterson-Kelley during 2019 and ULC and Sensors & Software during 2020 and (ii) adjustments which resulted in reductions to the cumulative revenue associated with variable consideration on the large power projects in South Africa of $23.5 during 2019, partially offset by a decline in organic revenue in 2020.

Revenues - For 2021, the increase in revenues, compared to 2020, was du e primarily to (i) the impact of the acquisitions of ULC and Sensors & Software in 2020 and Sealite, ECS and Cincinnati Fan in 2021 and (ii) an increase in organic revenue.

The increase in organic revenue was due primarily to higher sales of heating and underground pipe and locator products, partially offset by lower sales of cooling products.

During the first half of 2020, sales of heating and underground pipe and locator products were impacted negatively by the COVID-19 pandemic.

Sales of cooling products declined in 2021, as there were several large cooling projects that favorably impacted sales in 2020.

For 2020, the increase in revenues, compared to 2019, was due to the impact of the acquisitions of SGS and Patterson-Kelley during 2019 and ULC and Sensors & Software during 2020, partially offset by a decline in organic revenue in 2020.

The decline in organic revenue was due primarily to lower sales of heating products, domestic cooling products, and communication technologies products, partially offset by higher sales of cooling products in the international markets.

A portion of the organic revenue decline is attributable to a decline in customer demand and order delays caused by the COVID-19 pandemic.

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

For 2019, the increase in revenues, compared to 2018, was due primarily to increases in revenues associated with the acquisitions of Schonstedt and Cues in 2018 and Sabik, SGS, and Patterson-Kelley in 2019, partially offset by (i) a decline in organic revenue, (ii) adjustments during the first and second quarters of 2019 to revenues on the large power projects in South Africa of $17.5 and $6.0, respectively, and (iii) a stronger U.S.

dollar during 2019.

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

Gross Profit - For 2020, the increase in gross profit and gross profit as a percentage of revenues, compared to 2019, was due primarily to (i) the impact of the reduction in revenues during 2019 of $23.5 noted above associated with the large power projects in South Africa and (ii) increases in profitability at our power transformer and cooling products businesses.

These increases in gross profit and gross profit as a percentage of revenues were offset partially by declines in gross profit within our Detection and Measurement reportable segment resulting from lower sales of high-margin communication technologies products.

For 2019, the increase in gross profit and gross profit as a percentage of revenues, compared to 2018, was due primarily to (i) a more profitable revenue mix and (ii) operational improvements within the cooling businesses of our HVAC reportable segment and power transformer business of our Engineered Solutions reportable segment during 2019.

The more profitable revenue mix resulted from increases in revenues associated with acquired businesses that generally have higher gross margins (i.e., Cues and Sabik) and a decrease in revenue at DBT, a business that historically generates lower gross margins.

In addition, for 2019, gross profit and gross profit as a percentage of revenues were impacted negatively by the aggregate reduction in revenues noted above of $23.5 associated with the large power projects in South Africa.

Selling, General and Administrative (“SG&A”) Expense — For 2020, the increase in SG&A expense, compared to 2019, was due primarily to SG&A associated with ULC since its date of acquisition in 2020 and the impact of a full year’s SG&A associated with the 2019 acquisitions of Sabik, SGS, and Patterson-Kelley.

These increases in SG&A were partially offset by lower incentive compensation and lower travel expense during 2020, with the lower travel expense due to the impact of the COVID-19 pandemic.

For 2019, the increase in SG&A, compared to 2018, was due primarily to SG&A associated with Sabik, SGS, and Patterson-Kelley since their respective dates of acquisition in 2019 and the impact of a full year’s SG&A associated with the 2018 acquisitions of Schonstedt and Cues.

Intangible Amortization — For 2020, the increase in intangible amortization, compared to 2019, was due primarily to the amortization expense associated with ULC since its date of acquisition in 2020 and the impact of a full year’s amortization expense on the 2019 acquisitions of Sabik, SGS, and Patterson-Kelley.

For 2019, the increase in intangible amortization, compared to 2018, was due primarily to the amortization expense associated with Sabik, SGS, and Patterson-Kelley since their respective dates of acquisition in 2019 and the impact of a full year’s amortization expense on the 2018 acquisitions of Schonstedt and Cues.

Impairment of Intangible Assets — In connection with the annual impairment testing of our trademarks during the fourth quarter of 2020, we recorded impairment charges related to certain of these trademarks.

See “Results of Reportable Segments” for additional details.

Gross Profi t - For 2021, the increase in gross profit and gross profit as a percentage of revenues, compared to 2020, was due primarily to the revenue increases noted above.

For 2020, the decrease in gross profit and gross profit as a percentage of revenues, compared to 2019, was due primarily to lower sales of high-margin communication technologies products and heating products.

Selling, General a nd Administrative (“SG&A”) Expense — For 2021, the increase in SG&A expense, compared to 2020, was due primarily to SG&A associated with Sealite, ECS and Cincinnati Fan since their dates of acquisition in 2021 and the impact of a full year’s SG&A associated with the 2020 acquisitions of ULC and Sensors and Software.

Also, additional corporate expense in 2021 associated with (i) increased investments in continuous improvement and strategic initiatives and (ii) higher incentive compensation contributed to the increase in SG&A in 2021.

For 2020, the decrease in SG&A expense, compared to 2019, was due primarily to lower incentive compensation and lower travel expense during 2020, with the lower travel expense due to the impact of the COVID-19 pandemic.

Intangible Amortization — For 2021, the increase in intangible amortization, compared to 2020, was due to the amortization expense associated with Sealite, ECS and Cincinnati Fan since their dates of acquisition in 2021 and the impact of a full year’s amortization expense on the 2020 acquisitions of ULC and Sensors and Software.

For 2020, the increase in intangible amortization, compared to 2019, was due primarily to the amortization expense associated with ULC since its date of acquisition in 2020 and the impact of a full year’s amortization expense on the 2019 acquisitions of Sabik, SGS, and Patterson-Kelley.

Impairment of Goodwill and Intangible Assets — During 2021, we recorded impairment charges of $5.2 related to the goodwill and trademarks of ULC and $0.5 related to certain other trademarks.

During 2020, we recorded $0.7 of impairment charges related to certain trademarks.

See Note 10 to our consolidated financial statements for additional details.

Special Charges, Net — Special charges, net, related primarily to restructuring initiatives to consolidate manufacturing, distribution, sales and administrative facilities, reduce workforce, and rationalize certain product lines.

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Total $ 1.0 $ 2.4 $ 1.5

Other Operating Expenses, Net – During 2020, we recorded charges of $9.4 for asbestos product liability matters related to products that we no longer manufacture, net of 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.

Other Operating Expenses, Net – During 2021, we recorded charges of $26.3 for asbes tos product liability matters related to products that we no longer manufacture, along with a charge of $0.6 related to revisions to the contingent consideration liability associated with the Sensors and Software acquisition, partially offset by income of $6.7 associated with a reduction in the liability associated with the contingent consideration related to the ECS acquisition.

The charges for the asbestos product liability matters were due to a change in assumptions for estimating the related liabilities primarily as a result of a continuing unfavorable trend in the percentage of claims with payment (versus claims dismissed without payment).

The charge of $0.6 was the result of finalizing the contingent consideration amount that is due on the Sensors & Software acquisition.

The income associated with the ECS contingent consideration was due to a change in fair value of the related liability resulting from a lower probability of the business achieving certain defined financial milestones .

During 2020, we recorded charges of $9.4 for asbestos product liability matters, net of 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.

The charges for the asbestos product liability matters were due to a change in assumptions for estimating the related liabilities as a result of recent claim trends.

For 2019 and 2018, we recorded charges associated with revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

Other Income (Expense), Net – Other income, net, for 2020 was composed primarily of a gain of $8.6 related to changes in the estimated fair value of an equity security we hold and income derived from company-owned life insurance policies of $5.0, partially offset by charges of $7.6 associated with asbestos product liability matters and pension and postretirement expense of $3.0.

$7.9 related to changes in the estimated fair value of an equity security that we hold and income derived from company-owned life insurance policies of $4.0.

Other expense, net, for 2018 was composed primarily of pension and postretirement expense of $3.9, charges of $5.0 associated with legacy environmental matters, and charges of $2.0 associated with asbestos product liability matters, partially offset by income of $1.5 related to the reduction of the parent company guarantees and bank surety bonds liability and the amortization of related indemnification assets that were outstanding in connection with the Balcke Dürr sale, income from company-owned life insurance policies of $0.9, and equity earnings in joint ventures of $0.6.

Interest Expense, Net — Interest expense, net, includes both interest expense and interest income.

For 2019, we recorded charges associated with revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

Other Income (Expense), Net – Other income, net, for 2021 was composed primarily of pension and post retirement income of $16.4, a gain of $11.8 related to changes in the estimated fair value of an equity security we hold, and income derived from company-owned life insurance policies of $3.2, partially offset by charges of $21.0 associated with asbestos product liability matters.

The charges associated with asbestos product liability matters were the result of a change in assumptions for estimating the related liabilities due primarily to a continuing unfavorable trend in the percentage of claims with payment (versus claims dismissed without payment).

Other expense, net, for 2020 was composed primarily of charges of $7.6 associated with asbestos product liability matters, pension and postretirement expense of $3.0, environmental remediation charges of $1.5, and foreign currency transaction losses

of $0.6, partially offset by a gain of $8.6 related to changes in the estimated fair value of an equity security we hold and income derived from company-owned life insurance policies of $5.0.

Other expense, net, for 2019 was composed primarily of pension and postretirement expense of $9.9, charges of $4.5 associated with asbestos product liability matters, and foreign currency transaction losses of $1.5, pa rtially offset by a gain of $7.9 related to changes in the estimated fair value of an equity security that we hold and income derived from company-owned life insurance policies of $4.0.

Interest Expense, Ne t — Interest expense, net, includes both interest expense and interest income.

The decrease in interest expense, net, during 2021, compared to 2020, was the result of lower average effective interest rates and lower average debt balances during 2021.

The decrease in interest expense, net, during 2020, compared to 2019, was the result of lower average interest rates during 2020, partially offset by the impact of higher average debt balances during 2020.

The decrease in interest expense, net, during 2019, compared to 2018, was the result of lower average debt balances during 2019.

Loss on Amendment/Refinancing of Senior Credit Agreement — During the fourth quarter of 2019, we amended our senior credit agreement.

In connection with the amendment, we recorded a charge of $0.6, which consisted of the write-off of a portion of the unamortized deferred financing costs related to our senior credit facilities.

During the fourth quarter of 2018, we elected to reduce the issuance capacity of our foreign credit facilities under our senior credit agreement by $50.0.

In connection with such reduction, we recorded a charge of $0.4 associated with the write-off of the unamortized deferred financing costs related to the $50.0 of previously available issuance capacity.

Income Taxes — During 2021, we recorded an income tax provision of $10.9 on $69.9 of pre-tax income from continuing operations, resulting in an effective tax rate of 15.6%.

The most significant items impacting the effective tax rate for 2020 were (i) $4.2 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions and (ii) $2.9 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the year.

The most significant items impacting the effective income tax rate for 2021 were (i) earnings in jurisdictions with lower statutory rates, (ii) $4.3 of income tax benefits related to various valuation allowance adjustments, primarily due to foreign tax credits for which the future realization is now considered likely, and (iii) a benefit of $3.5 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims, partially offset by $13.2 of tax expense associated with global intangible low-taxed income created by the liquidation of various recently acquired entities.

During 2020, we recorded an income tax provision of $4.8 on $78.6 of pre-tax income from continuing operations, resulting in an effective tax rate of 6.1%.

The most significant items impacting the effective tax rate for 2019 were (i) $1.9 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the year, (ii) a $1.9 tax benefit associated with an adjustment to the taxation of foreign earnings, (iii) $1.3 of tax benefits related to our U.S.

tax credits and incentives, and (iv) $1.2 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions, partially offset by $3.8 of tax expense related to various valuation allowance adjustments, primarily due to foreign losses generated during the year for which no foreign tax benefit was recognized as future realization of any such tax benefit is considered unlikely.

The most significant items impacting the effective tax rate for 2020 were (i) earnings in jurisdictions with lower statutory tax rates, (ii) $4.2 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions, and (iii) $2.8 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the year.

During 2019, we recorded an income tax provision of $12.5 on $88.8 of pre-tax income from continuing operations, resulting in an effective tax rate of 14.1%.

The most significant items impacting the effective tax rate for 2018 were (i) the utilization of $33.0 of prior years' losses generated in foreign jurisdictions in which no benefit was previously recognized, (ii) $7.0 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions, and (iii) $2.2 of excess tax benefits resulting from stock-based compensation awards that vested during the year.

The most significant items impacting the effective tax rate for 2019 were (i) $1.6 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the year, (ii) $1.3 of tax benefits related to our U.S.

tax credits and incentives, and (iii) $1.2 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions.

Results of Discontinued Operations

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After an unsuccessful attempt to sell the Heat Transfer business, we implemented a wind-down plan for the business in 2018.

In connection with the wind-down of Heat Transfer, we recorded charges of $3.5 in 2018, with $0.9 related to the write-down of inventory, $0.6 related to the impairment of machinery and equipment, and $2.0 to severance costs.

In addition, we sold certain intangible assets of the business in 2018 for net cash proceeds of $4.8, which resulted in a gain of less than $0.1.

During 2019, we completed the sale of Heat Transfer's manufacturing facility for cash proceeds of $5.5, which resulted in a gain of $0.3.

During the fourth quarter of 2020, we completed the wind-down plan, which included providing all products and services on the business’s remaining contracts with customers.

As a result, we are now reporting Heat Transfer as a discontinued operation for all periods presented.

Sale of Balcke Dürr Business

During 2018, we reached a settlement with the buyer of Balcke Dürr on the amount of cash and working capital at the closing date, as well as on various other matters, for a net payment from the buyer in the amount of Euro 3.0 (or $3.6).

The settlement resulted in a gain, net of tax, of $3.8, which was recorded to “Gain (loss) on disposition of discontinued operations, net of tax.”

As a result, we are reporting Heat Transfer as a discontinued operation for all periods presented.

Sale of Transformer Solutions Business

On October 1, 2021, we completed the sale of Transformer Solutions pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021.

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.

In connection with the sale, we received net cash proceeds of $620.6 and recorded a gain of $382.2 to “Gain (loss) on disposition of discontinued operations, net of tax” within our 2021 consolidated statement of operations.

We have classified the business as a discontinued operation in our consolidated financial statements for all periods presented.

See Notes 1 and 4 to our consolidated financial statements for additional details.

Wind-Down of DBT Business

As a culmination of our strategic shift away from power generation markets, we completed the wind-down of our DBT business.

As a result, we are now reporting DBT as a discontinued operation in our consolidated financial statements for all periods presented.

In connection with the wind-down, we recorded a charge of $19.9 to “Gain (loss) on disposition of discontinued operations, net of taxes” within our consolidated statement of operations for the year ended December 31, 2021 to reflect the write-off of historical currency translation amounts associated with DBT that had been previously reported within “Stockholders' equity” of our consolidated balance sheet.

DBT continues to be engaged in various dispute resolution matters related to two large power projects, as indicated in Note 15 to the consolidated financial statements.

Other Discontinued Operations Activity

In addition to Heat Transfer and Balcke Dürr, we recognized net losses of $3.7 , $4.4 and $0.8 during 2020, 2019 and 2018, respectively, resulting from adjustments to gains/losses on dispositions of other businesses discontinued prior to 2018.

In addition to Heat Transfer, Transformer Solutions, and DBT, we recognized net losses of $1.3, $3.7 and $4.4 during 2021, 2020 and 2019, respectively.

The net losses for 2021, 2020, and 2019 resulted primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior businesses classified as discontinued operations.

Changes in estimates associated with liabilities retained in connection with a business divestiture (e.g., income taxes) may occur.

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2021 2020 2019

Transformer Solutions

Income from discontinued operations $ 454.9 $ 56.9 $ 39.4

Income tax provision (1)

(51.8) (14.0) (8.8)

Income from discontinued operations, net 403.1 42.9 30.6

Loss from discontinued operations (37.8) (16.6) (43.1)

Income tax benefit 2.7 2.4 7.3

Loss from discontinued operations, net (35.1) (14.2) (35.8)

Heat Transfer

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Income (loss) from discontinued operations 409.2 35.8 (9.5)

Income tax (provision) benefit 1.0 — (0.9)

Loss from discontinued operations, net $ (3.5) $ (5.8) $ (0.7)

Results of Reportable Segments and Other Operating Segment

Income tax provision (42.8) (10.6) (1.5)

Income (loss) from discontinued operations, net $ 366.4 $ 25.2 $ (11.0)

________________________________________________

(1) During the fourth quarter of 2021, we liquidated various recently acquired entities.

As a result of this action, we recorded a net income tax benefit of $16.5 within our 2021 consolidated statement of operations, which included an income tax charge of $10.9 within continuing operations and income tax benefit of $27.4 within discontinued operations.

Results of Reportable Segments

The following information should be read in conjunction with our consolidated financial statements and related notes.

These results exclude the operating results of discontinued operations for all periods presented.

See Note 7 to our consolidated financial statements for a description of each of our reportable segments and our other operating segment.

Non-GAAP Measures — Throughout the following discussion of reportable and other operating segments, we use “organic revenue” growth (decline) to facilitate explanation of the operating performance of our segments.

See Note 7 to our consolidated financial statements for a description of each of our reportable segments.

Non-GAAP Measures — Throughout the following discussion of reportable segments, we use “organic revenue” growth (decline) to facilitate explanation of the operating performance of our segments.

Organic revenue growth (decline) is a non-GAAP financial measure, and is not a substitute for net revenue growth (decline).

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% of revenues 13.9 % 13.9 % 14.0 %

Components of revenue increase (decline):

Components of revenue increase:

Organic 1.3 (4.8)

Foreign currency 0.5 (0.1)

Settlement of legacy dry cooling contract (0.6) —

Acquisitions 0.3 5.2

Net revenue increase (decline) (0.4) 1.9

Revenues — For 2020, the decrease in revenues, compared to 2019, was due to a decline in organic revenue, partially offset by the impact of the SGS and Patterson-Kelley acquisitions in 2019.

Net revenue increase 1.5 0.3

Revenues — For 2021, the increase in revenues, compared to 2020, was due primarily to an increase in organic revenue for the segment’s heating businesses, partially offset by a decline in organic revenue at the segment's cooling businesses due to several large projects that contributed significant revenue to the segment's results in 2020.

Sales of heating products during the first half of 2020 were impacted negatively by (i) a warmer than normal winter and (ii) the COVID-19 pandemic.

For 2020, the increase in revenues, compared to 2019, was due to the impact of the SGS and Patterson-Kelley acquisitions in 2019, partially offset by a decline in organic revenue.

The decline in organic revenue was due to a decrease in sales of heating products and domestic cooling products.

The decline in the sales of heating products was due primarily to (i) warmer than normal weather during the first quarter of 2020 and (ii) the negative impact of the COVID-19 pandemic on customer demand.

The decline in the sales of heating products was due primarily to (i) warmer than normal weather during the first half of 2020 and (ii) the negative impact of the COVID-19 pandemic on customer demand.

The demand for domestic cooling products was also negatively impacted by the COVID-19 pandemic.

These declines in organic revenue were offset partially by higher sales of cooling products in the international markets, with such sales favorably impacted by a number of large orders that were secured prior to the COVID-19 pandemic.

For 2019, the increase in revenues, compared to 2018, was due to the impact of the SGS and Patterson-Kelley acquisitions and, to a lesser extent, an increase in organic revenue, partially offset by the impact of a stronger U.S.

dollar in 2019.

The increase in organic revenue was due primarily to higher sales of boiler products, associated primarily with price increases, as well as cooling products in the Americas, partially offset by lower sales of cooling products in the Asia Pacific region.

Income — For 2020, the decrease in income and margin, compared to 2019, was due primarily to the decline in sales of heating products noted above.

Income — For 2021, the increase in income, compared to 2020, was due primarily to the increase in revenues noted above.

For 2020, the decrease in income and margin, compared to 2019, was due primarily to the decline in sales of heating products noted above.

This decrease in income and margin was partially offset by the impact of (i) improved operational execution and a favorable sales mix within the segment’s domestic cooling products business and (ii) higher sales of cooling products in the international markets.

For 2019, the increase in income and margin, compared to 2018, was due primarily to a more profitable sales mix and operational improvements within the segment’s cooling products businesses.

Backlog — The segment had backlog of $82.8 and $77.8 as of December 31, 2020 and 2019, respectively.

Backlog — The segment had backlog of $226.9 (including $20.4 related to Cincinnati Fan) and $150.1 as of December 31, 2021 and 2020, respectively.

Approximately 97% of the segment’s backlog as of December 31, 2021 is expected to be recognized as revenue during 2022.

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Net revenue increase 20.7 0.6

Revenues — For 2020, the increase in revenues, compared to 2019, was due primarily to the impact of the ULC acquisition and, to a lesser extent, the Sensors & Software acquisition, partially offset by a decline in organic revenue.

Revenues — For 2021, the increase in revenues, compared to 2020, was due primarily to the impact of the acquisitions of ECS and Sealite in 2021 and ULC and Sensors and Software in 2020 and, to a lesser extent, organic revenue growth and the impact of foreign currency exchange rates.

The increase in organic revenue was primarily the result of higher sales of underground pipe and locator products and, to a lesser extent, higher sales of communication technologies and obstruction

lighting products.

These increases in organic revenue were offset partially by lower sales of bus fare collection systems.

During the first half of 2020, sales of underground pipe and locator products were impacted negatively by the COVID-19 pandemic, while the decline in sales of bus fare collection systems in the current year was due primarily to the timing of large projects, as the extent of such projects can fluctuate from year-to-year.

For 2020, the increase in revenues, compared to 2019, was due primarily to the impact of the ULC acquisition and, to a lesser extent, the Sensors & Software acquisition, partially offset by a decline in organic revenue.

The decline in organic revenue was primarily the result of lower sales of communication technologies products, with a portion of the decline due to order delays caused by the COVID-19 pandemic.

For 2019, the increase in revenues, compared to 2018, was due to (i) the impact of the Schonstedt and Cues acquisitions in 2018 and the Sabik acquisition in 2019 and, to a lesser extent, (ii) an increase in organic revenue.

The increase in organic revenue was due primarily to additional sales by the segment’s communication technologies businesses, partially offset by a decline in sales by the segment’s bus fare collection systems business.

Income — For 2020, the decrease in income and margin, compared to 2019, was due primarily to the decline in sales of high-margin communication technologies products noted above.

For 2019, the increase in income, compared to 2018, was due to the impact of the acquisitions noted above and the incremental profits resulting from additional revenues within the segment’s communication technologies businesses.

The decrease in margin, compared to 2018, was due primarily to the incremental amortization expense associated with the intangible assets acquired in the Cues and Sabik transactions.

Backlog — The segment had ba cklog of $89.3 (including $10.6 related to ULC and Sensors & Software) and $76.4 as of December 31, 2020 and 2019, respectively.

Income — For 2021, the increase in income, compared to 2020, was due primarily to the increase in revenue noted above, partially offset by increases in amortization expense of $7.1 and inventory step-up charges of $2.3 associated with the acquisitions noted above.

The year-over-year decrease in margins was due primarily to the increases in amortization expense and inventory step-up charges noted above.

For 2020, the decrease in income and margin, compared to 2019, was due primarily to the decline in sales of high-margin communication technologies products noted above.

Backlog — The segment had ba cklog of $153.6 (including $50.8 related to Sealite and ECS) and $89.3 as of December 31, 2021 and 2020, respectively.

Approximately 71% of the segment’s backlog as of Decem ber 31, 2021 is expected to be recognized as revenue during 2022.

Engineered Solutions Reportable Segment

Year Ended December 31, 2020 vs.

2019% 2019 vs.

2020 2019 2018

Revenues $ 577.5 $ 548.9 $ 537.0 5.2 2.2

Income 60.5 43.0 35.0 40.7 22.9

% of revenues 10.5 % 7.8 % 6.5 %

Components of revenue increase:

Organic 5.3 2.2

Foreign currency (0.1) —

Net revenue increase 5.2 2.2

Revenues — For 2020, the increase in revenues, compared to 2019, was due primarily to an increase in organic revenue within the segment’s power transformer business associated with (i) a more favorable sales mix and (ii) improved pricing discipline.

For 2019, the increase in revenues, compared to 2018, was due to an organic revenue increase within the segment’s power transformer business, partially offset by a decrease in organic revenue for the segment’s process cooling business.

Revenue for the segment’s process cooling business continued to be impacted by a shift in its sales model, as the business is focused more on high-margin components and services and less on lower-margin large projects.

Income — For 2020, the increase in income and margin, compared to 2019, was due primarily to the increase in revenues noted above resulting from the favorable sales mix and improved pricing discipline at the segment's power transformer business.

For 2019, the increase in income and margin, compared to 2018, was due primarily to the increase in revenue noted above.

Backlog — The segment ha d backlog of $353.4 and $373.4 as of December 31, 2020 and 2019, respectively.

Approximately 88% of the segment’s backlog a s of December 31, 2020 is expected to be recognized as revenue during 2021.

Year Ended December 31, 2020 vs.

2019% 2019 vs.

2020 2019 2018

Revenues $ 4.0 $ (6.1) $ 72.6 * *

Loss (19.3) (43.6) (16.0) * *

% of revenues * * *

___________________________________________________________________

* Not meaningful for comparison purposes.

Revenues — For 2020, the increase in revenues, compared to 2019, was due to adjustments which resulted in reductions to the cumulative revenue associated with variable consideration on the large power projects in South Africa of $23.5 during 2019.

The year-over-year impact of these adjustments was offset partially by a decline in organic revenue resulting from lower sales on the large power projects in South Africa, as these projects have been in the latter stages of completion.

For 2019, the decrease in revenues, compared to 2018, was due primarily to a decline in organic revenue.

The decline in organic revenue was the result of lower sales related to the large power projects in South Africa, as these projects have been in the latter stages of completion.

In addition, revenues in 2019 were impacted negatively by an adjustment during the first quarter of 2019 to the amount of cumulative revenue associated with the variable consideration on the large power projects in South Africa of $17.5 and an adjustment during the second quarter of 2019 of $6.0 to revenues on the large power projects in South Africa associated with a settlement with Alstom/GE.

Loss — For 2020, the loss decreased, compared to 2019, as operating results for 2019 included the aggregate reduction in revenues/profit noted above of $23.5.

For 2019, the increase in the loss, compared to 2018, was due primarily to the aggregate adjustments noted above to the large power projects in South Africa.

Backlog — The DBT operating segment had aggregate backlog of $3.7 and $7.4 as of December 31, 2020 and 2019, respectively.

Corporate Expense and Other Expense

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Long-term incentive compensation expense 12.8 13.1 12.6 (2.3) 4.0

Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, NC corporate headquarters.

Corporate Expense — Corporate expense generally relates to the cost associated with our Charlotte, NC corporate headquarters.

The increase in corporate expense during 2021, compared to 2020, was due primarily to increased investments in continuous improvement and other strategic initiatives and higher incentive compensation during 2021.

The decrease in corporate expense during 2020, compared to 2019, was due primarily to lower incentive compensation and travel expense during 2020, with the decline in travel expense resulting from the impact of the COVID-19 pandemic.

The decrease in corporate expense in 2019, compared to 2018, was due primarily to a decline in acquisition-related costs and other professional fees, partially offset by higher incentive compensation expense.

Long-Term Incentive Compensation Expense — The increase in long-term incentive compensation in 2020, compared to 2019, was due primarily to the accelerated expense in 2020 on certain awards.

The decrease in long-term incentive compensation in 2019, compared to 2018, was due primarily to certain one-time awards, which were issued in 2015 and became fully vested in the second half of 2018.

Long- Term Incentive Compensation Expense — The decrease in long-term incentive compensation in 2021, compared to 2020, was due primarily to revisions to/finalization of the liability associated with the 2018 long-term cash awards during the first quarter of 2021, partially offset by the impact of a lower amount of award forfeitures during 2021.

The increase in long-term incentive compensation in 2020, compared to 2019, was due primarily to the accelerated expense in 2020 on certain awards.

See Note 16 to our consolidated financial statements for further details on our long-term incentive compensation plans.

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Cash flows from (used in) financing activities (167.8) 16.3 4.7

Cash flows from (used in) discontinued operations (4.8) (0.1) 7.5

Cash flows from discontinued operations 663.7 14.5 24.0

Change in cash and equivalents due to changes in foreign currency exchange rates

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2021 Compared to 2020

Operating Activities – The decrease in cash flows from operating activities, compared to 2019, was due primarily to a decline in cash flows at certain of our project-related businesses during 2020, as cash receipts for these project-related business are often subject to contractual milestones that can impact the timing of cash flows from period-to-period.

Operating Activities – The increase in cash flows from operating activities, compared to 2020, was due primarily to (i) improved cash flows within our heating and underground pipe and locator businesses associated with improved profitability, (ii) a decline in working capital at certain of our businesses, (iii) insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter, and (iv) income tax refunds, net of tax payments, of $5.5 in 2021 (compared to income tax payments, net of refunds, of $7.6 in 2020).

Investing Activiti es - Cash flows used in investing activities for 2021 were comprised primarily of cash utilized in the acquisitions of Sealite, ECS and Cincinnati Fan of $264.9, net expenditures related to company-owned life insurance policies of $31.2, and capital expenditures of $9.6.

Cash flows used in investing activities in 2020 were comprised primarily of cash utilized in the acquisitions of ULC and Sensors & Software of $104.4 and capital expenditures of $15.3.

Financing Activities – Cash flows used in financing activities during 2021 were comprised primarily of net repayments on our various debt instruments of $164.5.

Cash flows from financing activities during 2020 were comprised primarily of net borrowings on our various debt instruments of $15.6.

Discontinued Operations – Cash flows from discontinued operations for 2021 related primarily to proceeds received in connection with the sale of Transformer Solutions of $620.6.

In addition cash flows from discontinued operations include cash flows from operations generated by Transformer Solutions, partially offset by cash flows used in DBT's operations and disbursements related to liabilities retained in connection with other dispositions.

Cash flows from discontinued operations for 2020 related primarily to cash flows generated by Transformer Solutions and Heat Transfer, partially offset by cash flows used in DBT's operations and disbursements for liabilities retained in connection with other dispositions.

Change in Cash and Equivalents Due to Changes in Foreign Currency Exchange Rates - Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during 2021 and 2020.

2020 Compared to 2019

Investing Activities - Cash flows used in investing activities for 2020 were comprised primarily of cash utilized in the acquisitions of ULC and Sensors & Software of $104.4 and capital expenditures of $15.3.

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Financing Activities – Cash flows from financing activities during 2020 were comprised primarily of net borrowings on our various debt instruments of $15.6.

Cash flows used in financing activities during 2019 were comprised primarily of a payment of $15.6 to settle a put option held by a minority shareholder of DBT (see Note 15 to our consolidated financial statements for additional details), partially offset by net borrowings on various debt instruments of $10.0.

Discontinued Operations – Cash flows used in discontinued operations for 2020 related primarily to disbursements for liabilities retained in connection with dispositions, net of cash flows from operations generated by Heat Transfer.

Cash flows used in discontinued operations for 2019 related primarily to disbursements for liabilities retained in connection with dispositions and net cash flows used in operations by Heat Transfer, partially offset by proceeds of $5.5 received in connection with the sale of Heat Transfer's manufacturing facility.

2019 Compared to 2018

Operating Activities – The increase in cash flows from operating activities, compared to 2018, was due primarily to higher cash flows at certain of our project-related businesses due to the timing of contractual milestone payments and a decline in cash outflows related to our large power projects in South Africa, as these projects have been in the latter stages of completion.

These improvements in operating cash flows were offset partially by a decline in net income tax refunds (net tax payments of $7.0 in 2019 versus net tax refunds of $44.3 in 2018).

Investing Activities – Cash flows used in investing activities for 2019 were comprised primarily of cash utilized in the acquisitions of Sabik, SGS, and Patterson-Kelley of $147.1 and capital expenditures of $17.8, partially offset by proceeds from company-owned life insurance policies of $5.9.

Cash flows used in investing activities for 2018 were comprised primarily of cash utilized in the acquisitions of Schonstedt and Cues of $180.8 and capital expenditures of $12.4, partially offset by cash proceeds of $4.6 received in connection with the subsequent sale of marketable securities acquired in connection with the Cues transaction.

Financing Activities - Cash flows used in financing activities during 2019 were comprised primarily of a payment of $15.6 to settle a put option held by the minority shareholder of DBT (see Note 15 to our consolidated financial statements for additional details), partially offset by net borrowings on our various debt instruments of $10.0.

Cash flows from financing activities in 2018 related primarily to net borrowings in connection with the Cues acquisition.

Discontinued Operations – Cash flows used in discontinued operations for 2019 related primarily to disbursements for liabilities retained in connection with dispositions and net cash flows used in operations by Heat Transfer, partially offset by proceeds of $5.5 received in connection with the sale of Heat Transfer's manufacturing facility.

Cash flows from discontinued operations for 2018 related primarily to proceeds of $3.6 received in connection with a settlement reached with the buyer of Balcke Dürr, proceeds of $4.8 received in connection with the sale of certain intangible assets of our Heat Transfer business, and net cash flows from operations generated by Heat Transfer, partially offset by disbursements for liabilities retained in connection with dispositions.

Cash flows from financing activities during 2019 were comprised primarily of net borrowings on various debt instruments of $10.0.

Discontinued Operations – Cash flows from discontinued operations for 2020 related primarily to cash flows generated by Transformer Solutions and Heat Transfer, partially offset by cash flows used in DBT operations and disbursements for liabilities retained in connection with other dispositions.

Cash flows from discontinued operations for 2019 related primarily to cash flows generated by Transformer Solutions and proceeds of $5.5 received in connection with the sale of Heat Transfer's manufacturing facility, partially offset by disbursements for liabilities retained in connection with other dispositions, net cash flows used in operations by Heat Transfer and DBT, and a payment of $15.6 to settle a put option held by a minority shareholder of DBT (see Note 15 to our consolidated financial statements for additional details).

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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.

(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.

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

At December 31, 2020, we had $11.5 of available borrowing capacity under this facility.

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

At December 31, 2021, there was no available borrowing capacity under the agreement.

(4) Primarily includes balances under a purchase card program of $2.2 and $1.7 and finance lease obligations of $1.1 and $2.6 at December 31, 2021 and 2020, respectively.

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dollar, and the impact of amortization of debt issuance costs associated with the term loan.

Maturities of long-term debt payable during each of the five years subsequent to December 31, 2020 are $7.2, $13.3, $13.0, $279.0, and $0.1, respectively.

Maturities of long-term debt payable during each of the five years subsequent to December 31, 2021 are ar e $13.0, $12.9, $218.9, $0.0, and $0.0 respectively.

Senior Credit Facilities

On December 17, 2019, we amended our senior credit agreement (the “Credit Agreement”) to, among other things, extend the term of each facility under the Credit Agreement (with the aggregate of each facility comprising the “Senior Credit Facilities”) and provide for committed senior secured financing with an aggregate amount of $800.0, consisting of the following (each with a final maturity of December 17, 2024):

• A new term loan facility in the aggregate principal amount of $250.0;

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 consolidated statement of operations for the year ended December 31, 2021.

After this reduction, and repayments of term loans through December 31, 2021, our committed senior secured financing consists of the following at December 31, 2021 (each with a final maturity of December 17, 2024):

• A term loan facility with a remaining principle amount, as of December 31, 2021, of $243.7;

• A domestic revolving credit facility, available for loans and letters of credit, in an aggregate principal amount of $300.0;

• A global revolving credit facility, available for loans in USD, Euros, British Pounds Sterling, and other currencies, in the aggregate principal amount up to the equivalent of $150.0;

• A global revolving credit facility, available for loans in USD, Euros, British Pound Sterling, and other currencies, in the aggregate principal amount up to the equivalent of $150.0;

• A participating foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $35.0;

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The Credit Agreement also:

• Requires that we maintain the Consolidated Leverage Ratio (defined in the Credit Agreement) as of the last day of each fiscal quarter to not more than 3.75 to 1.00 (or up to 4.25 to 1.00 for the four fiscal quarters after certain permitted acquisitions);

• Requires that we maintain a Consolidated Leverage Ratio (defined in the Credit Agreement) as of the last day of each fiscal quarter to not more than 3.75 to 1.00 (or up to 4.25 to 1.00 for the four fiscal quarters after certain permitted acquisitions);

• Requires that we maintain a Consolidated Interest Coverage Ratio as of the last day of each fiscal quarter to not less than 3.00 to 1.00;

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Greater than or equal to 3.50 to 1.0

0.350 % 0.350 % 2.000 % 0.350 % 1.250 % 2.000 % 1.000 %

Between 2.50 to 1.0 and 3.50 to 1.0

0.300 % 0.300 % 1.750 % 0.300 % 1.000 % 1.750 % 0.750 %

Between 1.75 to 1.0 and 2.50 to 1.0

0.275 % 0.275 % 1.500 % 0.275 % 0.875 % 1.500 % 0.500 %

Less than 1.75 to 1.0

0.250 % 0.250 % 1.375 % 0.250 % 0.800 % 1.375 % 0.375 %

The interest rates applicable to loans under the Credit Agreement are, at our option, equal to either (i) an alternate base rate (the highest of (a) the federal funds effective rate plus 0.5%, (b) the prime rate of Bank of America, N.A., and (c) the one-month LIBOR rate plus 1.0%) or (ii) a reserve-adjusted LIBOR rate for dollars (Eurodollars) plus, in each case, an applicable margin percentage as previously discussed, which varies based on our Consolidated Leverage Ratio (defined in the Credit Agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings and analogous instruments and net of cash and cash equivalents) at the date of determination to consolidated adjusted EBITDA for the four fiscal quarters ended most recently before such date).

We may elect interest periods of one, two, three or six months (and, if consented to by all relevant lenders, twelve months) for Eurodollar borrowings.

The weighted-average interest rate of outstanding borrowings under our Senior Cre dit Facilities was approximately 1.6% at December 31, 2020.

The weighted-average interest rate of outstanding borrowings under our Senior Credit Facilities was approximately 1.5% at December 31, 2021.

On December 9, 2021, in preparation of our adoption of Accounting Standards Update ("ASU") No.

2020-04 and No.

2021-01, Reference Rate Reform, we entered into a LIBOR transition amendment related to our global revolving credit facility for certain foreign currencies.

This amendment provides for a transition from the LIBOR rate to a successor rate in accordance with the Credit Agreement.

The fees and bilateral foreign credit commitments are as specified above for foreign credit commitments unless otherwise agreed with the bilateral foreign issuing lender.

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We are permitted under the Credit Agreement to repurchase our capital stock and pay cash dividends in an unlimited amount if our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) less than 2.75 to 1.00.

If our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) greater than or equal to 2.75 to 1.00, the aggregate amount of such repurchases and dividend declarations cannot exceed (A) $100.0 in any fiscal year plus (B) an additional amount for all such repurchases and dividend declarations made after September 1, 2015 equal to the sum of (i) $100.0 plus (ii) a positive amount equal to 50% of cumulative Consolidated Net Income (as defined in the Credit Agreement generally as consolidated net income subject to certain adjustments solely for the purposes of determining this basket) during the period from September 1, 2015 to the end of the most recent fiscal quarter preceding the date of such repurchase or dividend declaration for which financial statements have been (or were required to be) delivered (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit) plus (iii) certain other amounts, less our previous usage of such additional amount for certain other investments and restricted junior payments.

At December 31, 2020, we had $302.9 of available borrowing capacity under our revolving credit facilities after giving effect to borrowings under the domestic revolving loan facility of $129.8 and $17.3 reserved for outstanding letters of credit.

generally as consolidated net income subject to certain adjustments solely for the purposes of determining this basket) during the period from September 1, 2015 to the end of the most recent fiscal quarter preceding the date of such repurchase or dividend declaration for which financial statements have been (or were required to be) delivered (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit) plus (iii) certain other amounts, less our previous usage of such additional amount for certain other investments and restricted junior payments.

At December 31, 2021, 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.

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.

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We are party to a trade receivables financing agreement, whereby we can borrow, on a continuous basis, up to $50.0.

Availability of funds may fluctuate over time given changes in eligible receivable balances, but will not exceed the $50.0 program limit.

Availability of funds may fluctuate over time given, among other things, changes in eligible receivable balances, but will not exceed the $50.0 program limit.

The facility contains representations, warranties, covenants and indemnities customary for facilities of this type.

The facility does not contain any covenants that we view as materially constraining to the activities of our business.

In addition, we maintain line of credit facilities in China and South Africa available to fund operations in these regions, when necessary.

At December 31, 2020, the aggregate amount of borrowing capacity under these facilities was $20.0, while there were no borrowings outstanding.

Financial Instruments

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These inputs can be readily observable quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2) or significant unobservable inputs (Level 3).

Our derivative financial assets and liabilities include interest rate swap agreements, FX forward contracts, and forward contracts that manage the exposure on forecasted purchases of commodity raw materials (“commodity contracts”) that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk, and our counterparties’ credit risks.

Our derivative financial assets and liabilities include interest rate swap agreements, forward contracts to manage exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries ("FX forward contracts"), and, as related to Transformer Solutions through its date of disposition, forward contracts that manage the exposure on forecasted purchases of commodity raw materials (“commodity contracts”) that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk, and our counterparties’ credit risks.

Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy.

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Interest Rate Swaps

In March 2018, we entered into interest rate swap agreements (“Initial Swaps”) that had an initial notional amount of $260.0 and maturities through March 2021 and effectively convert a portion of the borrowings under our senior credit facilities to a fixed rate of 2.535%, plus the applicable margin.

As of December 31, 2020, the aggregate notional amount of the Initial Swaps was $234.0.

In February 2020, and as a result of a December 2019 amendment that extended the maturity date of our senior credit facilities to December 17, 2024, we entered into additional interest swap agreements (“Additional Swaps”).

The Additional Swaps have a notional amount of $248.4, cover the period from March 2021 to November 2024, and will effectively convert borrowings under our senior credit facilities to a fixed rate of 1.061%, plus the applicable margin.

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

The Swaps have a notional amount of $243.7, cover the period from March 2021 to November 2024, and effectively convert borrowings under our senior credit facilities to a fixed rate of 1.061%, plus the applicable margin.

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

As of December 31, 2020 and 2019, the unrealized loss, net of tax, recorded in accumulated other comprehensive income (“AOCI”) was $5.9 and $1.9 as of December 31, 2020 and 2019, respectively.

In addition, as of December 31, 2020, the fair value of our interest rate swap agreements totaled $7.8, with $1.4 recorded as a current liability and the remainder in long-term liabilities, and $2.5 at December 31, 2019 (all of which is recorded in long-term liabilities).

As of December 31, 2021 and 2020, the unrealized gain (loss), net of tax, recorded in Accumulated other comprehensive income ("AOCI") was $0.5 and $(5.9), respectively.

In addition, as of December 31, 2021, the fair value of our interest rate swap agreements was $0.6

(with $2.5 recorded as a non-current asset and $1.9 as a current liability), 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 agreements are reclassified into earnings as a component of interest expense, when the forecasted transaction impacts earnings.

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Our principal currency exposures relate to the South African Rand, British Pound Sterling, and Euro.

From time to time, we enter into forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries (“FX forward contracts”).

From time to time, we enter into FX forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries.

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

We had FX forward contracts with an aggregate notional amount of $8.7 and $6.3 outstanding as of December 31, 2021 and 2020, respectively, with all of the $8.7 scheduled to mature in 2022.

The fair value of our FX forward contracts was less than $0.1 at December 31, 2021 and 2020.

Commodity Contracts

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

The outstanding notional amounts of commodity contracts were 3.2 and 3.4 pounds of copper at December 31, 2020 and 2019, respectively.

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

We reclassify AOCI associated with our commodity contracts to cost of products sold when the forecasted transaction impacts earnings.

As of December 31, 2020 and 2019, the fair values of these contracts were current assets of $2.4 and $0.4, respectively.

The unrealized gains, net of taxes, recorded in AOCI were $1.5 and $0.3 as of December 31, 2020 and 2019, respectively.

We anticipate reclassifying the unrealized gain as of December 31, 2020 to income over the next 12 months.

Other Fair Value Financial Assets and Liabilities

The carrying amounts of cash and equivalents and receivables reported in our consolidated balance sheets approximate fair value due to the short maturity of those instruments.

The fair value of our debt instruments as of December 31, 2020 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments.

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

The commodity contracts related 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 consolidated statement of operations for the year ended December 31, 2021.

Prior to extinguishment, we designated and accounted for these c ontracts as cash flow hedges and, to the extent these 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 f orecasted transaction impacted earnings.

As of December 31, 2020, the fair values 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 of our consolidated balance sheet.

The unrealized gain, net of taxes, recorded in AOCI was $1.5 as of December 31, 2020.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, insurance recovery assets associated with asbestos product liability matters, and interest rate swap, foreign currency forward, and commodity contracts.

These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions and insurance companies throughout the world.

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At December 31, 2021, we had $43.7 o f future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year.

Capital expenditures for 2020 totaled $21.5 , compared to $17.8 and $12.4 in 2019 and 2018, respectively.

Capital expenditures in 2020 related primarily to upgrades to manufacturing facilities, including replacement of equipment, and the move of our corporate headquarters.

We expect 2021 capital expenditures to approx imate $20.0 to $25.0, wit h a significant portion related to replacement of equipment.

Capital expenditures for 2021 t otaled $9.6, compared to $15.3 and $13.5 in 2020 and 2019, respectively.

Capital expenditures in 2021 related prima rily to upgrades to manufacturing facilities, including replacement of equipment.

We expect 2022 capital expenditures to approximate $15.0 to $20.0, with a significant portion related to replacement of equipment.

In 2021, we made contributions and direct benefit payments of $12.3 to our defined benefit pension and postretirement benefit plans.

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See Note 11 to our consolidated financial statements for further disclosure of expected future contributions and benefit payments.

On a net basis, both from continuing and discontinued operations, net income tax refunds (payments) totaled ( $7.6) , ( $7.0) , and $44.3 in 2020, 2019, and 2018, respectively.

In 2020, we made payments of $10.8 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $3.2 .

The amount of income taxes that we receive or pay annually is dependent on various factors, including the timing of certain deductions.

On a ne t basis, both from continuing and discontinued operations, net income tax refunds (payments) totaled $5.5, $(7.6), and $(7.0) in 2021, 2020, and 2019, respectively.

In 2021, we made paym en ts of $22.0 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $27.5.

T he amount of income taxes that we receive or pay annually is dependent on various factors, including the timing of certain deductions.

Deductions and the amount of income taxes can and do vary from year-to-year.

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These reviews could result in selected acquisitions to expand an existing business or result in the disposition of an existing business.

In addition, you should read “Risk Factors,” “Results for Reportable Segments and Other Operating Segment” included in this MD&A, and “Business” for an understanding of the risks, uncertainties and trends facing our businesses.

In addition, you should read “Risk Factors,” “Results for Reportable Segments” included in this MD&A, and “Business” for an understanding of the risks, uncertainties and trends facing our businesses.

Off-Balance Sheet Arrangements

As of December 31, 2020, except as discussed in Notes 15 and 17 to our consolidated financial statements and in the contractual obligat ions table below, we did not have any material guarantees, off-balance sheet arrangements or purchase commitments other than the following:

(i) $29.2 of certain standby letters of credit outstanding, all of which relate to self-insurance or environmental matters and $17.3 of which reduce the available borrowing capacity on our domestic revolving credit facility;

(ii) $89.0 of letters of credit outstanding, all of which redu ce the available borrowing capacity on our foreign trade facilities;

and (iii) $168.8 of surety bonds.

A s of December 31, 2021, except as discussed in Notes 15 and 17 to our consolidated financial statements and in the contractual obligations table below, we did not have any material guarantees, off-balance sheet arrangements or purchase commitments other than the following:

(i) $30.8 of certain standby letters of credit outstanding, all of which relate to self-insurance or environmental matters and $12.2 of which reduce the available borrowing capacity on our domestic revolving credit facility, (ii) $24.7 of letters of credit outstanding, all of which reduce the available borrowing capacity on our foreign trade facilities, and (iii) $87.1 of surety bonds.

Contractual Obligations

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The expected pension contributions for the U.S.

plans in 2021 and thereafter reflect the minimum required contributions under the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of 2008.

These contributions do not reflect potential voluntary contributions, or additional contributions that may be required in connection with acquisitions, dispositions or related plan mergers.

plans in 2021 and therea fter reflect the minimum required contributions under the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of 2008.

These contributions do not reflect potential voluntary contributions, or additional contributions that may be required in connection with acquisitions, dispositions or related

plan mergers.

See Note 11 to our consolidated financial statements for additional information on expected future contributions and benefit payments.

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(3) Represents rental payments under operating leases with remaining non-cancelable terms in excess of one year.

(4) Contingent obligations, such as environmental accruals and those relating to uncertain tax positions generally do not have specific payment dates and accordingly have been excluded from the above table.

We believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease up to $ 5.0 .

(5) In addition, the above table does not include potential payments under (i) our derivative financial instruments or (ii) the guarantees and bonds associated with Balcke Dürr.

(5) In addition, the above table does not include potential payments under our derivative financial instruments.

Critical Accounting Estimates

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Our recorded liabilities related to these matters totaled $658.8 and $575.7 at December 31, 2021 and 2020, respectively.

Of these amounts, $499.8 and $517.6 are included in “Other long-term liabilities” within our consolidated balance sheets at

December 31, 2020 and 2019, 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.

Of these amounts, $584.3 and $499.8 are included in “Other long-term liabilities” within our consolidated balance sheets at December 31, 2021 and 2020, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these matters are based on a number of assumptions, inc luding 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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These variances relative to current expectations could have a material impact on our financial position and results of operations.

During the years ended December 31, 2020, 2019 and 2018, our payments for asbestos-related claims, net of respective insurance recoveries of $35.4, $47.1, and $45.3, were $19.3, $13.1 and $9.7, respectively.

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 years ended December 31, 2021, 2020 and 2019, our (receipts) payments for asbestos-related claims, net of respective insurance recoveri es of $53.9, $35.4, and $47.1, were $(0.3), $19.3 and $13.1, respectively.

The year ended December 31, 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 i nsurance 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 years ended December 31, 2021, 2020, and 2019, we recorded charges of $51.2, $21.3, and $10.1, respectively, as a result of changes in estimates associated with the liabilities and assets related to asbestos-related claims.

Of these charges, $19.2, $6.3 and $4.4 were reflected in “Income from continuing operations before income taxes” for the years ended December 31, 2020, 2019, and 2018, respectively, and $2.1, $3.8, and $0.4, respectively, were reflected in “Ga in (loss) on disposition of discontinued operations, net of tax.”

Of these charges, $48.6, $19.2 and $6.3 were reflected in “Income from continuing operations before income taxes” for the years ended December 31, 2021, 2020, and 2019, respectively, and $2.6, $2.1, and $3.8, respectively, were reflected in “Gain (loss) on disposition of discontinued operations, net of tax.”

Large Power Projects in South Africa

Overview - Since 2008, DBT has been executing contracts on two large power projects in South Africa (Kusile and Medupi).

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.

DBT has substantially completed its scope of work, with its remaining responsibilities related largely to resolution of various claims, primarily between itself and one of its prime contractors, Mitsubishi Heavy Industries Power—ZAF (f.k.a.

Mitsubishi-Hitachi Power Systems Africa (PTY) LTD), or “ MHI.”

Overview - 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.

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 subcontractors (including DBT and its subcontractors), and various suppliers.

DBT's remaining responsibilities relate largely to resolution of various claims, primarily between itself and one of its prime contractors, MHI.

The challenges related to the projects have resulted in (i) significant adjustments to our revenue and cost estimates for the projects, (ii) DBT’s submission of numerous change orders to the prime contractors, (iii) various claims and disputes between DBT and other parties involved with the projects (e.g., prime contractors, subcontractors, suppliers, etc.), and (iv) the possibility that DBT may become subject to additional claims, which could be significant.

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Claims by DBT - DBT has asserted claims against MHI of approximately South African Rand 1,000.0 (or $62.6).

As we prepare these claims for dispute resolution processes, the amounts, along with the characterization, of the claims could change.

Of these claims, South African Rand 372.1 (or $25.3) are currently proceeding through contractual dispute resolution processes and DBT is likely to initiate additional dispute resolution processes in 2021.

As DBT prepares these claims for dispute resolution processes, the amounts, along with the characterization, of the claims could change.

Of these claims, South African Rand 566.5 (or $35.5), 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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No revenue has been recorded in the consolidated financial statements with respect to current or potential future claims against MHI.

On July 23, 2020, a dispute adjudication panel issued a ruling in favor of DBT on certain matters related to the Kusile and Medupi projects.

The panel (i) ruled that DBT had achieved ta keover on 9 of the units;

(ii) ordered MHI to return $2.3 of bonds (which have been subsequently returned by MHI);

(iii) ruled that DBT is entitled to the return of an additional $4.3 of bonds upon the completion of certain administrative milestones;

(iv) ordered MHI to pay South African Rand 18.4 (or $1.1 at the time of the ruling) in incentive payments for work performed by DBT (which MHI has subsequently paid);

and (v) ruled that MHI waived its rights to assert delay damages against DBT on one of the units of the Kusile project.

The ruling is subject to MHI’s rights to seek further arbitration in the matter, as provided in the contracts.

As such, the incentive payments noted above have not been recorded in our consolidated statements of operations.

On February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on two units of the Kusile project.

The panel ruled that MHI is obligated to pay DBT South African Rand 116.4 (or $7.8 at the time of the ruling).

This ruling is subject to MHI’s rights to seek further arbitration in the matter.

No amount has been reflected in the consolidated financial statements for this matter.

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 consolidated statement of operations for the year ended December 31, 2021.

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

On April 28, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on two units of the Medupi project.

In connection with the ruling, MHI paid DBT South African Rand 82.0 (or $6.0 at the time of payment).

This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our consolidated st atement of operations for the year ended December 31, 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.

We believe the notification is unsubstantiated and the vast majority of the claimed damages are prohibited under the relevant contracts.

Therefore, we believe any loss for the majority of these claimed damages is remote.

For the remainder of the claims, which largely appear to be direct in nature (approximately South African Rand 948.0 or $64.5 ), DBT has numerous defenses and, thus, we do not believe that DBT has a probable loss associated with these claims.

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

In September 2020, MHI made a demand on certain bonds issued in its favor by DBT, based solely on these alleged defects, but without further substantiation or other justification (see further discussion below).

On December 30, 2020, MHI notified DBT of its intent to take these claims to binding arbitration.

On December 30, 2020, MHI notified DBT of its intent to take these claims to binding arbitration even though the vast majority of these claims has not been brought appropriately before a dispute adjudication board as required under the relevant subcontracts.

On June 4, 2021, in connection with the arbitration, DBT received a revised version of the claim.

Similar to the interim claim, we believe the vast majority of the damages summarized in the revised claim are unsubstantiated and, thus, any loss for the majority of these claims is considered remote.

For the remainder of the claims in both the interim notification and the revised

version, which largely appear to be direct in nature (approximately South African Rand 790.0 or $49.5), DBT has numerous defenses and, thus, we do not believe that DBT has a probable loss associated with these claims.

In addition, we do not believe MHI has followed the appropriate dispute resolution processes under our agreement and therefore most, if not all, of its claims against DBT are invalid.

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

DBT intends to vigorously defend itself against these claims.

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and (iv) unpredictable nature of any dispute resolution processes that may occur in connection with these claims.

In April and July 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 407.2 (or $27.7) f rom MHI alleging that DBT failed to meet certain project milestones related to the construction of the filters for both the Kusile and Medupi projects.

In April and July 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 407.2 (or $25.5) from MHI alleging that DBT failed to meet certain project milestones related to the construction of the filters for both the Kusile and Medupi projects.

DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a probable loss associated with these claims.

As such, no loss has been recorded in the consolidated financial

statements with respect to these claims.

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

Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss.

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

On July 23, 2020, a dispute adjudication panel issued a ruling in favor of DBT on certain matters related to the Kusile and Medupi projects.

The panel (i) ruled that DBT had achieved takeover on 9 of the units;

(ii) ordered MHI to return $2.3 of bonds (which have been subsequently returned by MHI);

(iii) ruled that DBT is entitled to the return of an additional $4.0 of bonds upon the completion of certain administrative milestones;

and (iv) ordered MHI to pay South African Rand 18.4 (o r $1.1) i n incentive payments for work performed by DBT (which MHI has subsequently paid), and ruled that MHI waived its rights to assert delay damages against DBT on one of the units of the Kusile project.

The ruling is subject to MHI’s rights to seek further arbitration in the matter, as provided in the contracts.

As such, the incentive payments noted above have not been recorded in our consolidated statement of operations for the year ended December 31, 2020.

Bonds Issued in Favor of MHI - We are 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, which we funded as required under the terms of the bonds and our senior credit agreement.

In its demand, MHI purported that DBT failed to carry out its obligations to rectify certain alleged product defects identified in its February 2019 interim claims notice (see above).

DBT denies liability for such alleged product defects and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand 239.6 (or $16.3) that has been paid.

However, given the extent and com plexities of the claims between DBT and MHI, reimbursement of the South African Rand 239.6 (or $16.3) is unlikely to occur over the next twelve months.

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

In September of 2020, MHI made a demand, and received payment of South African Rand 239.6 (or $14.3 at the time of payment), on certain of these bonds.

In May 2021, MHI made an additional demand, and received payment of South African Rand 178.7 (or $12.5 at time of payment), on certain of the remaining bonds at such time.

In both cases, we funded the payment as required under the terms of the bonds and our senior credit agreement.

In its demands, MHI purported that DBT failed to carry out its obligations to rectify certain alleged product defects and that DBT failed to meet certain project milestones.

DBT denies liability for such allegations and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand 418.3 (or $26.2) that has been paid.

However, given the extent and complexities of the claims between DBT and MHI, reimbursement of the South African Rand 418.3 (or $26.2) is unlikely to occur over the next twelve months.

As such, we have reflected the South African Rand 418.3 (or $26.2) as a non-current asset within our consolidated balance sheet as of December 31, 2021.

The remaining amount of outstanding bonds that have been issued in favor of MHI include (i) $16.2 of performance and retention money guarantees, which could be exercised by MHI for alleged defects or other alleged breaches of DBT's obligations, and (ii) a $22.3 bond that can be exercised by MHI only in the event that (a) it receives a favorable judgment on a certain matter and (b) DBT fails to pay any money damages awarded in such judgment.

In the event that MHI were to receive payment on a portion, or all, of the remaining bonds, we would be required to reimburse the respective issuing bank.

In addition to these bonds, SPX Corporation has guaranteed DBT’s performance on these projects to the prime contractors.

Settlement with the Minority Shareholder of DBT – On October 16, 2019, SPX Technologies (PTY) LTD, DBT’s parent company, along with DBT and SPX Corporation, executed an agreement with the minority shareholder of DBT to settle a put option and other claims between the parties for a total payment of South African Rand 230.0 (or $15.6).

The difference between the settlement amount (South African Rand 230.0) and the amount previously recorded for the matter of South African Rand 257.0, or South African Rand 27.0 (or $1.8), along with a tax benefit of $3.8 associated with the total payment of South African Rand 230.0, has been reflected as an adjustment to “Net income attributable to SPX common shareholders” in our calculations of basic and diluted earnings per share for the year ended December 31, 2019.

The remaining bond of $1.8 issued to MHI as a performance guarantee could be exercised by MHI for an alleged breach of DBT's obligation.

In the event that MHI were to receive payment on a portion, or all, of the remaining bond, we would be required to reimburse the issuing bank.

In addition to this 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 o f such amount and, thus, the amount received by DBT has not been reflected in our consolidated statement of operations for the year ended December 31, 2021.

Settlement with the Minority Shareholder of DBT – On October 16, 2019, SPX Technologies (PTY) LTD, DBT’s parent company, along with DBT and SPX Corporation, executed an agreement with the then minority shareholder of DBT to settle a put option and other claims between the parties for a total payment of South African Rand 230.0 (or $15.6 at the time of payment).

The difference between the settlement amount (South African Rand 230.0) and the amount previously recorded for the matter of South African Rand 257.0, or South African Rand 27.0 (or $1.8), along with a tax benefit of $3.8 associated with the total payment of South African Rand 230.0, has been reflected as an adjustment to “Net income attributable to SPX common stockholders” in our calculations of basic and diluted earnings per share for the year ended December 31, 2019.

Environmental Matters

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It is our policy to accrue for estimated losses from legal actions or claims when events exist that make the realization of the losses or expenses probable and they can be reasonably estimated.

Our environmental accruals cover anticipated costs, including investigation, remediation, and operation and maintenance of clean-up sites.

Our environmental accruals cover anticipated costs, including investigation, remediation, and

operation and maintenance of clean-up sites.

Accordingly, our estimates may change based on future developments, including new or changes in existing environmental laws or policies, differences in costs required to complete anticipated actions from estimates provided, future findings of investigation or remediation actions, or alteration to the expected remediation plans.

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Factors that may affect revenue and costs relating to long-term contracts include, but are not limited to, the following:

• Sales Price Incentives and Sales Price Escalation Clauses — Sales price incentives and sales price escalations that are reasonably assured and reasonably estimable are recorded over the performance period of the contract.

Otherwise, these amounts are recorded when awarded.

• Cost Recovery for Product Design Changes and Claims — On occasion, design specifications may change during the course of the contract.

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Change orders and claims related to design changes are accounted for as described above.

• Material Availability and Costs — Our estimates of material costs generally are based on existing supplier relationships, adequate availability of materials, prevailing market prices for materials, and, in some cases, long-term

supplier contracts.

Changes in our supplier relationships, delays in obtaining materials, or changes in material prices can have a significant impact on our cost and profitability estimates.

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Goodwill and indefinite-lived intangible assets are not amortized, but instead are subject to annual impairment testing.

We review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter and continually assess whether a triggering event has occurred to determine whether the carrying value exceeds the implied fair value.

We monitor the results of each of our reporting units as a means of identifying trends and/or matters that may impact their financial results and, thus, be an indicator of a potential impairment.

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The identification and measurement of goodwill impairment involves the estimation of the fair value of reporting units.

We perform our impairment testing by comparing the estimated fair value of the reporting unit to the carrying value of the reported net assets, with such testing occurring during the fourth quarter of each year in conjunction with our annual financial planning process (or more frequently if impairment indicators arise), based primarily on events and circumstances existing as of the end of the third quarter.

Fair value is generally based on the income approach using a calculation of discounted cash flows, based on the most recent financial projections for the reporting units.

We have the option to assess impairment through a qualitative assessment, which includes factors such as general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which a reporting unit operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others.

When a potential impairment is indicated, we perform quantitative testing by

comparing the estimated fair value of the reporting unit to the carrying value of the reported net assets.

Under our quantitative testing, fair value is generally based on the income approach using a calculation of discounted cash flows, based on the most recent financial projections for the reporting units.

The revenue growth rates included in the financial projections are our best estimates based on current and forecasted market conditions, and the profit margin assumptions are projected by each reporting unit based on current cost structure and, when applicable, anticipated net cost reductions.

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Changes in economic and operating conditions impacting these assumptions could result in impairment charges in future periods.

Based on our annual goodwill impairment testing during the fourth quarter of 2020, we concluded that the estimated fair value of each of our reporting units, exclusive of Cues and Patterson-Kelley, 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 approximatel y 12% and 3%, wh ile the total goodwill for Cues and Patterson-Kelley was $47.9 and $14.2, respectively, as of December 31, 2020.

A change in assumptions used in testing Cues’ and Patterson-Kelley’s goodwill for impairment (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in Cues’ and/or Patterson-Kelley’s estimated fair value being less than the respective carrying value of their net assets.

If Cues and/or Patterson-Kelley is unable to achieve the financial forecasts included in their respective 2020 annual goodwill impairment analysis, we may be required to record an impairment charge in a future period related to Cues’ and/or Patterson-Kelley’s goodwill.

After performing our qualitative assessment during the fourth quarter of 2021, we concluded that, with the exception of our Cues and ULC reporting units, it was not more likely than not that the fair values of our reporting units were less than their respective carrying values and, therefore, did not perform a quantitative analysis on these reporting units.

Based on our quantitative review of the Cues and ULC reporting units during the fourth quarter of 2021, we concluded that the estimated fair value of ULC, after impairment charges of $5.2, approximates the carrying value of its net assets, and the estimated fair value of Cues exceeded the carrying value of its respective net assets by 30%.

The total goodwill for ULC was $12.0 as of December 31, 2021.

A change in assumptions used in ULC's quantitative analysis (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in the reporting unit's estimated fair value being less than the carrying value of its net assets.

In addition to ULC, the fair value of Sealite, ECS and Cincinnati Fan, acquisitions over the past 12 months, approximate their carrying value.

If ULC, Sealite, ECS or Cincinnati Fan are unable to achieve their respective current financial forecast, we may be required to record an impairment charge in a future period related to their respective goodwill.

We perform our annual trademarks impairment testing during the fourth quarter, or on a more frequent basis if there are indications of potential impairment.

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The 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.

In connection with the annual impairment testing of our trademarks during the fourth quarter of 2020, we recorded impairment charges related to certain of these trademarks of $0.7.

In connection with the annual impairment testing of our trademarks during the fourth quarters of 2021 and 2020, we recorded impairment charges of $0.5 and $ 0.7, respectively, related to certain of these trademarks

See Note 10 to our consolidated financial statements for additional details.

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Including the effects of recognizing actuarial gains and losses into earnings as described above, a 50 basis point decrease in the discount rate for our domestic plans would have increased our 2021 pension expense by approximately $16.6, and a 50 basis point increase in the discount rate would have decreased our 2021 pension expense by approximately $15.3.

The trend in healthcare costs is difficult to estimate, and it can significantly impact our postretirement liabilities and costs.

The trend in healthcare costs is difficult to e stimate, and it can significantly impact our postretirement liabilities and costs.

The healthcare cost trend rate for 2021, which is the weighted-average annual projected rate of increase in the per capita cost of covered benefits, is 6.3%.

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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-K

Item 7. Management’s Discussion and Analysis