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Item 8. Financial Statements and Supplementary Data

2022-02-25 compared with 2021-02-26 · 593 added, 503 removed, 1533 unchanged (42% of the section changed)

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SPX Corporation and Subsidiaries

Report of Independent Registered Public Accounting Firm — Deloitte & Touche LLP

Report of Independent Registered Public Accounting Firm — Deloitte & Touche LL P ( PCAOB ID No.

Consolidated Financial Statements:

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Consolidated Balance Sheets as of December 31, 20 21 and 20 20

Consolidated Statements of Equity for the years ended December 31, 20 20 , 201 9 and 201 8

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Cash Flows for the years ended December 31, 202 1 , 20 20 and 201 9

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of SPX Corporation

To the stockholders and the Board of Directors of SPX Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of SPX Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of SPX Corporation and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2022, expressed an adverse opinion on the Company's internal control over financial reporting because of a material weakness.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company elected to change its method of accounting for inventory from the last-in, first-out (“LIFO”) cost method to the first-in, first-out (“FIFO”) cost method which has been retrospectively applied to the consolidated financial statements for the years ended December 31, 2021, 2020, and 2019.

Basis for Opinion

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Critical Audit Matter Description

Since 2008, DBT Technologies (PTY) LTD (“DBT”) (a South African subsidiary of the Company) has been executing contracts on two large power projects in South Africa.

DBT has experienced delays, cost overruns, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, subcontractors (including DBT and its subcontractors), and 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.

Since 2008, DBT Technologies (PTY) LTD (“DBT”) (South African subsidiary of the Company) had been executing on two large power projects in South Africa (Kusile and Medupi), 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.

These matters resulted in claims and disputes between DBT and other parties involved with the projects, including allegations that DBT provided defective product and failed to meet certain project milestones.

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

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Insurance recovery assets are based on certain assumptions, including the continued solvency of the insurers and legal interpretation of rights for recovery under the insurance policies.

We identified asbestos product liabilities and insurance recovery assets as a critical audit matter given the subjectivity of estimating projected claims, the projected settlement values of reported and unreported claims, the complexity of determining the associated insurance recovery assets, and a material weakness related to the insurance recovery assets as described in “Management's Report on Internal Control Over Financial Reporting”.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial and insurance specialist, when performing audit procedures to evaluate the reasonableness of the asbestos product liabilities and the associated insurance recovery assets.

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Our audit procedures related to asbestos product liabilities and insurance recovery assets included the following, among others:

• We tested the effectiveness of controls related to asbestos product liabilities and insurance recovery assets.

• We tested the effectiveness of controls related to asbestos product liabilities.

• We evaluated the methods and assumptions used by management to estimate the asbestos product liabilities by testing the underlying data that served as the basis for the actuarial estimates, including historical claims and payment experience, to test that the inputs to the actuarial estimates were complete and accurate.

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• We independently confirmed a selection of insurance policies directly with insurance carriers.

• We independently confirmed a selection of defense costs directly with external legal counsel.

• We developed an independent expectation of the insurance recovery assets and compared our estimates to management’s estimates and recalculated the insurance recovery assets for entities under coverage-in-place agreements.

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Intangible amortization 21.6 14.0 8.9

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

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Income from continuing operations 59.0 73.8 76.3

Gain (loss) from discontinued operations, net of tax 0.2 ( 1.4 ) ( 3.7 )

Income (loss) from discontinued operations, net of tax 5.7 28.9 ( 6.6 )

Gain (loss) on disposition of discontinued operations, net of tax 360.7 ( 3.7 ) ( 4.4 )

Loss from discontinued operations, net of tax ( 3.5 ) ( 5.8 ) ( 0.7 )

Gain (loss) from discontinued operations, net of tax 366.4 25.2 ( 11.0 )

Net income 425.4 99.0 65.3

Net loss attributable to noncontrolling interests — — —

Net income attributable to SPX Corporation common shareholders 97.2 65.3 81.2

Net income attributable to SPX Corporation common stockholders 425.4 99.0 65.3

Adjustment related to redeemable noncontrolling interest (Note 15) — — 5.6

Net income attributable to SPX Corporation common shareholders after

Net income attributable to SPX Corporation common stockholders after

adjustment related to redeemable noncontrolling interest $ 425.4 $ 99.0 $ 70.9

Amounts attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest:

Amounts attributable to SPX Corporation common stockholders after adjustment related to redeemable noncontrolling interest:

Income from continuing operations, net of tax $ 59.0 $ 73.8 $ 76.3

Loss from discontinued operations, net of tax ( 3.5 ) ( 5.8 ) ( 0.7 )

Gain (loss) from discontinued operations, net of tax 366.4 25.2 ( 5.4 )

Net income $ 425.4 $ 99.0 $ 70.9

Basic income (loss) per share of common stock:

Income from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest

$ 2.26 $ 1.75 $ 1.90

Loss from discontinued operations attributable to SPX Corporation common shareholders ( 0.08 ) ( 0.14 ) ( 0.01 )

Net income per share attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest

$ 2.18 $ 1.61 $ 1.89

Income from continuing operations attributable to SPX Corporation common stockholders after adjustment related to redeemable noncontrolling interest $ 1.30 $ 1.65 $ 1.74

Income (loss) from discontinued operations attributable to SPX Corporation common stockholders 8.09 0.57 ( 0.13 )

Net income per share attributable to SPX Corporation common stockholders after adjustment related to redeemable noncontrolling interest $ 9.39 $ 2.22 $ 1.61

Weighted-average number of common shares outstanding — basic 45.289 44.628 43.942

Diluted income (loss) per share of common stock:

Income from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest

$ 2.20 $ 1.71 $ 1.83

Loss from discontinued operations attributable to SPX Corporation common shareholders ( 0.08 ) ( 0.13 ) ( 0.01 )

Net income per share attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest

$ 2.12 $ 1.58 $ 1.82

Income from continuing operations attributable to SPX Corporation common stockholders after adjustment related to redeemable noncontrolling interest $ 1.27 $ 1.61 $ 1.70

Income (loss) from discontinued operations attributable to SPX Corporation common stockholders 7.88 0.55 ( 0.12 )

Net income per share attributable to SPX Corporation common stockholders after adjustment related to redeemable noncontrolling interest $ 9.15 $ 2.16 $ 1.58

Weighted-average number of common shares outstanding — diluted 46.495 45.766 44.957

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Other comprehensive income (loss), net:

Pension and postretirement liability adjustment and other, net of tax benefit of $ 1.2 , $ 0.5 , and $ 5.9 in 2020, 2019 and 2018, respectively

Pension and postretirement liability adjustment, net of tax benefit of $ 1.2 , $ 1.2 , and $ 0.5 in 2021, 2020 and 2019, respectively

( 3.6 ) ( 3.6 ) ( 1.8 )

Net unrealized losses on qualifying cash flow hedges, net of tax benefit of $ 0.9 , $ 0.3 , and $ 0.7 in 2020, 2019 and 2018, respectively

Net unrealized gains (losses) on qualifying cash flow hedges, net of tax (provision) benefit of $( 1.5 ), $ 0.9 , and $ 0.3 in 2021, 2020 and 2019, respectively

4.9 ( 2.8 ) ( 1.0 )

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Total comprehensive loss attributable to noncontrolling interests — — —

Total comprehensive income attributable to SPX Corporation common shareholders $ 101.4 $ 64.7 $ 76.0

Total comprehensive income attributable to SPX Corporation common stockholders $ 440.8 $ 103.2 $ 64.7

The accompanying notes are an integral part of these statements.

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Assets of discontinued operations — 219.1

Assets of DBT and Heat Transfer (includes cash and cash equivalents of $ 7.8 and $ 4.3 at December 31, 2021 and 2020, respectively) - Note 4

TOTAL ASSETS $ 2,628.6 $ 2,333.7

LIABILITIES AND EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

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Liabilities of discontinued operations — 31.4

Liabilities of DBT and Heat Transfer (Note 4) 35.6 18.1

Total long-term liabilities 1,086.2 1,121.5

Commitments and contingent liabilities (Note 15)

Stockholders' equity:

Common stock ( 53,011,255 and 45,467,768 issued and outstanding at December 31, 2021, respectively, and 52,704,973 and 45,032,325 issued and outstanding at December 31, 2020, respectively)

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( 443.9 ) ( 451.6 )

Total equity 629.2 502.4

TOTAL LIABILITIES AND EQUITY $ 2,297.7 $ 2,134.5

Total stockholders' equity 1,102.9 640.1

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,628.6 $ 2,333.7

The accompanying notes are an integral part of these statements.

SPX Corporation and Subsidiaries

Consolidated Statements of Equity

Consolidated Statements of Stockholders' Equity

(in millions)

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Income Common

Treasury Total Equity

Treasury Total Stockholders' Equity

Balance at December 31, 2018 $ 0.5 $ 1,295.4 $ ( 641.0 ) $ 244.9 $ ( 475.8 ) $ 424.0

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Restricted stock and restricted stock unit vesting — ( 22.4 ) — — 15.8 ( 6.6 )

Impact of adoption of ASU 2016-01 - See Note 3 — — 12.0 — — 12.0

Impact of adoption of ASC 606 - See Note 3 — — 4.0 — — 4.0

Impact of adoption of ASU 2016-16 - See Note 3 — — ( 0.2 ) — — ( 0.2 )

Stranded income tax effects resulting from tax reform - See Note 3 — — ( 4.8 ) — — ( 4.8 )

Adjustment related to redeemable noncontrolling interest (Note 15) — 5.6 — — — 5.6

Balance at December 31, 2019 0.5 1,302.4 ( 575.7 ) 244.3 ( 460.0 ) 511.5

Impact of adoption of ASU 2016-13 - See Note 3 — — ( 0.5 ) — — ( 0.5 )

Net income — — 99.0 — — 99.0

Other comprehensive loss, net — — — ( 0.6 ) — ( 0.6 )

Other comprehensive income, net — — — 4.2 — 4.2

Incentive plan activity — 17.5 — — — 17.5

Long-term incentive compensation expense — 12.8 — — — 12.8

Restricted stock and restricted stock unit vesting — ( 22.4 ) — — 15.8 ( 6.6 )

Adjustment related to redeemable noncontrolling interest (Note 15) — 5.6 — — — 5.6

Restricted stock unit vesting — ( 12.8 ) — — 8.4 ( 4.4 )

Balance at December 31, 2020 0.5 1,319.9 ( 477.2 ) 248.5 ( 451.6 ) 640.1

Impact of adoption of ASU 2016-13 - See Note 3 — — ( 0.5 ) — — ( 0.5 )

Net income — — 425.4 — — 425.4

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Net income $ 425.4 $ 99.0 $ 65.3

Loss from discontinued operations, net of tax ( 3.5 ) ( 5.8 ) ( 0.7 )

Gain (loss) from discontinued operations, net of tax 366.4 25.2 ( 11.0 )

Income from continuing operations 59.0 73.8 76.3

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Loss on amendment/refinancing of senior credit agreement — — 0.6

Impairment of intangible assets 0.7 — —

Impairment of goodwill and intangible assets 5.7 0.7 —

Deferred and other income taxes ( 1.4 ) 0.3 13.8

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Net cash from continuing operations 131.2 105.2 110.0

Net cash used in discontinued operations ( 4.8 ) ( 5.6 ) ( 0.9 )

Net cash from discontinued operations 43.4 21.1 38.6

Net cash from operating activities 174.6 126.3 148.6

Cash flows from (used in) investing activities:

Proceeds from asset sales and other — ( 0.2 ) 5.0

Proceeds (expenditures) related to company-owned life insurance policies, net ( 31.2 ) ( 0.2 ) 5.9

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Capital expenditures ( 9.6 ) ( 15.3 ) ( 13.5 )

Other — — ( 0.2 )

Net cash used in continuing operations ( 306.0 ) ( 119.9 ) ( 154.9 )

Net cash from discontinued operations

Net cash used in investing activities ( 126.1 ) ( 153.7 ) ( 180.6 )

Net cash from (used in) discontinued operations 620.1 ( 6.2 ) 1.2

Net cash from (used in) investing activities 314.1 ( 126.1 ) ( 153.7 )

Cash flows from (used in) financing activities:

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Financing fees paid — — ( 1.6 )

Purchase of subsidiary shares — ( 15.6 ) —

Net cash from (used in) continuing operations ( 167.8 ) 16.3 4.7

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Cash and cash equivalents $ 388.2 $ 64.0 $ 50.7

Cash and cash equivalents included in assets of discontinued operations — 0.1 0.3

Cash and cash equivalents included in assets of DBT and Heat Transfer 7.8 4.3 4.0

Total cash and cash equivalents $ 396.0 $ 68.3 $ 54.7

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In determining whether we are the primary beneficiary of a variable interest entity (“VIE”), we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties to determine which party has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and which party has the obligation to absorb losses or the right to receive benefits of the entity that could potentially be significant to the VIE.

We have an interest in a VIE, in which we are not the primary beneficiary, as a result of the sale of Balcke Dürr.

See below and in Notes 2, 4 and 17 for further discussion of the Balcke Dürr sale.

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

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

Shift Away from the Power Generation Markets — On September 26, 2015, we completed the spin-off to our stockholders (the “Spin-Off”) of all the outstanding shares of SPX FLOW, Inc., a wholly-owned subsidiary of SPX prior to the Spin-Off, which at the time of the Spin-Off held the businesses comprising our Flow Technology reportable segment, our Hydraulic Technologies business, and certain of our corporate subsidiaries.

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In the years leading up to the Spin-Off, these businesses experienced significant declines in revenues and profitability associated with weak demand and increased competition within the global power generation markets.

Based on a review of our post-spin portfolio and the belief that a recovery within the power generation markets was unlikely in the foreseeable future, we decided that our strategic focus would be on our (i) scalable growth businesses that serve the heating, ventilation and cooling (“HVAC”) and detection and measurement markets and (ii) power transformer and process cooling systems businesses.

Based on a review of our post-spin portfolio and the belief that a recovery within the power generation markets was unlikely in the foreseeable future, we decided coming out of the Spin-Off that our strategic focus would be on our (i) scalable growth businesses that serve the heating, ventilation and cooling (“HVAC”) and detection and measurement markets and (ii) power transformers and process cooling systems business.

As a result, we have significantly reduced our exposure to the power generation markets as indicated by the activities summarized below:

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As we considered the disposition of Balcke Dürr to be the cornerstone of our strategic shift away from the power generation markets, and given the significance of Balcke Dürr’s financial results to our overall operations prior to its disposition, we began classifying Balcke Dürr as a discontinued operation at the time of its disposition.

See Note 4 for additional details.

• Wind-Down of the SPX Heat Transfer Business – After an unsuccessful attempt to sell the SPX Heat Transfer (“Heat Transfer”) business, and as a continuation of our strategic shift away from power generation markets, we initiated a wind-down plan for the business.

In connection with this plan, 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 intangible assets of the business in 2018 for 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 plan, which included providing all products and services on the business’s remaining contracts with customers.

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See Note 4 for additional details.

• Wind-Down of DBT Technologies Business - As a culmination of our strategic shift away from power generation markets, we substantially ceased all operations of, and have ceased accepting new businesses in, our South African subsidiary, DBT Technologies (PTY) LTD (“DBT”).

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

DBT continues to be involved in various dispute resolution matters related to two large power projects.

See Note 4 for additional details regarding DBT's presentation as a discontinued operation and Note 15 regarding the dispute resolution matters.

Sale of Transformer Solutions Business — On October 1, 2021, we completed the sale of SPX Transformer Solutions, Inc.

(“Transformer Solutions”) pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021 with GE-Prolec Transformers, Inc.

(the “Purchaser”) and Prolec GE Internacional, S.

We transferred all of the outstanding common stock of Transformer Solutions to the Purchaser for an aggregate cash purchase price of $ 645.0 (the “Transaction”).

The purchase price is subject to potential adjustment based on Transformer Solutions’ cash, debt and working capital on the

date the Transaction was consummated, as well as for specified transaction expenses and other specified items.

In connection with the sale, we received 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.

Historically, Transformer Solutions’ operations have had a significant impact on our consolidated financial results, with revenues totaling approximately 25 % of our total consolidated revenues.

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

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

See Note 4 for additional details.

Change in Segment Reporting Structure — As noted above, Transformer Solutions and DBT are now being reported as discontinued operations within the accompanying consolidated financial statements.

In addition, the remaining operations of our former Engineered Solutions reportable segment, with annual income representing less than 5% of the total income of our reportable segments, are being reported within our HVAC reportable segment, as these operations are now being managed, and evaluated by our Chief Operating Decision Maker, as part of our HVAC cooling business.

Acquisitions in 2021:

• Sealite - On April 19, 2021, we completed the acquisition of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, "Sealite").

Sealite is a leader in the design and manufacture of marine and aviation Aids to Navigation products.

We purchased Sealite for cash proceeds of $ 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.

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

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

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

The estimated fair value of such contingent consideration as of the date of acquisition was $ 8.2 , 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 liability o f $ 6.7 , with such amount recorded within "Other operating expenses, net" in the 2021 consolidated statement of operations.

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

• Cincinnati Fan - On December 15, 2021, we completed the acquisition of Cincinnati Fan & Ventilator Co., Inc.

(“Cincinnati Fan”), a leader in engineered air movement solutions, including blowers and critical exhaust systems.

W e purchased Cincinnati Fan for cash proceeds of $ 145.2 , net of cash acquired of $ 2.5 .

The purchase price is subject to adjustment based on the final calculation of working capital, cash, and debt as of the date of the acquisition.

The post acquisition operating results of Cincinnati Fan are reflected within our HVAC reportable segment.

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

Acquisitions in 2020:

• ULC – On September 2, 2020, we completed the acquisition of ULC Robotics (“ULC”), a leading developer of robotic systems, machine learning applications, and inspection technology for the energy, utility, and industrial markets, for cash proceeds of $ 89.2 , net of cash acquired of $ 4.0 .

Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $ 45.0 , with payments scheduled to be made in 2021 and 2022 upon

successful achievement of certain operational and financial performance milestones.

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

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

At the time of the acquisition, we recorded a liability of $ 24.3 , which represented the estimated fair value of the contingent consideration.

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

As a result, we revers ed the liability of $ 24.3 during the third quarter, with the offset recorded to “Other operating expenses, net” (See Note 10 for further discussion of this matter).

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

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(“Sensors & Software“), a leading manufacturer and distributor of ground penetrating radar products used for locating underground utilities, detecting unexploded ordinances, and geotechnical and geological investigations, for cash proceeds of $ 15.5 , net of cash acquired of $ 0.3 .

Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $ 3.9 , with payment scheduled to be made in 2021 upon successful achievement of a financial performance milestone during the twelve months following the date of acquisition.

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

In addition, the purchase price is subject to adjustment based on the final calculation of working capital, cash, and debt as of the date of the acquisition.

Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $ 3.9 , with payment scheduled to be made upon successful achievement of defined financial performance milestones during the twelve months following the date of acquisition.

At the time of the acquisition, we recorded a liability of $ 0.7 which represented the estimated fair value of the contingent consideration.

During the fourth quarter of 2021, we concluded that certain of these financial milestones had been achieved, resulting in an increase to the liability of $ 0.6 , with the offset reflected in “Other operating expenses, net” in the accompanying 2021 consolidated statement of operations.

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

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

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

Acquisitions in 2019:

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

Acquisitions in 2018:

• Schonstedt - On March 1, 2018, we completed the acquisition of Schonstedt Instrument Company (“Schonstedt”), a manufacturer and distributor of magnetic locator products used for locating underground utilities and other buried objects, for a purchase price of $ 16.4 , net of cash acquired of $ 0.3 .

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

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

(“Cues”), a manufacturer of pipeline inspection and rehabilitation equipment.

The acquisition was completed through the purchase of all of the issued and outstanding shares of Cues’ parent company for a purchase price of $ 164.4 , net of cash acquired of $ 20.6 .

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

See Note 4 for additional details on the Cues acquisition.

Inventories — 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 for further discussion of this change, including the impact of this change on our prior years’ consolidated financial statements.

Foreign Currency Translation and Transactions — The financial statements of our foreign subsidiaries are translated into U.S.

dollars in accordance with the Foreign Currency Matters Topic of the Financial Accounting Standards Board Codification (“Codification”).

Gains and losses on foreign currency translations are reflected as a separate component of equity and other comprehensive income.

Foreign currency transaction gains and losses, as well as gains and losses related to foreign currency forward contracts and currency forward embedded derivatives, are included in “Other income (expense), net,” with the related net gains (losses) totaling $ 1.3 , $( 1.5 ) and $( 0.3 ) in 2020, 2019 and 2018, respectively.

Gains and losses on foreign currency translations are reflected as a separate component of stockholders' equity and other comprehensive income.

Foreign currency transaction gains and losses, as well as gains and losses related to foreign currency forward contracts, are included in “Other income (expense), net,” with the related net losses totaling $ 0.9 , $ 0.6 and $ 0.9 in 2021, 2020 and 2019, respectively.

Cash Equivalents — We consider highly liquid money market investments with original maturities of three months or less at the date of purchase to be cash equivalents.

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Capitalized software, net of amortization, totaled $ 0.1 and $ 1.3 as of December 31, 2021 and 2020, respectively.

Capitalized software amortization expense totaled $ 2.5 in 2020, and $ 2.4 in both 2019 and 2018.

Capitalized software amortization expense totaled $ 1.3 , $ 2.5 , and $ 2.4 in 2021, 2020, and 2019, respectively.

We expensed research activities relating to the development and improvement of our products of $ 30.7 , $ 28.1 and $ 24.3 in 2021, 2020 and 2019, respectively.

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No interest was capitalized during 2021, 2020 or 2019.

Pension and Postretirement — We recognize changes in the fair value of plan assets and actuarial gains and losses in earnings during the fourth quarter of each year, unless earlier remeasurement is required, as a component of net periodic benefit expense and, accordingly, recognize the effects of plan investment performance, interest rate changes, and changes in actuarial assumptions as a component of earnings in the year in which they occur.

The remaining components of pension/postretirement expense, primarily interest costs and expected return on plan assets, are recorded on a quarterly basis.

Pension and Postretirement — We recognize changes in the fair value of plan assets and actuarial gains and losses in earnings during the fourth quarter of each year, unless earlier remeasurement is required, as a component of net periodic benefit expense/income and, accordingly, recognize the effects of plan investment performance, interest rate changes, and changes in actuarial assumptions as a component of earnings in the year in which they occur.

The remaining components of pension/postretirement expense/income, primarily interest costs and expected return on plan assets, are recorded on a quarterly basis.

Income Taxes — We account for income taxes based on the requirements of the Income Taxes Topic of the Codification, which includes an estimate of the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.

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Cash flows from hedging activities are included in the same category as the items being hedged, which are primarily operating activities.

Reclassification of Prior Years’ Amounts – Certain prior years’ amounts have been reclassified to conform to the current year presentation, including amounts related to the inclusion of Heat Transfer within discontinued operations.

(2) Use of Estimates

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Actual results may differ from the estimates and assumptions used in the consolidated financial statements and related notes.

Impact of the Coronavirus Disease (the “COVID-19 pandemic”) — We have experienced modest adverse impacts of the COVID-19 pandemic since March 2020.

Despite the adverse impacts, there are no indications that the COVID-19 pandemic has resulted in a material decline in the carrying value of any assets, or a material change in the estimate of any contingent amounts, recorded in our consolidated balance sheet as of December 31, 2020.

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

Listed below are certain significant estimates and assumptions used in the preparation of our consolidated financial statements.

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Accounts Receivable Allowances — We provide allowances for estimated losses on uncollectible accounts based on our historical experience and the evaluation of the likelihood of success in collecting specific customer receivables.

In addition, we maintain allowances for customer returns, discounts and invoice pricing discrepancies, with such allowances primarily based on historical experience.

In addition, we

maintain allowances for customer returns, discounts and invoice pricing discrepancies, with such allowances primarily based on historical experience.

Summarized below is the activity for these allowance accounts.

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In determining the estimated useful lives of definite-lived intangibles, we consider the nature, competitive position, life cycle position, and historical and expected future operating cash flows of each acquired asset, as well as our commitment to support these assets through continued investment and legal infringement protection.

Goodwill and Indefinite-Lived Intangible Assets — We test 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.

The fair value of reporting units is based generally on discounted projected cash flows, but we also consider factors such as comparable industry price multiples.

Goodwill and Indefinite-Lived Intangible Assets — 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.

In reviewing goodwill for impairment, we first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (greater than 50%) that the estimated fair value of a reporting unit is less than its carrying amount.

If we determine that an impairment is more likely than not, we then perform a quantitative impairment test (described below).

Otherwise, no further analysis is required.

Our qualitative evaluation is an assessment of factors, including reporting unit-specific operating results, as well as industry, market, and general economic conditions.

Our quantitative analysis of the fair value of reporting units is based generally on discounted projected cash flows, but we also consider factors such as comparable industry price multiples.

We employ cash flow projections that we believe to be reasonable under current and forecasted circumstances, the results of which form the basis for making judgments about the carrying values of the reported net assets of our reporting units.

Many of our businesses closely follow changes in the industries and end markets that they serve.

innovations, as well as estimates associated with cost reduction initiatives, capacity utilization and assumptions for inflation and foreign currency changes.

Accordingly, we consider estimates and judgments that affect the future cash flow projections, including principal methods of competition, such as volume, price, service, product performance and technical innovations, as well as estimates associated with cost reduction initiatives, capacity utilization and assumptions for inflation and foreign currency changes.

Accrued Expenses — We make estimates and judgments in establishing accruals as required under GAAP.

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___________________________________________________________________

(1) Other consists of various items including, among other items, accrued legal, interest and restructuring costs, none of which is individually material.

(1) Other consists of various items including, among other items, the current portion of our liabilities related to risk management matters, environmental remediation costs, and operating leases, as well as, accrued rebates, legal, interest and restructuring costs, none of which is individually material.

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

We do not discount legal obligations or reduce them by anticipated insurance recoveries.

See Note 15 for additional details.

Environmental Remediation Costs — We expense costs incurred to investigate and remediate environmental issues unless they extend the economic useful lives of related assets.

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Acquisitions 0.1 1.6 0.4

Impact of initial adoption of ASC 606 — — 0.4

Provisions 8.5 12.4 12.0

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These reviews also entail analyzing the realization of deferred tax assets.

When we believe that it is more likely than not that we will not realize a benefit for a deferred tax asset based on all available evidence, we establish a valuation allowance.

When we believe that it is more

likely than not that we will not realize a benefit for a deferred tax asset based on all available evidence, we establish a valuation allowance.

Employee Benefit Plans — Defined benefit plans cover a portion of our salaried and hourly employees, including certain employees in foreign countries.

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We also consult with independent actuaries in determining these assumptions.

Parent Guarantees and Bonds Associated with Balcke Dürr — As further discussed in Note 17, in connection with the sale of Balcke Dürr, we became contingently obligated under existing parent company guarantees and bank and surety bonds which totaled approximately Euro 79.0 and Euro 79.0 , respectively, at the time of sale (and Euro 0.0 and Euro 2.9 , respectively, at December 31, 2020).

We have accounted for our contingent obligation in accordance with the Guarantees Topic of the Codification, which required that we record a liability for the estimated fair value of the parent company guarantees and the bonds in connection with the accounting for the sale of Balcke Dürr.

We estimated the fair value of the parent company guarantees and bank and surety bonds considering the probability of default by Balcke Dürr and an estimate of the amount we would be obligated to pay in the event of a default.

As also discussed in Note 17, under the related purchase agreement, Balcke Dürr provided cash collateral and the parent company of the buyer provided a partial guarantee in the event any of the bonds are called.

Parent Guarantees and Bonds Associated with Balcke Dürr — In connection with the sale of Balcke Dürr in 2016, we became contingently obligated under existing parent company guarantees and bank and surety bonds which totaled approximately Eur o 79.0 and Euro 79.0 , resp ectively, at the time of sale.

Since the sale of Balcke Dürr, the guarantees have expired and, as of the third quarter of 2021, all the bonds have been returned.

We accounted for our contingent obligation in accordance with the Guarantees Topic of the Codification, which required that we record a liability for the estimated fair value of the parent company guarantees and the bonds in connection with the accounting for the sale of Balcke Dürr.

Under the related purchase agreement, Balcke Dürr provided cash collateral and the parent company of the buyer provided a partial guarantee in the event any of the bonds were called.

We recorded an asset for the estimated fair value of the cash collateral provided by Balcke Dürr and the partial guarantee provided by the parent company of the buyer, with the estimated fair values based on the terms and conditions and relative risk associated with each of these securities.

By way of an offset to “Other income (expense), net,” we are reducing the liability and amortizing the asset, with the reduction of the liability generally to occur upon return of the guarantee or bond which is expected to occur at the earlier of the completion of the related underlying project milestones or the expiration of the guarantees or bonds, and the amortization of the asset to occur based on the expiration terms of each of the securities.

We will continue to evaluate the adequacy of the recorded liability and will record an adjustment to the liability if we conclude that it is probable that we will be required to fund an amount greater than what is recorded.

See Note 17 for further information regarding the estimated fair values of the parent company guarantees and bonds, as well as the cash collateral provided by Balcke Dürr and the partial guarantee provided by the parent company of the buyer.

As the guarantees have expired and the bonds have been returned, we no longer have assets or liabilities recorded for this matter.

See Note 17 for additional details.

(3) New Accounting Pronouncements

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

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a new standard on revenue recognition (“ASC 606”) that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded most current revenue recognition guidance, including industry-specific guidance.

Effective January 1, 2018, we adopted ASC 606 using the modified retrospective transition approach for all contracts not completed as of the date of adoption.

The modified retrospective transition approach recognizes any changes as of the beginning of the year of initial application (i.e., as of January 1, 2018) through retained earnings, with no restatement of comparative periods.

The adoption of ASC 606 resulted in a reduction of our retained deficit of $ 4.0 .

In January 2016, the FASB issued an amendment to guidance that (i) requires equity securities (excluding equity method investments) to be measured at fair value, with changes in fair value recognized in net earnings, and (ii) enhances the disclosure associated with these instruments.

The amendment allows equity securities that do not have readily determinable fair values to be measured at fair value, either upon the occurrence of an observable price change or identification of an impairment.

We adopted this amendment in 2018, with the impact limited to an adjustment to the carrying value of an equity security that we had been accounting for based on its historical cost.

In connection with our adoption, we adjusted the carrying value of this equity security to its estimated fair value, which resulted in a reduction, net of tax, of our retained deficit of $ 12.0 .

See Note 17 for additional details.

In February 2016, the FASB issued an amendment to existing guidance, ASC 842, that requires lessees to recognize assets and liabilities for the rights and obligations created by leases.

Under the amendment, additional qualitative and quantitative disclosures are required to allow users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

Effective January 1, 2019, we adopted ASC 842 using the modified retrospective transition approach.

The modified retrospective transition approach recognizes any changes as of the beginning of the year of initial application (i.e., as of January 1, 2019) through retained earnings, with no restatement of comparative periods.

The new standard provides a number of optional practical expedients upon transition.

We elected the “package of practical expedients,” which allowed us to maintain our prior conclusions regarding lease identification, lease classification and initial direct costs.

We did not elect the practical expedients for the use-of-hindsight or land easements;

the latter not being applicable to us.

The adoption of ASC 842 had no impact on our retained deficit and no significant impact on the accompanying consolidated statements of operations or consolidated statements of cash flows for the years ended December 31, 2020 and 2019.

See Note 6 for further discussion of the post adoption impact of ASC 842.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13.

ASU 2016-13 changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, including trade receivables, based on historical experience, current conditions, and reasonable and supportable forecasts.

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We adopted ASU 2016-13 on January 1, 2020, which resulted in an increase of our retained deficit of $ 0.5 .

In October 2016, the FASB issued ASU 2016-16, which removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory.

ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods.

The requirements of ASU 2016-16 are to be applied on a modified retrospective basis, which entails recognizing the initial effect of adoption in retained earnings.

We adopted ASU 2016-16 as of January 1, 2018, which resulted in an increase of our retained deficit of $ 0.2 .

In January 2017, the FASB issued an amendment to simplify the subsequent measurement of goodwill by removing the second step of the two-step impairment test.

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This amendment is effective for annual reporting periods beginning after December 31, 2019, including interim periods within those annual reporting periods.

We adopted this guidance during the first quarter of 2020, with such adoption having no material impact to our consolidated financial statements.

In August 2017, the FASB issued significant amendments to hedge accounting.

The new guidance will make more financial and nonfinancial hedging strategies eligible for hedge accounting.

It also amends the presentation and disclosure requirements and changes how companies assess effectiveness.

It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope

and results of hedging programs.

We adopted this guidance during the first quarter of 2019, with such adoption having no material impact to our consolidated financial statements.

In February 2018, the FASB amended its guidance for reporting comprehensive income to reflect the potential impacts of the reduction in the corporate tax rate resulting from the “Tax Cut and Jobs Act,” which was enacted in the United States on December 22, 2017.

The amendment gives the option of reclassifying the stranded tax effects within AOCI to retained earnings during the fiscal year or quarter in which the effect of the lower tax rate is recorded.

The amendment is effective for years beginning after December 15, 2018, with early adoption permitted.

We adopted this guidance as of January 1, 2018, which resulted in an increase of our retained deficit of $ 4.8 .

We adopted this guidance during the first quarter of 2020, with such adoption having no impact to our consolidated financial statements.

In August 2018, the FASB issued amended guidance to simplify fair value measurement disclosure requirements.

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

This ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combinations that result in a step-up in the tax basis of goodwill.

The transition requirements are primarily prospective and the effective date is for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted.

We are currently evaluating the impact of this guidance on our consolidated financial statements.

The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on December 31, 2021.

We adopted this guidance on January 1, 2021, with no material impact on our consolidated financial statements.

The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on June 30, 2023, with some tenors ceasing on December 31, 2021.

In an effort to address the various challenges created by such discontinuance, the FASB issued two amendments to existing guidance, ASU No.

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Application of the guidance in the amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022.

We are currently evaluating the impacts of reference rate reform and the new guidance on our consolidated financial statements.

In preparation of our adoption of these amendments, we entered into a LIBOR transition amendment related to our global revolving credit facility, as described in Note 13.

Upon adoption, we do not believe these amendments will have a material impact to our consolidated financial statements.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

This ASU requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

This guidance is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The impact of adopting this guidance on our consolidated financial statements will depend on business combinations occurring on or after the effective date.

(4) Acquisitions and Discontinued Operations

Acquisition of Cues

As indicated in Note 1, on June 7, 2018, we completed the acquisition of Cues for $ 164.4 , net of cash acquired of $ 20.6 .

For the period June 7, 2018 to December 31, 2018, Cues recognized revenues and a net loss of $ 52.3 and $ 0.4 , respectively, with the net loss impacted by charges of $ 4.3 associated with the excess fair value (over historical cost) of inventory acquired which was subsequently sold in 2018.

During the year ended December 31, 2018, we incurred acquisition related costs for Cues of $ 2.4 , which have been recorded to “Selling, general and administrative” within the accompanying consolidated statement of operations.

The following unaudited pro forma information presents our consolidated results of operations for the year ended December 31, 2018 as if the acquisition of Cues had taken place on January 1, 2018.

The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the acquisition been completed as of the date presented, and should not be taken as representative of our future consolidated results of operations.

The pro forma results include estimates and assumptions that management believes are reasonable;

however, these results do not include any anticipated cost savings or expenses of the planned integration of Cues.

These pro forma results of operations have been prepared for comparative purposes only and include additional interest expense on the borrowings required to finance the acquisition, additional depreciation and amortization expense associated with fair value adjustments to the acquired property, plant and equipment and intangible assets, the removal of charges associated with the excess fair value (over historical cost) of inventory acquired and subsequently sold, the removal of professional fees and other one-time costs incurred in connection with the transaction, and the related income tax effects.

Year ended December 31,

Revenues $ 1,546.7

Income from continuing operations 90.8

Net income 90.1

Income from continuing operations per share of common stock:

Diluted $ 2.03

Net income per share of common stock:

Diluted $ 2.02

Other Acquisitions

As indicated in Note 1, on March 1, 2018, February 1, 2019, July 3, 2019, November 12, 2019, September 2, 2020, and November 11, 2020, we completed the acquisitions of Schonstedt, Sabik, SGS, Patterson-Kelley, ULC, and Sensors & Software, respectively.

As indicated in Note 1, on February 1, 2019, July 3, 2019, November 12, 2019, September 2, 2020, November 11, 2020, April 19, 2021, August 2, 2021 and December 15, 2021, we completed the acquisitions of Sabik, SGS, Patterson-Kelley, ULC, Sensors & Software, Sealite, ECS, and Cincinnati Fan, respectively.

The pro forma effects of these acquisitions are not material to our consolidated results of operations.

Sale of Transformer Solutions Business

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

In connection with the sale, we recorded a gain of $ 382.2 to “ Gain (loss) on disposition of discontinued operations, net of tax ” within our consolidated statement of operations for the year ended December 31, 2021.

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

Major line items constituting pre-tax income and after-tax income of Transformer Solutions for the period January 1, 2021 to October 1, 2021 and the years ended December 2020 and 2019 are shown below:

2021 2020 2019

Revenues $ 313.5 $ 427.4 $ 403.4

Costs and expenses:

Cost of product sold 257.2 338.7 334.1

Selling, general and administrative 28.4 32.7 30.2

Special charges — — 0.3

Other income, net — 0.9 0.6

Income before tax 27.9 56.9 39.4

Income tax provision ( 7.0 ) ( 14.0 ) ( 8.8 )

Income after tax $ 20.9 $ 42.9 $ 30.6

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

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

Accounts receivable, net $ 50.9

Contract assets 48.6

Inventories, net 21.7

Other current assets 3.2

Property, plant and equipment:

Buildings and leasehold improvements 63.1

Machinery and equipment 141.1

Accumulated depreciation ( 131.0 )

Property, plant and equipment, net 79.7

Goodwill 131.3

Other assets 8.1

Total assets - discontinued operations $ 343.5

Accounts payable $ 34.1

Contract liabilities 57.2

Accrued expenses 24.5

Deferred and other income taxes 22.3

Other long-term liabilities 9.1

Total liabilities - discontinued operations $ 147.2

Wind-Down of DBT Business

As discussed in Note 1, we completed the wind-down of our DBT business in the fourth quarter of 2021.

As a result of completing the wind-down plan, we are now reporting DBT as a discontinued operation 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 tax ” 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.”

Major line items constituting pre-tax loss and after-tax loss of DBT for the years ended December 31, 2021, 2020 and 2019 are shown below:

2021 2020 2019

$ 0.5 $ 4.0 $ ( 6.1 )

Costs and expenses:

Cost of product sold 0.9 6.9 22.4

Selling, general and administrative 15.1 14.8 11.6

Special charges 1.3 0.8 2.6

Other income (expense), net ( 1.2 ) 1.9 ( 0.6 )

Interest income, net 0.1 — 0.2

Loss before tax ( 17.9 ) ( 16.6 ) ( 43.1 )

Income tax benefit 2.7 2.4 7.3

Loss after tax $ ( 15.2 ) $ ( 14.2 ) $ ( 35.8 )

________________________________________________

(1) During the year ended December 31, 2019, we reduced the amount of revenue associated with the large power projects in South Africa by $ 23.5 .

See below for further discussion.

During February, April, and July of 2019, we received a number of claims from the prime contractors on the large power projects in South Africa asserting various amounts of damages.

In consideration of these claims (including the magnitude of the claims and claims in areas that had not been previously identified by the prime contractors), and in accordance with ASC 606, we analyzed the risk of a significant revenue reversal associated with the amount of variable consideration that had been recorded for these projects.

Based on such analysis, we reduced the amount of cumulative revenue associated with variable consideration on these projects by $ 17.5 during the first quarter of 2019, as it was no longer probable that such amounts of revenue would not be reversed.

On June 28, 2019, DBT reached an agreement with Alstom S&E Africa (PTY) LTD (“Alstom/GE”), one of the prime contractors on the large power projects in South Africa to, among other things, settle all material outstanding claims between the parties (other than certain pass-through claims relating to third parties).

In connection with the agreement, we reduced the amount of cumulative revenue associated with variable consideration on the large power projects in South Africa by $ 6.0 during the second quarter of 2019.

The assets and liabilities of DBT have been included within “ Assets of DBT and Heat Transfer ” and “ Liabilities of DBT and Heat Transfer, ” respectively, on the consolidated balance sheets as of December 31, 2021 and 2020.

The major line items constituting DBT's assets and liabilities as of December 31, 2021 and 2020 are shown below:

December 31, 2021 December 31, 2020

Cash and equivalents $ 7.8 $ 4.3

Accounts receivable, net 9.1 10.1

Other current assets 7.0 7.5

Property, plant and equipment:

Buildings and leasehold improvements 0.2 5.7

Machinery and equipment 1.5 7.3

Accumulated depreciation ( 1.5 ) ( 9.8 )

Property, plant and equipment, net 0.2 3.2

Other assets 27.6 17.9

Total assets of DBT $ 51.7 $ 43.0

Accounts payable $ 2.3 $ 2.3

Contract liabilities 5.6 7.5

Accrued expenses 22.4 2.5

Other long-term liabilities 4.9 5.3

Total liabilities of DBT $ 35.2 $ 17.6

Wind-Down of the Heat Transfer Business

As discussed in Note 1, we completed the wind-down of our Heat Transfer business in the fourth quarter of 2020.

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

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 .

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

Major line items constituting pre-tax income (loss) and after-tax income (loss) of Heat Transfer for the years ended December 31, 2020 and 2019 are shown below:

Year ended December 31,

2020 2019 2018

Revenues $ 3.9 $ 4.5

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Selling, general and administrative 0.1 0.9

Intangible amortization expense — — 0.1

Special charges (credits), net 0.4 ( 0.4 )

Other income, net — 0.3

Income (loss) before income tax 0.3 ( 1.8 ) ( 4.9 )

Income (loss) before tax 0.3 ( 1.8 )

Income tax (provision) benefit ( 0.1 ) 0.4

Income (loss) from discontinued operations, net of tax $ 0.2 $ ( 1.4 ) $ ( 3.7 )

The assets and liabilities of Heat Transfer have been classified as assets and liabilities of discontinued operations as of December 31, 2020 and 2019.

Income (loss) after tax $ 0.2 $ ( 1.4 )

The assets and liabilities of Heat Transfer have been included within “ Assets of DBT and Heat Transfer ” and “ Liabilities of DBT and Heat Transfer, ” respectively, on the consolidated balance sheets as of December 31, 2021 and 2020.

The major line items constituting Heat Transfer's assets and liabilities as of December 31, 2021 and 2020 are shown below:

Cash and equivalents $ — $ 0.1

December 31, 2021 December 31, 2020

Accounts receivable, net $ 0.1 $ 0.1

Contract assets — 0.3

Other current assets 0.2 0.2

Assets of discontinued operations - current 0.3 1.7

Other assets 0.2 0.2

Total assets - discontinued operations $ 0.5 $ 2.1

Total assets of Heat Transfer $ 0.5 $ 0.5

Accounts payable $ 0.3 $ 0.2

Contract liabilities — 0.3

Accrued expenses 0.1 0.3

Liabilities of discontinued operations - current 0.5 1.5

Long-term liabilities — 0.2

Total liabilities - discontinued operations $ 0.5 $ 1.7

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.”

Total liabilities of Heat Transfer $ 0.4 $ 0.5

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 Transformer Solutions, DBT and Heat Transfer, 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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For the years ended December 31, 2021, 2020 and 2019, results of operations from our businesses reported as discontinued operations were as follows:

Year ended December 31,

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 )

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 certain 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.

(5) Revenues from Contracts

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As a practical expedient, we do not disclose performance obligations (i) that are part of a contract that has an original expected duration of less than one year and/or (ii) where our right to consideration corresponds directly to the value transferred to the customer.

Performance obligations for contracts with an original duration in excess of one year that have yet to be satisfied as of the end of a period primarily relate to our large process cooling systems, as well as certain of our bus fare collection systems.

As of December 31, 2020, the aggregate amount allocated to remaining performance obligations after the effect of practical

expedients was $ 81.2 .

We expect to recognize revenue on approximately 52 % and 77 % of the remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

Performance obligations for contracts with an original duration in excess of one year that have yet to be satisfied as of the end of a period primarily relate to our Aids to Navigation systems, communication technologies products, large process cooling systems, as well as certain of our bus fare collection systems.

As of December 31, 2021, the aggregate amount allocated to remaining performance obligations after the effect of practical expedients was $ 105.8 .

We expect to recognize revenue on

approximately 63 % and 88 % o f the remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

Options - We offer options within certain of our contracts to purchase future goods or services.

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Contracts are sometimes modified for changes in contract specifications, scope, or price (or a combination of these).

Contract modifications for goods or services that are not distinct within the context of the contract (generally associated with specification changes for certain product lines within our Engineered Solutions reportable segment) are accounted for as part of the existing contract.

Contract modifications for goods or services that are not distinct within the context of the contract (generally associated with specification changes for certain product lines within our HVAC reportable segment) are accounted for as part of the existing contract.

Contract modifications for goods or services that are distinct (i.e., adding or subtracting distinct goods or services) are accounted for as either a termination of the existing contract and the creation of a new contract (where the goods or services are not priced at their standalone selling price), or the creation of separate contract (where the goods or services are priced at their standalone selling price).

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We analyze the risk of a significant revenue reversal and, if necessary, constrain the amount of variable consideration recognized in order to mitigate this risk.

Variable consideration primarily pertains to late delivery penalties, unapproved change orders and claims (levied by us and/or against us), and index-based pricing.

Variable consideration primarily pertains to late delivery penalties and unapproved change orders and claims (levied by us and/or against us).

Actual amounts of consideration ultimately received may differ from our estimates.

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These estimates are also based on historical award experience.

As indicated in Note 15, during February, March, and April of 2019, we received a number of claims from the prime contractors on the large power projects in South Africa asserting various amounts of damages.

As indicated in Note 15, on June 28, 2019, DBT reached an agreement with Alstom S&E Africa (PTY) LTD (“Alstom/GE”), one of the prime contractors on the large power projects in South Africa to, among other things, settle all material outstanding claims between the parties (other than certain pass-through claims relating to third parties).

As of December 31, 2020, there w as $ 0.4 c umulative revenue associated with variable consideration recorded for the large power projects in South Africa.

Returns, Customer Sales Incentives and Warranties - We have certain arrangements that require us to estimate, at the time of sale, the amounts of variable consideration that should be excluded from revenue as (i) certain amounts are not expected to be collected from customers and/or (ii) the product may be returned.

We principally rely on historical experience, specific

customer agreements, and anticipated future trends to estimate these amounts at the time of shipment and to reduce the transaction price.

We principally rely on historical experience, specific customer agreements, and anticipated future trends to estimate these amounts at the time of shipment and to reduce the transaction price.

These arrangements include volume rebates, which are estimated using the most likely amount method, as well as early payment discounts and promotional and advertising allowances, which are estimated using the expected value method.

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Nature of Goods and Services, Satisfaction of Performance Obligations, and Payment Terms

Our HVAC product lines include package cooling towers, residential and commercial boilers, and comfort heating and ventilation products.

Performance obligations for our HVAC product lines relate primarily to the delivery of equipment and components, with satisfaction of these performance obligations occurring at the time of shipment or delivery (i.e., control is transferred at a point in time).

The typical length of a contract is one to three months and payment terms are generally 15 to 60 days after shipment to the customer.

Our HVAC product lines include package and process cooling equipment, residential and commercial boilers, comfort heating and ventilation products, and engineered air movement solutions.

Performance obligations for our HVAC product lines relate primarily to the delivery of equipment and components, construction and reconstruction of cooling towers and other components, and providing installation, replacement/spare parts and various other services.

Performance obligations related to delivery of equipment and components are satisfied at the time of shipment or delivery (i.e., control is transferred at a point in time).

The typical length of these contracts is one to three months and payment terms are generally 15 to 60 days after shipment to the customer.

Performance obligations for construction and reconstruction of cooling towers and other components, and providing installation and various other services, are typically satisfied through a contract with us to provide a customer-specific solution.

The customer typically controls the work in process due to contractual termination clauses whereby we have an enforceable right to recovery of cost incurred including a reasonable profit for work performed to date on products or services that do not have an alternative use to us.

Additionally, certain projects are performed on customer sites such that the customer controls the asset as it is created or enhanced.

As such, performance obligations for these product lines are generally satisfied over time, with the related revenue recorded based on the percentage of costs incurred to date for each contract to the estimated total costs for such contract at completion, as this method best depicts how control of the product or service is being transferred.

The length of customer contract for these product lines is generally 6 to 18 months.

Revenue for sales of certain engineered components and all replacement/spare parts is recognized upon shipment or delivery (i.e., at a point in time).

Payments on longer-term contracts are generally commensurate with milestones defined in the related contract, while payments for the replacement/spare parts contracts typically occur 30 to 60 days after delivery.

Our detection and measurement product lines include underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, bus fare collection systems, communication technologies, and obstruction lighting.

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These product lines have varying contract lengths ranging from one to eighteen months (with the longer term contracts generally associated with our bus fare collection systems and communication technologies products lines), with the typical duration being one to three months .

Our engineered solutions product lines include medium and large power transformers and process cooling equipment.

Performance obligations for these product lines relate to delivery of equipment and components, construction and reconstruction of cooling towers and other components, providing installation, replacement/spare parts, and various other services.

For these product lines, our customers typically contract with us to provide a customer-specific solution.

Additionally, certain projects are performed on customer sites such that the customer controls the asset as it is created or enhanced.

Revenue for sales of certain engineered components and all replacement/spare parts is recognized upon shipment or delivery (i.e., at a point in time).

The length of customer contract is generally 6 to 12 months for our power transformers business and 6 to 18 months for our process cooling business.

Our remaining product lines relate to DBT, our South African business.

Performance obligations for these product lines relate to delivery of equipment and components and construction, installation, and various other services, primarily for two large power projects that are in the final stages of completion.

For these product lines, our customers contracted with us to provide a customer-specific solution.

Additionally, most projects are performed on customer sites such

that the customer controls the asset as it is created or enhanced.

Payments for these product lines are generally commensurate with milestones defined in the related contract.

Customer prepayments, progress billings, and retention payments are customary in certain of our project-based businesses, generally for our engineered solutions and DBT product lines and, to a lesser extent, our detection and measurement product lines.

Customer prepayments, progress billings, and retention payments are customary for some of our longer-term contracts.

Customer prepayments, progress billings, and retention payments are not considered a significant financing component because they are intended to protect either the customer or ourselves in the event that some or all of the obligations under the contract are not completed.

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Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments and our other operating segment, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are effected by economic factors, with such disaggregation presented below for the years ended December 31, 2020, 2019, and 2018:

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are effected by economic factors, with such disaggregation presented below for the years ended December 31, 2021, 2020, and 2019:

Year Ended December 31, 2021

Reportable Segments and Other HVAC Detection and Measurement Engineered Solutions Other Total

Reportable Segments HVAC Detection and Measurement Total

Major product lines

Cooling $ 297.0 $ — $ — $ — $ 297.0

Package and process cooling equipment and services, and engineered air quality solutions $ 433.8 $ — $ 433.8

Boilers, comfort heating, and ventilation 318.3 — 318.3

Underground locators, inspection and rehabilitation equipment, and robotic systems — 256.8 256.8

Signal monitoring, obstruction lighting, and bus fare collection systems — 169.5 — — 169.5

Power transformers — — 427.4 — 427.4

Process cooling equipment and services — — 150.1 0.8 150.9

South African projects — — — 3.2 3.2

Communication technologies, obstruction lighting, and bus fare collection systems — 210.6 210.6

$ 752.1 $ 467.4 $ 1,219.5

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Year Ended December 31, 2020

Reportable Segments and Other HVAC Detection and Measurement Engineered Solutions Other Total

Reportable Segments HVAC Detection and Measurement Total

Major product lines

Cooling $ 284.2 $ — $ — $ — $ 284.2

Package and process cooling equipment and services $ 447.1 $ — $ 447.1

Boilers, comfort heating, and ventilation 293.7 — 293.7

Underground locators and inspection and rehabilitation equipment — 194.3 — — 194.3

Signal monitoring, obstruction lighting, and bus fare collection systems — 190.6 — — 190.6

Power transformers — — 403.4 — 403.4

Process cooling equipment and services — — 145.5 4.8 150.3

South African projects (1)

— — — ( 10.9 ) ( 10.9 )

Underground locators, inspection and rehabilitation equipment, and robotic systems — 217.8 217.8

Communication technologies, obstruction lighting, and bus fare collection systems — 169.5 169.5

$ 740.8 $ 387.3 $ 1,128.1

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$ 740.8 $ 387.3 $ 1,128.1

$ 593.2 $ 384.9 $ 548.9 $ ( 6.1 ) $ 1,520.9

__________________________

(1) As discussed above, during the year ended December 31, 2019, we reduced the amount of revenue associated with the large power projects in South Africa by $ 23.5 .

Year Ended December 31, 2019

Reportable Segments and Other HVAC Detection and Measurement Engineered Solutions Other Total

Reportable Segments HVAC Detection and Measurement Total

Major product lines

Cooling $ 281.7 $ — $ — $ — $ 281.7

Package and process cooling equipment and services $ 429.7 $ — $ 429.7

Boilers, comfort heating, and ventilation 309.0 — 309.0

Underground locators and inspection and rehabilitation equipment — 194.3 194.3

Signal monitoring, obstruction lighting, and bus fare collection systems — 161.8 — — 161.8

Power transformers — — 373.8 — 373.8

Process cooling equipment and services — — 163.2 23.5 186.7

South African projects — — — 49.1 49.1

Communication technologies, obstruction lighting, and bus fare collection systems — 190.6 190.6

$ 738.7 $ 384.9 $ 1,123.6

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During 2021, we recognized revenues of $ 34.0 related to our contract liabilities at December 31, 2020.

As indicated in Note 3, effective January 1, 2019, we adopted ASC 842 under the modified retrospective transition approach.

As a result, for 2018, leases continue to be presented based on prior guidance.

Summarized below is our policy under, as well as the various other disclosures required by, ASC 842.

We elected to account for lease agreements with lease and non-lease components as a single component for all leases.

We have elected to account for lease agreements with lease and non-lease components as a single component for all leases.

Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheets and we recognize lease expense for these leases on a straight-line basis over the lease term.

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We concluded to apply the incremental borrowing rate at a consolidated portfolio level using a five-year term, as the results did not materially differ upon further stratification.

The weighted-average discount rate for our operating leases was 3.0 % and 3.8 %, respectively, at December 31, 2020 and 2019 and finance leases was 3.6 % and 3.8 % at December 31, 2020 and 2019, respectively.

The weighted-average discount rate for our operating leases was 3.1 % and 3.0 % at December 31, 2021 and 2020, respectively, and finance leases was 3.0 % and 3.6 % at December 31, 2021 and 2020, respectively.

The future minimum payments under our operating and finance leases were as follows as of December 31, 2021:

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Total $ 39.2 $ 1.1 $ 40.3

(7) Information on Reportable Segments and “ Other ” Operating Segment

We are a global supplier of highly specialized, engineered solutions with operations in over 15 countries and sales in over 100 countries around the world.

Our DBT operating segment is reported within an “Other” category outside of our reportable segments.

We have aggregated our other operating segments into the following three reportable segments:

HVAC, Detection and Measurement and Engineered Solutions.

(7) Information on Reportable Segments

We are a global supplier of highly specialized, engineered solutions with operations in 15 countries and sales in over 100 countries around the world.

We have aggregated our operating segments into the following two reportable segments:

HVAC and Detection and Measurement.

The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment.

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

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

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

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

HVAC Reportable Segment

Our HVAC reportable segment engineers, designs, manufactures, installs and services cooling products for the HVAC and industrial markets, as well as heating and ventilation products for the residential and commercial markets.

Our HVAC reportable segment engineers, designs, manufactures, installs and services package and process cooling products and engineered air movement solutions for the HVAC industrial and power generation markets, as well as boilers and comfort heating and ventilation products for the residential and commercial markets.

The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers.

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The primary distribution channels for the segment’s products are direct to customers and third-party distributors.

The segment serves a global customer base, with a strong presence in North America, Europe, Africa and Asia Pacific.

Engineered Solutions Reportable Segment

Our Engineered Solutions reportable segment engineers, designs, manufactures, installs and services transformers for the power transmission and distribution market and process cooling equipment for the industrial and power generation markets.

The primary distribution channels for the segment’s products are direct to customers and third-party representatives.

The segment has a strong presence in North America.

As noted above, “Other” consists of our South African operating segment, DBT.

Our DBT operating segment engineers, designs, manufactures, installs, and services equipment for the industrial and power generation markets, with its efforts focused primarily on two large power projects in South Africa that are in the final stages of completion (see Note 15 for additional details).

The segment serves a global customer base, with a strong presence in North America, Europe, Africa and Asia.

Corporate Expense

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

Financial data for our reportable and other operating segments for the years ended December 31, 2020, 2019 and 2018 were as follows:

Financial data for our reportable segments for the years ended December 31, 2021, 2020 and 2019 were as follows:

2021 2020 2019

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Detection and Measurement reportable segment 467.4 387.3 384.9

Engineered Solutions reportable segment 577.5 548.9 537.0

4.0 ( 6.1 ) 72.6

Consolidated revenues $ 1,219.5 $ 1,128.1 $ 1,123.6

Income (loss):

HVAC reportable segment $ 104.2 $ 102.7 $ 103.2

Detection and Measurement reportable segment 69.7 69.1 81.7

Engineered Solutions reportable segment 60.5 43.0 35.0

( 19.3 ) ( 43.6 ) ( 16.0 )

Total income for segments 173.9 171.8 184.9

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Long-term incentive compensation expense 12.8 13.1 12.6

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

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Detection and Measurement reportable segment 3.4 2.7 2.3

Engineered Solutions reportable segment 8.3 7.0 6.9

Other — 0.1 0.1

General corporate 0.9 5.6 2.5

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Detection and Measurement reportable segment 28.0 17.6 13.2

Engineered Solutions reportable segment 11.1 10.7 10.6

Other 0.3 0.4 0.5

General corporate 2.8 3.3 3.0

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Detection and Measurement reportable segment 835.4 772.5 609.4

Engineered Solutions reportable segment 435.0 356.5 383.2

Other 42.6 28.6 56.9

General corporate and eliminations (2)

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China 57.9 41.7 31.1

South Africa (1)

4.0 ( 6.1 ) 72.6

United Kingdom 80.1 88.4 59.0

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Long-lived assets of continuing operations 800.2 722.4 723.7

Long-lived assets of discontinued operations 0.2 0.4 5.6

Long-lived assets of discontinued operations, DBT and Heat Transfer 28.0 109.1 95.7

Total tangible long-lived assets $ 828.2 $ 831.5 $ 819.4

_______________________________________________________________

(1) As further discussed in Note 15, during the first and second quarters of 2019 and the third quarter of 2018, we made revisions to our estimates of expected revenues and costs on our large power projects in South Africa.

As a result of these revisions, we reduced 2019 revenues by $ 23.5 ($ 17.5 and $ 6.0 in the first and second quarters, respectively) and 2018 revenues by $ 2.7 , and 2019 segment income by $ 23.5 ($ 17.5 and $ 6.0 in the first and second quarters, respectively) and 2018 segment income by $ 4.7 .

(2) For 2020, includes 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.

For 2019 and 2018, includes charges of $ 1.8 and $ 0.6 , respectively, related to revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

(1) For 2021, includes charges of $ 26.3 for asbestos product liability matters related to products we no longer manufacture and $ 0.6 related to revisions to the liability associated with the contingent consideration for the Sensors & Software acquisition, partially offset by income of $ 6.7 related to the reduction of the liability associated with contingent consideration for the ECS acquisition.

For 2020, includes 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.

For 2019, includes charges of $ 1.8 related to revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

(2) General corporate and eliminations is comprised of general corporate assets and includes elimination or netting of intercompany amounts, primarily related to certain deferred tax balances and cash management arrangements.

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Detection and Measurement reportable segment 0.9 — — — 0.9

Engineered Solutions reportable segment — — — — —

Other 0.8 — — — 0.8

Corporate — — — — —

Total $ 1.0 $ — $ — $ — $ 1.0

HVAC – Charges for 2020 related to severance costs associated with restructuring actions at the segment’s Cooling Americas and Heating businesses.

HVAC – Charges for 2021 related to severance costs associated with a restructuring action at one of the segment’s heating businesses.

This action resulted in the termination of 6 employees.

Detection & Measurement – Charges for 2021 related primarily to severance costs associated with restructuring actions at the segment’s location and inspection businesses.

These actions resulted in the termination of 44 employees.

Detection & Measurement – Charges for 2020 related to severance costs for a restructuring action at the segment’s bus fare collection systems business.

The action resulted in the termination of 5 employees.

Other – Charges for 2020 related to severance costs incurred in connection with the wind-down activities at DBT, our South African subsidiary.

Corporate – Charges for 2020 related primarily to (i) asset impairment and other charges associated with the move to a new corporate headquarters and (ii) cost incurred for a legal entity reorganization initiative.

2020 Charges:

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Detection and Measurement reportable segment 0.3 — — — 0.3

Engineered Solutions reportable segment 0.1 0.4 — 0.3 0.8

Other 2.6 — — — 2.6

Corporate 0.2 — 1.0 0.4 1.6

Total $ 1.0 $ — $ 1.0 $ 0.4 $ 2.4

HVAC – Charges for 2019 related primarily to severance, asset impairment, and other charges associated with the relocation of certain of the segment’s operations and severance costs associated with a restructuring action at the segment’s Cooling EMEA business.

These actions resulted in the termination of 9 employees.

Engineered Solutions – Charges for 2019 related primarily to costs associated with the relocation of certain operations and an asset impairment charge.

These actions resulted in the termination of 10 employees.

Other – Charges for 2019 related to severance costs incurred in connection with the wind-down activities at DBT, our South African subsidiary.

HVAC – Charges for 2020 related to severance costs associated with restructuring actions at the segment’s Cooling Americas and heating businesses.

These actions resulted in the termination of 11 employees.

Corporate – Charges for 2019 related to severance costs incurred in connection with the rationalization of certain administrative functions.

Detection & Measurement – Charges for 2020 related severance costs for a restructuring action at the segment’s bus fare collection systems business.

The action resulted in the termination of 5 employees.

2019 Charges:

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Detection and Measurement reportable segment — — — — —

Engineered Solutions reportable segment — — — — —

Other 2.4 — — — 2.4

Corporate 0.2 — — — 0.2

Total $ 0.5 $ 0.5 $ — $ 0.5 $ 1.5

HVAC — Charges for 2018 related primarily to severance costs associated with restructuring actions at the boiler and Cooling Americas’ businesses.

These actions resulted in the termination of 18 employees.

Other — Charges for 2018 related to severance costs incurred in connection with the wind-down activities at DBT.

HVAC — Charges for 2019 related primarily to severance, asset impairment, and other charges associated with the relocation of certain of the segment's operations and severance costs associated with a restructuring action at the segment's Cooling EMEA business.

These actions resulted in the termination of 19 employees.

Corporate — Charges for 2019 related to severance costs incurred in connection with the rationalization of certain administrative functions.

These actions resulted in the termination of 6 employees.

The following is an analysis of our restructuring liabilities for the years ended December 31, 2021, 2020 and 2019:

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Utilization — cash ( 1.6 ) ( 1.5 ) ( 1.4 )

Currency translation adjustment and other ( 0.2 ) ( 0.1 ) —

Balance at the end of year $ 0.3 $ 0.9 $ 0.4

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Raw materials and purchased parts 113.6 84.4

Total FIFO cost 176.7 167.2

Excess of FIFO cost over LIFO inventory value ( 14.7 ) ( 12.3 )

Total inventories $ 189.8 $ 155.0

Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated net realizable values.

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

These inventories were approximately 38 % and 36 % of total inventory at December 31, 2020 and 2019, respectively.

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

Historically, certain of our domestic businesses within our HVAC reportable segment accounted for their inventories under the LIFO method.

As indicated in Note 1, during the fourth quarter of 2021, we converted the inventory accounting for these businesses to the FIFO method.

We believe that this change in accounting is preferable as it (i) results in a consistent method to value inventories across all of our businesses, (ii) it improves comparability with industry peers, (iii) better reflects current inventory costs, and (iv) aligns with how we internally monitor the performance of our businesses.

The effects of this accounting change have been retrospectively applied to all periods presented.

This change resulted in a reduction of our to “Retained deficit” o f $ 9.1 as of December 31, 2018.

The impact of this accounting change on our consolidated statements of operations and consolidated statements of comprehensive income for the years ended December 31, 2019 and 2020, and our consolidated balance sheet as of December 31, 2020, was as follows:

As Computed under LIFO Effect of Change As Adjusted

Consolidated Statement of Operations for the year ended December 31, 2019:

Income from continuing operations before income taxes $ 88.7 $ 0.1 $ 88.8

Income tax provision ( 12.4 ) ( 0.1 ) ( 12.5 )

Income from continuing operations, net of tax 76.3 — 76.3

Loss from discontinued operations, net of tax ( 11.0 ) — ( 11.0 )

Net income 65.3 — 65.3

Adjustment related to redeemable noncontrolling interest 5.6 — 5.6

Net income attributable to SPX common stockholders $ 70.9 $ — $ 70.9

Basic income (loss) per share of common stock:

Income from continuing operations, net of tax $ 1.74 $ — $ 1.74

Loss from discontinued operations, net of tax ( 0.13 ) — ( 0.13 )

Net income attributable to SPX common stockholders after adjustment related to redeemable noncontrolling interest $ 1.61 $ — $ 1.61

Diluted income per share of common stock:

Income from continuing operations, net of tax $ 1.70 $ — $ 1.70

Loss from discontinued operations, net of tax ( 0.12 ) — ( 0.12 )

Net income attributable to SPX common stockholders after adjustment related to redeemable noncontrolling interest $ 1.58 $ — $ 1.58

Total comprehensive income $ 64.7 $ — $ 64.7

Consolidated Statement of Operations for the year ended December 31, 2020

Income from continuing operations before income taxes $ 76.3 $ 2.3 $ 78.6

Income tax provision ( 4.2 ) ( 0.6 ) ( 4.8 )

Income from continuing operations 72.1 1.7 73.8

Gain from discontinued operations, net of tax 25.1 0.1 25.2

Net income $ 97.2 $ 1.8 $ 99.0

Basic income per share of common stock:

Income from continuing operations, net of tax $ 1.61 $ 0.04 $ 1.65

Gain from discontinued operations, net of tax 0.57 — 0.57

Net income attributable to SPX common stockholders $ 2.18 $ 0.04 $ 2.22

Diluted income per share of common stock:

Income from continuing operations, net of tax $ 1.57 $ 0.04 $ 1.61

Gain from discontinued operations, net of tax 0.55 — 0.55

Net income attributable to SPX common stockholders $ 2.12 $ 0.04 $ 2.16

Total comprehensive income $ 101.4 $ 1.8 $ 103.2

Consolidated Balance Sheet as of December 31, 2020:

Inventories, net $ 143.1 $ 11.9 $ 155.0

Current assets of discontinued operations 121.6 2.8 124.4

Deferred and other income taxes 23.5 3.1 26.6

Non-current liabilities of discontinued operations 30.7 0.7 31.4

Retained deficit ( 488.1 ) 10.9 ( 477.2 )

The following table compares amounts that would have been reported under the LIFO method with amounts reported under the FIFO method in the accompanying consolidated statement of operations and consolidated statement of comprehensive income for the year ended December 31, 2021, and the consolidated balance sheet as of December 31, 2021:

As Computed under LIFO As Reported under FIFO Effect of Change

Income from continuing operations before income taxes $ 58.3 $ 69.9 $ 11.6

Income tax provision ( 8.0 ) ( 10.9 ) ( 2.9 )

Income from continuing operations, net of tax 50.3 59.0 8.7

Gain from discontinued operations, net of tax 368.5 366.4 ( 2.1 )

Net income attributable to SPX common stockholders $ 418.8 $ 425.4 $ 6.6

Basic income per share of common stock:

Income from continuing operations, net of tax $ 1.11 $ 1.30 $ 0.19

Gain from discontinued operations, net of tax 8.14 8.09 ( 0.05 )

Net income attributable to SPX common stockholders $ 9.25 $ 9.39 $ 0.14

Total Comprehensive Income $ 434.3 $ 440.8 $ 6.5

Diluted income per share of common stock:

Income from continuing operations, net of tax $ 1.08 $ 1.27 $ 0.19

Gain from discontinued operations, net of tax 7.93 7.88 ( 0.05 )

Net income attributable to SPX common stockholders $ 9.01 $ 9.15 $ 0.14

Inventories, net $ 166.3 $ 189.8 $ 23.5

Deferred and other income taxes 25.3 31.3 6.0

Retained deficit ( 69.3 ) ( 51.8 ) 17.5

The impact of the change from LIFO to FIFO on our consolidated statements of cash flows for the years ended December 31, 2021, 2020, and 2019 was limited to the changes in income noted above, along with offsetting changes within inventories and deferred and other income taxes.

As a result, this accounting change had no impact on our total cash flows from operating, investing, and financing activities during the years ended December 31, 2021, 2020, and 2019.

(10) Goodwill and Other Intangible Assets

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from Business

Combinations (1) Impairments Foreign

Combinations (1) Impairments (2)

Translation December 31,

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Goodwill 217.0 78.7 ( 28.2 ) ( 5.0 ) 262.5

Engineered Solutions reportable segment

Gross goodwill 843.7 124.7 — ( 14.6 ) 953.8

1 unchanged sentence

Goodwill $ 368.6 $ 124.7 $ ( 28.2 ) $ ( 7.8 ) $ 457.3

Gross goodwill — — — — —

Accumulated impairments — — — — —

Goodwill — — — — —

Gross goodwill 915.4 43.5 — 16.1 975.0

Accumulated impairments ( 466.1 ) — — ( 9.0 ) ( 475.1 )

Goodwill $ 449.3 $ 43.5 $ — $ 7.1 $ 499.9

___________________________________________________________________

(1) Reflects goodwill acquired with the ULC and Sensors & Software acquisitions of $ 37.3 and $ 5.4 , respectively, and a net increase in Patterson-Kelley's goodwill during 2020 of $ 0.4 resulting from revisions to the valuation of certain liabilities and tangible assets and an increase in SGS's goodwill during the first half of 2020 of $ 0.4 resulting from revisions to the valuation of certain income tax accounts.

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

(1) Reflects (i) goodwill acquired with the Sealite, ECS and Cincinnati Fan acquisitions of $ 47.7 , $ 25.9 and $ 46.0 , respectively, (ii) and increase in ULC's goodwill during 2021 of $ 3.1 resulting from revisions to the valuation of certain assets and liabilities and income tax accounts, and (iii) an increase in Sensors & Software's goodwill of $ 2.0 resulting from revisions to the valuation of certain assets and liabilities and income tax accounts.

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

(2) As indicated in Note 1, we concluded during the third quarter of 2021 that the operating and financial milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $ 24.3 , with the offset to “Other operating expenses, net.” We also concluded that the lack of achievement of these milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s goodwill and indefinite-lived intangible assets.

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

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

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

In connection with our annual impairment analysis of ULC's goodwill and indefinite-lived intangibles, during the fourth quarter of 2021, we determined that the carrying value of ULC's net assets exceeded the implied fair value of the business by $ 5.2 .

As a result, we recorded impairment charges of $ 4.9 and $ 0.3 related to the business's goodwill and trademarks, respectively.

The changes in the carrying amount of goodwill, for the year ended December 31, 2020, were as follows:

11 unchanged sentences

Goodwill 170.5 42.7 — 3.8 217.0

Engineered solutions reportable segment

Gross goodwill 784.1 43.5 — 16.1 843.7

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Goodwill $ 318.0 $ 43.5 $ — $ 7.1 $ 368.6

Gross goodwill — — — — —

Accumulated impairments — — — — —

Goodwill — — — — —

Gross goodwill 862.1 56.1 — ( 2.8 ) 915.4

Accumulated impairments ( 467.7 ) — — 1.6 ( 466.1 )

Goodwill $ 394.4 $ 56.1 $ — $ ( 1.2 ) $ 449.3

___________________________________________________________________

(1) Reflects goodwill acquired in connection with the Sabik, SGS and Patterson-Kelley acquisitions of $ 41.2 , $ 1.9 and $ 13.8 , respectively, partially offset by a reduction in Cues' goodwill during the first quarter of 2019 of $ 0.8 resulting from revisions to the valuation of certain income tax accounts.

Identifiable intangible assets were as follows:

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___________________________________________________________________

(1) The identifiable intangible assets associated with the ULC and Sensors & Software acquisitions consist of customer backlog of $ 4.6 and $ 0.1 , respectively, customer relationships of $ 22.8 and $ 2.3 , respectively, technology of $ 21.9 and $ 2.4 , respectively, and non-compete agreements of $ 1.7 and $ 0.1 , respectively.

(2) Changes during 2020 related primarily to the acquisition of ULC and Sensors & Software trademarks of $ 7.6 and $ 1.8 , respectively.

(1) The identifiable intangible assets associated with the Sealite, ECS and Cincinnati Fan acquisitions consist of customer backlog of $ 1.9 , $ 0.8 and $ 4.3 , respectively, customer relationships of $ 12.1 , $ 12.6 and $ 61.7 , respectively, technology of $ 6.6 , $ 5.8 and $ 14.4 , respectively, and definite-lived trademarks of $ 0.0 , $ 1.2 and $ 4.7 , respectively.

(2) Changes during 2021 related primarily to the acquisition of Sealite trademarks of $ 11.6 and, as previously discussed, the impairment charges of $ 1.3 related to ULC's trademarks during the third and fourth quarters of 2021.

Amortization expense was $ 21.6 , $ 14.0 and $ 8.9 for the years ended December 31, 2021, 2020 and 2019, respectively.

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At December 31, 2021, the net carrying value of intangible assets with determinable lives consisted of $ 106.2 in the HVAC reportable segment and $ 137.1 in the Detection and Measurement reportable segment.

Trademarks with indefinite lives consisted of $ 96.7 in the HVAC reportable segment, $ 58.1 in the Detection and Measurement reportable segment, and $ 9.1 in the Engineered Solutions reportable segment.

Consistent with the requirements of the Intangibles — Goodwill and Other Topic of the Codification, the fair values of our reporting units generally are estimated using discounted cash flow projections that we believe to be reasonable under current and forecasted circumstances, the results of which form the basis for making judgments about carrying values of the reported net assets of our reporting units.

Other considerations are also incorporated, including comparable industry price multiples.

Many of our reporting units closely follow changes in the industries and end markets that they serve.

Accordingly, we consider estimates and judgments that affect the future cash flow projections, including principal methods of competition such as volume, price, service, product performance and technical innovations and estimates associated with cost improvement initiatives, capacity utilization and assumptions for inflation and foreign currency changes.

Any significant change in market conditions and estimates or judgments used to determine expected future cash flows that indicate a reduction in carrying value may give rise to impairment in the period that the change becomes known.

We perform our annual goodwill impairment testing during the fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of the end of the third quarter.

Trademarks with indefinite lives consisted of $ 105.4 in the HVAC reportable segment and $ 66.8 in the Detection and Measurement reportable segment.

As indicated in Note 1, we review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter.

In addition, we test goodwill for impairment on a more frequent basis if there are indications of potential impairment.

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 approximately 12 % and 3 %, while 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.

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

The fair values of our trademarks are determined by applying estimated royalty rates to projected revenues, with resulting cash flows discounted at a rate of return that reflects current market conditions.

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 of $ 0.7 related to certain of these trademarks.

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

As of December 31, 2020, there are no indications that the carrying value of our goodwill and other intangible assets may not be recoverable.

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

In reviewing goodwill and indefinite-lived intangible assets for impairment, we initially perform a qualitative analysis.

If there is an indication of impairment, we then perform a quantitative analysis.

During the fourth quarter of 2021, we performed quantitative analyses on the goodwill and indefinite-lived intangible assets of our Cues and ULC reporting units.

Based on such analysis, we determined that the fair value of Cues’ net assets exceeded the related carrying value by approximately 30 %.

Our quantitative analysis of the ULC reporting unit resulted in impairment charges of $ 5.2 , with $ 4.9 related to goodwill and $ 0.3 to the ULC trademarks.

After such impairment charges, ULC’s total goodwill 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.

Our quantitative analysis of trademarks is based on applying estimated royalty rates to projected revenues, with resulting cash flows discounted at a rate of return that reflects current market conditions.

In addition to the $ 1.3 of 2021 impairment charges related to the ULC trademarks, during the fourth quarters of 2021 and 2020, we recorded impairment charges of $ 0.5 and $ 0.7 , respectively, related to certain other trademarks.

(11) Employee Benefit Plans

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Beginning in 2001, we discontinued providing these pension benefits generally to newly hired employees.

Effective January 31, 2018, we no longer provide service credits to active participants.

Effective January 31, 2018, we discontinued providing service credits to active participants.

We have domestic postretirement plans that provide health and life insurance benefits to certain retirees and their dependents.

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The plan year-end date for all our plans is December 31.

Actuarial Gains and Losses - As indicated in Notes 1 and 2, actuarial gains and losses related to our pension and postretirement plans are recorded to earnings during the fourth quarter of each year, unless earlier remeasurement is required.

Actuarial Gains and Losses - As indicated in Notes 1 and 2, changes in fair value of plan assets and actuarial gains and losses related to our pension and postretirement plans are recorded to earnings during the fourth quarter of each year, unless earlier remeasurement is required.

Defined Benefit Pension Plans

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Government securities 10 % 9 % 12 %

Short-term investments (1)

Short-term investments and other (1)

Total 100 % 100 % 100 %

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Short-term investments (5)

22.5 22.5 — —

Total $ 478.1 $ 22.5 $ 454.7 $ 0.9

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Interest cost 8.4 10.8 3.4 3.8

Actuarial losses 30.4 32.4 14.3 13.2

Actuarial (gains) losses ( 12.9 ) 30.4 ( 4.8 ) 14.3

Settlements ( 10.5 ) ( 10.3 ) ( 3.0 ) —

Acquisition — 7.1 — —

Benefits paid ( 14.3 ) ( 14.4 ) ( 5.1 ) ( 6.7 )

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Projected benefit obligation — end of year $ 335.4 $ 364.7 $ 182.4 $ 192.2

The actuarial losses for all pension plans in 2020 and 2019 were primarily related to a change in the discount rate used to measure the benefit obligations of those plans.

The actuarial gains and losses for all pension plans in 2021 and 2020 were primarily related to a change in the discount rate used to measure the benefit obligations of those plans.

Domestic Pension

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Benefits paid ( 14.3 ) ( 14.4 ) ( 5.1 ) ( 6.7 )

Acquisition — 9.2 — —

Foreign exchange and other — — ( 1.1 ) 6.1

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Fair value of plan assets 251.8 270.4 — 48.4

The accumulated benefit obligation for all domestic and foreign pension plans was $ 364.7 and $ 192.2 , r espectively, at December 31, 2020 and $ 348.2 and $ 175.0 , respectively, at December 31, 2019.

The accumulated benefit obligation for all domestic and foreign pension plans w as $ 335.4 and $ 182.4 , r espectively, at December 31, 2021 and $ 364.7 and $ 192.2 , respectively, at December 31, 2020.

Components of Net Periodic Pension Benefit Expense (Income) — Net periodic pension benefit expense (income) for our domestic and foreign pension plans included the following components:

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( 4.2 ) 4.7 6.5

Total net periodic pension benefit expense $ 5.9 $ 9.9 $ 1.6

Total net periodic pension benefit (income) expense $ ( 4.6 ) $ 5.9 $ 9.9

___________________________________________________________________

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Expected return on plan assets ( 5.8 ) ( 5.7 ) ( 6.7 )

Recognized net actuarial losses (1)

Total net periodic pension benefit (income) expense $ ( 1.7 ) $ ( 0.9 ) $ 6.3

Recognized net actuarial (gains) losses (1)

( 1.8 ) 0.2 1.0

Total net periodic pension benefit income $ ( 4.2 ) $ ( 1.7 ) $ ( 0.9 )

___________________________________________________________________

(1) Consists of our reported actuarial (gains) losses and the difference between actual and expected returns on plan assets.

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Interest cost 1.0 1.6

Actuarial losses 1.9 2.5

Actuarial (gains) losses ( 3.9 ) 1.9

Benefits paid ( 5.9 ) ( 6.6 )

Plan amendment — ( 1.8 )

Other — ( 0.2 )

Projected postretirement benefit obligation — end of year $ 51.7 $ 60.5

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Amount recognized in accumulated other comprehensive income (pre-tax) consists of — net prior service credits $ ( 15.5 ) $ ( 20.2 )

The actuarial losses for our postretirement benefit plans in 2020 and 2019 were primarily related to a change in the discount rate used to measure the benefit obligations of those plans.

The actuarial gains and losses for our postretirement benefit plans in 2021 and 2020 were primarily related to a change in the discount rate used to measure the benefit obligations of those plans.

The net periodic postretirement benefit expense (income) included the following components:

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The matching contributions vest with the employee immediately upon the date of the match and there are no restrictions on the resale of common stock held by employees.

Under the DC Plan, we contributed 0.276 , 0.287 and 0.279 shares of our common stock to employee accounts in 2020, 2019 and 2018, respectively.

Under the DC Plan, we c ontributed 0.135 , 0.192 and 0.199 shares of our common stock to employee accounts in 2021, 2020 and 2019, respectively.

Compensation expense is recorded based on the market value of shares as the shares are contributed to employee accounts.

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Changes in valuation allowance (1)

47.9 % ( 0.6 ) % ( 1.8 ) %

Share-based compensation ( 1.8 ) % ( 3.6 ) % ( 1.8 ) %

tax reform — % — % ( 0.8 ) %

Capital loss (1)

( 42.5 ) % — % — %

Goodwill impairment and basis adjustments 7.3 % — % — %

Statutory rate changes 2.1 % — % ( 0.6 ) %

Adjustments to contingent consideration ( 8.9 ) % — % — %

Other ( 3.0 ) % ( 1.3 ) % 0.6 %

15.6 % 6.1 % 14.1 %

___________________________________________________________________

(1) During the fourth quarter of 2021, we generated a capital loss in connection with the liquidation of certain recently acquired entities.

All but $ 2.0 of the income tax benefit associated with the capital loss has been reflected in “Gain (loss) from discontinued operations, net of tax” in the accompanying consolidated statement of operations for the year ended December 31, 2021.

As such, the capital loss had only a minimal impact on our effective income tax rate for continuing operations during the year ended December 31, 2021.

Significant components of our deferred tax assets and liabilities were as follows:

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We periodically assess deferred tax assets to determine if they are likely to be realized and the adequacy of deferred tax liabilities, incorporating the results of local, state, federal and foreign tax audits in our estimates and judgments.

At December 31, 2020, we had $ 483.2 of state and $ 321.3 of foreign tax loss carryforwards available.

At December 31, 2021, we ha d $ 352.0 of state and $ 288.0 of foreign tax loss carryforwards available.

We also had federal and state tax credit carryforwards of $ 8.0 .

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However, deferred tax assets could be reduced in the near term if our estimates of taxable income are significantly reduced or tax planning strategies are no longer viable.

The valuation allowance decreased by $ 1.6 in 2020 and increased by $ 4.3 in 2019.

The 2020 decrease was primarily driven by the impact of foreign exchange rates on our foreign losses.

Our valuation allowance decreased by $ 2.2 in 2021 and by $ 1.6 in 2020.

The 2021 decrease was primarily driven by the utilization of state attributes in connection with our sale of Transformer Solutions.

As previously indicated, we recorded an income tax benefit associated with the capital loss that was generated from the liquidation of certain recently acquired entities, with $ 2.0 recorded to continuing operations and the remainder to discontinued operations.

As such, the capital loss had no net impact to our valuation allowance during the year ended December 31, 2021.

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

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Unrecognized Tax Benefits

A s of December 31, 2020, we had gross and net unrecognized tax benefits of $ 13.6 and $ 11.0 , respectively.

Of these net unrecognized tax benefits, $ 7.0 would impact our effective tax rate from continuing operations if recognized.

Similarly, at December 31, 2019 and 2018, we had gross unrecognized tax benefits of $ 17.2 (net unrecognized tax benefits of $ 13.9 ) and $ 20.3 (net unrecognized tax benefits of $ 13.8 ), respectively.

A s of December 31, 2021, we had gross and net unrecognized tax benefits of $ 7.1 and $ 6.4 , resp ectively.

All of these net unrecognized tax benefits would impact our effective tax rate from continuing operations if recognized.

Similarly, at December 31, 2020 and 2019, we had gross unreco gnized tax benefits of $ 13.6 (net unrecognized tax benefits of $ 11.0 ) and $ 17.2 (net unrecognized tax benefits of $ 13.9 ), respect ively.

We classify interest and penalties related to unrecognized tax benefits as a component of our income tax (provision) benefit.

As of December 31, 2020, gross accrued interest totaled $ 3.8 (net accrued interest of $ 3.0 ), while the related amounts as of December 31, 2019 and 2018 were $ 4.1 (net accrued interest of $ 3.2 ) and $ 3.8 (net accrued interest of $ 2.9 ), respectively.

As of December 31, 2021, gross accrued interest total ed $ 2.6 (net accrued interest of $ 2.2 ), while the related amounts as of December 31, 2020 and 2019 were $ 3.8 (net accrued interest of $ 3.0 ) and $ 4.1 (net accrued interest of $ 3.2 ), respectively.

Our income tax (provision) benefit for the years ended December 31, 2021, 2020 and 2019 included gross interest income (expense) of $ 1.0 , $ 0.2 , and $( 0.5 ), respectively, resulting from adjustments to our liability for uncertain tax positions.

As of December 31, 2020, 2019 and 2018, we had no accrual for penalties included in our unrecognized tax benefits.

As of December 31, 2021, 2020 and 2019, we had no accrua l for penalties included in our unrecognized tax benefits.

Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $ 5.0 .

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Other Tax Matters

During 2020, our income tax provision was impacted most significantly by (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.

During 2019, our income tax provision was impacted most significantly by (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.

During 2018, our income tax provision was impacted most significantly by (i) the utilization of $ 33.0 of prior years’ losses generated in foreign jurisdictions in which no tax 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.

During 2021, our income tax provision was impacted most significantly by (i) earnings in jurisdictions with lower statutory tax 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, our income tax provision was impacted most significantly by (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, our income tax provision was impacted most significantly by (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.

We perform reviews of our income tax positions on a continuous basis and accrue for potential uncertain positions when we determine that a tax position meets the criteria of the Income Taxes Topic of the Codification.

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As events change and resolutions occur, these accruals are adjusted, such as in the case of audit settlements with taxing authorities.

The Internal Revenue Service (“IRS”) currently is performing an audit of our 2013, 2014, 2015, 2016 and 2017 federal income tax returns.

With regard to all open tax years, we believe any contingencies are adequately provided for.

The Internal Revenue Service (“IRS”) concluded its audit of our 2013, 2014, 2015, 2016 and 2017 federal income tax returns.

In connection with such, we recorded a tax benefit of $ 2.2 during 2021 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims.

State income tax returns generally are subject to examination for a period of three to five years after filing the respective tax returns.

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We do not believe these changes impact our current and deferred income tax balances;

therefore, no resulting adjustments have been recorded to such balances as of December 31, 2020.

therefore, no resulting adjustments have been recorded to such balances as of December 31, 2021 and 2020.

As provided within the CARES Act, we are deferring payments of our social security payroll taxes, for the period March 27, 2020 to December 31, 2020, with such deferral totaling $ 3.5 as of December 31, 2021.

One-half of the deferred amount is required to be paid in 2021, with the remainder to be paid in 2022.

One-half of the deferred amount was paid in 2021, with the remainder required to be paid in 2022.

(13) Indebtedness

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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) Under 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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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 accompanying 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 principal 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 ;

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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 ASU No.

2020-04 and No.

2021-01, Reference Rate Reform (see Note 3), we entered into a LIBOR transition amendment related to our global revolving credit facility for certain foreign currencies.

This amendment provides for a transition within the Credit Agreement from the LIBOR rate to a successor rate.

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 may voluntarily prepay loans under the Credit Agreement, in whole or in part, without premium or penalty.

Any voluntary prepayment of loans will be subject to reimbursement of the lenders’ breakage costs in the case of a prepayment of

Eurodollar rate borrowings other than on the last day of the relevant interest period.

Any voluntary prepayment of loans will be subject to reimbursement of the lenders’ breakage costs in the case of a prepayment of Eurodollar rate borrowings other than on the last day of the relevant interest period.

Indebtedness under the Credit Agreement is guaranteed by:

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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.

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.

As of December 31, 2020, except as discussed in Notes 15 and 17 to our consolidated financial statements , 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.

At December 31, 2021, we were in compliance with all covenants of our Credit Agreement.

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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.

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

At December 31, 2021, the aggregate amount of borrowing capacity under these facilities was $ 20.0 , while there were no borrowings outstanding.

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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 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 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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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.

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 contracts 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 forecasted 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 in the accompanying 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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We have credit loss exposure in the event of nonperformance by counterparties to the above financial instruments, but have no other off-balance-sheet credit risk of accounting loss.

We anticipate, however, that counterparties will be able to fully

satisfy their obligations under the contracts.

We anticipate, however, that counterparties will be able to fully satisfy their obligations under the contracts.

We do not obtain collateral or other security to support financial instruments subject to credit risk, but we do monitor the credit standing of counterparties.

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(15) Contingent Liabilities and Other Matters

Spin-Off of SPX FLOW

In connection with the Spin-Off, we entered into definitive agreements with SPX FLOW that, among other matters, set forth the terms and conditions of the Spin-Off and provide a framework for our relationship with SPX FLOW after the Spin-Off, including the following:

• Separation and Distribution Agreement;

• Tax Matters Agreement;

• Employee Matters Agreement;

• Trademark License Agreement.

Pursuant to the Separation and Distribution Agreement, the Employee Matters Agreement and the Tax Matters Agreement, SPX FLOW has agreed to indemnify us for certain liabilities, and we have agreed to indemnify SPX FLOW for certain liabilities, in each case for uncapped amounts.

As of December 31, 2020, no material indemnification claims have been initiated.

The financial activity governed by these agreements between SPX FLOW and us was not material to our consolidated financial results for the years ended December 31, 2020, 2019 and 2018.

We also entered into a five-year agreement with SPX FLOW to lease office space for our corporate headquarters.

Annual lease costs associated with the agreement were $ 2.1 .

This agreement expired in September 2020 and we entered into an agreement for office space in a new corporate headquarters with a third-party lessor.

Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”).

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It is not unusual in these cases for fifty or more corporate entities to be named as defendants.

We vigorously defend these claims, many of which are dismissed without payment, and the significant majority of costs related to these claims

have historically been paid pursuant to our insurance arrangements.

We vigorously defend these claims, many of which are dismissed without payment, and the significant majority of costs related to these claims have historically been paid pursuant to our insurance arrangements.

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

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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.

During the years ended December 31, 2021, 2020 and 2019, our (receipts) payments for asbestos-related claims, net of respective insurance recoveries 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 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.

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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.

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.

DBT's remaining responsibilities relate 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.

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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 accompanying 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 accompanying 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 accompanying 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 accompanying 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 remain der 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 had 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 not valid.

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 accompanying 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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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.

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.

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

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 accompanying 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.

Litigation Matters

We are subject to other legal matters that arise in the normal course of business.

We believe these matters are either without merit or of a kind that should not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows;

We believe these matters are either without merit or of a kind that should not have a material effect, individually or in the aggregate, on our financial position,

results of operations or cash flows;

however, we cannot give assurance that these proceedings or claims will not have a material effect on our financial position, results of operations or cash flows.

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

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

Our estimates are based primarily on investigations and remediation plans established by independent

consultants, regulatory agencies and potentially responsible third parties.

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

Our estimates are based primarily on investigations and remediation plans established by independent consultants, regulatory agencies and potentially responsible third parties.

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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We record a liability when it is both probable and the amount can be reasonably estimated.

In our opinion, after considering accruals established for such purposes, the cost of remedial actions for compliance with the present laws and regulations governing the protection of the environment is not expected to have a material impact, individually or in the aggregate, on our financial position, results of operations or cash flows.

In our opinion, after considering accruals established for such purposes, the cost of remedial actions for compliance with the present laws and regulations governing the protection of the environment are not expected to have a material impact, individually or in the aggregate, on our financial position, results of operations or cash flows.

Self-Insured Risk Management Matters

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This agreement had an initial term through December 31, 2017 and, thereafter, rolling terms of one year , and specifies the executive’s current compensation, benefits and perquisites, severance entitlements, and other employment rights and responsibilities.

The Compensation Committee of the Board of Directors has approved severance benefit agreements for our other seven executive officers.

The Compensation Committee of the Board of Directors has approved severance benefit agreements for our other six executive officers.

These agreements cover each executive’s entitlements in the event that the executive’s employment is terminated for other than cause, death or disability, or the executive resigns with good reason.

The Compensation Committee of the Board of Directors has also approved change of control agreements for each of our executive officers, which cover each executive’s entitlements following a change of control.

(16) Shareholders’ Equity and Long-Term Incentive Compensation

(16) Stockholders’ Equity and Long-Term Incentive Compensation

Income Per Share

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2021 2020 2019

Income from continuing operations $ 100.7 $ 71.1 $ 81.9

Income from continuing operations attributable to SPX Corporation common stockholders for calculating basic and diluted income per share $ 59.0 $ 73.8 $ 76.3

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

Adjustment related to redeemable noncontrolling interest (Note 15) — — 5.6

Income from continuing operations attributable to SPX Corporation common shareholders for calculating basic and diluted income per share $ 100.7 $ 76.7 $ 81.9

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

Net loss attributable to noncontrolling interest — — —

Loss from discontinued operations attributable to SPX Corporation common shareholders for calculating basic and diluted income per share $ ( 3.5 ) $ ( 5.8 ) $ ( 0.7 )

Weighted-average number of common shares used in basic income (loss) per share 44.628 43.942 43.054

Income (loss) from discontinued operations attributable to SPX Corporation common stockholders for calculating basic and diluted income per share $ 366.4 $ 25.2 $ ( 5.4 )

Weighted-average number of common shares used in basic income per share 45.289 44.628 43.942

Dilutive securities — Employee stock options, restricted stock shares and restricted stock units 1.206 1.138 1.015

Weighted-average number of common shares and dilutive securities used in diluted income (loss) per share 45.766 44.957 44.660

Weighted-average number of common shares and dilutive securities used in diluted income per share 46.495 45.766 44.957

For the years ended December 31, 2021, 2020, and 2019, 0.245 , 0.300 , and 0.319 , respectively, of unvested restricted stock shares/units were excluded from the computation of diluted earnings per share as the assumed proceeds for these instruments exceeded the average market value of the underlying common stock for the related years.

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Under the Directors’ Plan, up to 0.027 shares of our common stock were available for grant at December 31, 2021.

The 2020, 2019 and 2018 grants to non-employee directors generally vest over a one-year period, with the 2020 grants scheduled to vest in their entirety immediately prior to the annual meeting of stockholders in May 2021.

Stock options may be granted to key employees in the form of incentive stock options or nonqualified stock options.

The 2021, 2020 and 2019 grants to non-employee directors generally vest over a 1 year-period, with the 2021 grants scheduled to vest in their entirety immediately prior to the annual meeting of stockholders in May 2022.

Stock options may be granted to key employees in the form of incentive stock options or non-qualified stock options.

The option price per share may be no less than the fair market value of our common stock at the close of business the day prior to the date of grant.

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We use the Monte Carlo simulation model valuation technique to determine fair value of our restricted stock awards that contain a market condition (i.e., the PSU’s).

The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculates the fair value of each PSU.

We issued PSU’s to eligible participants on February 20, 2020, February 21, 2019 and February 22, 2018.

The Monte Carlo simulation model utilizes multiple input variables that determine

the probability of satisfying the market condition stipulated in the award and calculates the fair value of each PSU.

We issued PSU’s to eligible participants on March 1, 2021, February 20, 2020 and February 21, 2019.

We used the following assumptions in determining the fair value of these awards:

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Return for SPX

February 20, 2020

March 1, 2021

SPX Corporation 42.88 % — % 0.25 % 60.24 %

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Stock Options

On February 20, 2020, February 21, 2019 and February 22, 2018, we granted stock options tota ling 0.125 , 0.186 and 0.184 , respectively.

The exercise price per share of these options is $ 50.09 , $ 36.51 and $ 32.69 , respectively, and the maximum contractual term of these options is ten years .

The fair value of each stock option granted on February 20, 2020, February 21, 2019 and February 22, 2018 was $ 17.40 , $ 13.31 and $ 11.66 , respectively.

On March 1, 2021, February 20, 2020 and February 21, 2019, we granted stock options totaling 0.105 , 0.125 and 0.186 , respectively.

The exercise price per share of these options is $ 58.34 , $ 50.09 and $ 36.51 , resp ectively, and the maximum contractual term of these options is ten years .

The fair value of each stock option granted on March 1, 2021, February 20, 2020 and February 21, 2019 was $ 23.49 , $ 17.40 and $ 13.31 , respectively.

The fair value of each option grant was estimated using a Black-Scholes option-pricing model with the following assumptions:

February 20, 2020 February 21, 2019 February 22, 2018

March 1, 2021 February 20, 2020 February 21, 2019

Annual expected stock price volatility 41.15 % 33.48 % 32.70 %

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Expected life of stock option (in years) 6.0 6.0 6.0

Annual expected stock price volatility for the February 20, 2020, February 21, 2019 and February 22, 2018 grants were based on a weighted average of SPX’s stock volatility since the Spin-Off and an average of the most recent six-year historical volatility of a peer company group.

Annual expected stock price volatility for the March 1, 2021, February 20, 2020 and February 21, 2019 grants were based on a weighted average of SPX’s stock volatility since the Spin-Off and an average of the most recent six-year historical volatility of a peer company group.

There is no annual expected dividend yield as we discontinued dividend payments in 2015 and do not expect to pay dividends for the foreseeable future.

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Adjustment Net Unrealized

Gains (losses) on

Postretirement

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__________________________________________________________________

(1) Net of tax benefit of $ 1.4 and $ 0.5 as of December 31, 2020 and 2019, respectively.

(1) Net of tax (provision) benefi t of $( 0.1 ) and $ 1.4 as of December 31, 2021 and 2020, respectively.

(2) Net of tax provision of $ 3.7 and $ 4.9 as of December 31, 2021 and 2020, respectively.

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

The balances as of December 31, 2021 and 2020 include unamorti zed prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the year ended December 31, 2020 were as follows:

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(Gains) losses on qualifying cash flow hedges:

Commodity contracts $ ( 0.9 ) $ 0.8 Cost of products sold

Commodity contracts $ ( 3.8 ) $ ( 0.9 ) Income from discontinued operations, net of tax

Swaps 3.2 4.7 Interest expense

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Income taxes 0.2 ( 0.9 )

$ ( 0.4 ) $ 2.9

Pension and postretirement items:

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$ ( 3.6 ) $ ( 3.6 )

Loss on reclassification of foreign currency translation adjustments:

DBT $ 19.9 $ — Gain on disposition of discontinued operations, net of tax

Income taxes — —

Common Stock in Treasury

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There were no transfers between the three levels of the fair value hierarchy for the periods presented.

Valuation Methodologies Used to Measure Fair Value on a Non-Recurring Basis

Parent Guarantees and Bonds Associated with Balcke Dürr — In connection with the sale of Balcke Dürr, existing parent company guarantees and bank and surety bonds, which totaled approximately Euro 79.0 and Euro 79.0 , respectively, at the time of sale (and Euro 0.0 and Euro 2.9 , respectively, at December 31, 2020), will remain in place through each instrument’s expiration date, with such expiration dates occurring through 2022.

These guarantees and bonds provide protections for Balcke Dürr customers in regard to advance payments, performance, and warranties on projects in existence at the time of sale.

In addition, certain bonds relate to lease obligations and foreign tax matters in existence at the time of sale.

Balcke Dürr and the buyer have provided us an indemnity in the event that any of these bonds are called.

Also, at the time of sale, Balcke Dürr provided cash collateral of Euro 4.0 and the parent company of the buyer provided a guarantee of Euro 5.0 as a security for the above indemnifications (Euro 0.0 and Euro 1.0 , respectively, at December 31, 2020).

Valuation Methods Used to Measure Fair Value on a Non-Recurring Basis

Parent Guarantees and Bonds Associated with Balcke Dürr — In connection with the 2016 sale of Balcke Dürr, existing parent company guarantees and bank surety bonds, which totaled approximately Euro 79.0 and Euro 79.0 , respectively, remained in place at the time of sale.

These guarantees and bonds provided protections for Balcke Dürr customers in regard to advance payments, performance, and warranties on projects in existence at the time of sale.

In addition, certain bonds related to lease obligations and foreign tax matters in existence at the time of sale.

Balcke Dürr and the acquirer of Balcke Dürr provided us an indemnity in the event that any of the bonds were called or payments were made under the guarantees.

Also, at the time of sale, Balcke Dürr provided cash collateral of Euro 4.0 and the parent company of the buyer provided a guarantee of Euro 5.0 as a security for the above indemnification s (Euro 0.0 and Euro 0.0 , resp ectively, at December 31, 2021).

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

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

Summarized below are the liability (related to the parent company guarantees and bank and surety bonds) and asset (related to the cash collateral and guarantee provided by the parent company of the buyer) recorded at the time of sale, along with the change in the liability and the asset during 2021, 2020, and 2019.

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Additionally, we estimated the fair value of the cash collateral provided by Balcke Dürr and the guarantee provided by the parent company of the buyer based on the terms and conditions and relative risk associated with each of these securities (unobservable inputs - Level 3).

(2) We reduce the liability generally at the earlier of the completion of the related underlying project milestones or the expiration of the guarantees or bonds.

We amortize the asset based on the expiration terms of each of the securities.

We record the reduction of the liability and the amortization of the asset to “Other income (expense), net.”

(3) Balance associated with the guarantees and bonds is reflected within “Other long-term liabilities,” while the balance associated with the indemnification assets is reflected within “Other assets.”

Contingent Consideration for ULC and Sensors & Software Acquisitions — In connection with acquisitions of ULC and Sensors & Software, the respective sellers are eligible for additional cash consideration of $ 45.0 and $ 3.9 , respectively, with payment of such contingent consideration dependent upon the achievement of certain milestones.

The estimated fair value of such contingent consideration is $ 24.3 and $ 0.7 , respectively, with such amounts reflected as liabilities within our consolidated balance sheet as of December 31, 2020.

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

(2) We reduced the liability generally at the earlier of the completion of the related underlying project milestones or the expiration of the guarantees or bonds.

We amortized the asset based on the expiration terms of each of the securities.

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

(3) Balance associated with the guarantees and bonds is reflected within "Other long-term liabilities" within the accompanying consolidated balance sheet as of December 31, 2020.

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

The estimated fair value of such contingent consideration is $ 1.3 and $ 1.5 , r espectively, with such amounts reflected as liabilities within our consolidated balance sheet as of December 31, 2021.

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

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

1 unchanged sentence

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

Valuation Methodologies Used to Measure Fair Value on a Recurring Basis

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

Valuation Methods Used to Measure Fair Value on a Recurring Basis

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

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

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

Equity Security - As indicated in Note 3, during 2018, we adopted an amendment to guidance that requires, among other things, equity securities (excluding equity method investments) to be measured at fair value.

We have an equity security that we account for in accordance with this amended guidance.

Specifically, we estimate the fair value of this equity security utilizing a practical expedient under the amended guidance, with such estimated fair value based on our ownership percentage applied to the net asset value of the investee as presented in the investee’s most recent audited financial statements.

During the years ended December 31, 2020 and 2019, we recorded gains of $ 8.6 and $ 7.9 , respectively, to “Other income (expense), net” related to increases in the estimated fair value of such equity security.

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

During the years ended December 31, 2021, 2020 and 2019, we recorded gains of $ 11.8 , $ 8.6 a nd $ 7.9 , respectively, to “Other income (expense), net” related to increases in the estimated fair value of such equity security.

In addition, we received distributions during 2020 and 2019 of $ 3.5 and $ 2.6 , respectively, included within “cash flows from operating activities” in our consolidated statements of cash flows.

As of December 31, 2021 and 2020, the equity security had an estimated fair value of $ 38.8 and $ 27.0 , respectively.

We are restricted from transferring this investment without approval of the manager of the investee.

We are restric ted from transferring this investment without approval of the manager of the investee.

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

See Note 13 for fur ther details.

(18) Quarterly Results (Unaudited)

2021 2020 2021 2020 2021 2020 2021 2020

Operating revenues $ 287.2 $ 254.7 $ 296.6 $ 257.3 $ 285.7 $ 267.8 $ 350.0 $ 348.3

Gross profit (1)

104.4 90.5 102.3 89.4 95.8 92.1 129.3 123.5

Income from continuing operations, net of tax (1)(2)

23.0 14.5 17.7 19.3 13.9 19.5 4.4 20.5

Income from discontinued operations, net of tax (1)(3)

3.8 8.6 44.2 8.2 316.4 3.1 2.0 5.3

$ 26.8 $ 23.1 $ 61.9 $ 27.5 $ 330.3 $ 22.6 $ 6.4 $ 25.8

Basic income per share of common stock:

Continuing operations, net of tax $ 0.51 $ 0.33 $ 0.39 $ 0.43 $ 0.31 $ 0.44 $ 0.10 $ 0.46

Discontinued operations, net of tax 0.08 0.19 0.98 0.19 6.98 0.07 0.04 0.11

Net income $ 0.59 $ 0.52 $ 1.37 $ 0.62 $ 7.29 $ 0.51 $ 0.14 $ 0.57

Diluted income per share of common stock:

Continuing operations, net of tax $ 0.50 $ 0.32 $ 0.38 $ 0.42 $ 0.30 $ 0.42 $ 0.10 $ 0.44

Discontinued operations, net of tax 0.08 0.19 0.95 0.18 6.78 0.07 0.04 0.12

Net income $ 0.58 $ 0.51 $ 1.33 $ 0.60 $ 7.08 $ 0.49 $ 0.14 $ 0.56

___________________________________________________________________

The sum of the quarters’ income per share may not equal the full year per share amounts.

(1) During the fourth quarter of 2021, and as further discussed in Note 9, we converted the inventory accounting for certain of our businesses from the LIFO method to the FIFO method.

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

Within the quarterly results presented above, and compared to what has been previously reported, we have restated gross profit, income from continuing operations, net of tax, income from discontinued operations, net of tax, and net income as follows:

First Second Third Fourth

2021 2020 2021 2020 2021 2020 2020

Gross profit $ — $ 0.5 $ 0.5 $ 0.5 $ 1.5 $ ( 0.2 ) $ 1.5

Income from continuing operations, net of tax — 0.4 0.4 0.4 1.1 ( 0.2 ) 1.1

Income from discontinued operations, net of tax — — — — ( 2.1 ) — 0.1

Net income — 0.4 0.4 0.4 ( 1.0 ) ( 0.2 ) 1.2

(2) During the fourth quarter of 2021 and 2020, we recognized pre-tax actuarial gains (losses) of $ 9.9 and $ ( 6.8 ) , respectively, associated with our pension and postretirement benefit plans.

See Note 11 for additional details.

During the fourth quarter of 2021 and 2020, we recorded charges of $ 46.3 ($ 44.6 to continuing operations and $ 1.7 to discontinued operations) and $ 19.1 ($ 17.0 to continuing operations and $ 2.1 to discontinued operations), respectively, as a result of changes in estimates associated with the assets and liabilities recorded for asbestos product liability matters.

During the fourth quarter of 2021, we recorded impairment charges of $ 5.7 related to (i) the goodwill and indefinite-lived intangible assets of ULC ( $ 5.2 ) and (ii) certain other indefinite-lived intangible assets ($ 0.5 ).

See Note 10 for additional details.

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

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

In connection with the sale, we recorded a gain of $ 357.7 to “Gain (loss) on disposition of discontinued operations, net of tax” within our consolidated statement of operations for the third quarter 2021.

During the fourth quarter of 2021, we increased the gain by $ 24.5 , with the additional gain related primarily to the utilization of income tax benefits associated with liquidating certain recently acquired entities.

In the fourth quarter of 2021, and in connection with the completion of the wind-down of our DBT business, we recorded a charge of $ 19.9 to discontinued operations to reflect the write-off of historical currency translation amounts associated with DBT that had been previously reported within “Stockholders’ equity.”

(4) We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length.

Our fourth quarter ends on December 31.

The interim closing dates for the first, second and third quarters of 2021 were April 3, July 3 and October 2, compared to the respective March 28, June 27 and September 26, 2020 dates.

This practice only affects the quarterly reporting periods and not the annual reporting period.

We had five more days in the first quarter of 2021 and had six fewer days in the fourth quarter of 2021 than in the respective 2020 periods.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data