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Item 1. Financial Statements

2022-11-04 compared with 2022-08-05 · 363 added, 236 removed, 837 unchanged (42% of the section changed)

Financial Statements

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

SPX TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

in millions, except per share amounts)

Three months ended Six months ended

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Revenues $ 370.5 $ 285.7 $ 1,031.6 $ 869.5

3 unchanged sentences

Intangible amortization 6.7 5.5 23.1 16.0

Impairment of goodwill and intangible assets — 24.3 — 24.3

Special charges, net — ( 0.1 ) 0.1 0.7

Other operating expense, net 1.9 2.7 1.0 2.7

Other operating (income) expense, net — ( 24.3 ) 1.0 ( 21.6 )

Operating income 37.3 17.7 75.9 59.8

2 unchanged sentences

Interest income 1.0 0.1 1.4 0.2

Loss on amendment/refinancing of senior credit agreement ( 1.1 ) — ( 1.1 ) ( 0.2 )

Income from continuing operations before income taxes 10.0 18.1 49.1 66.5

Income tax provision ( 4.4 ) ( 2.4 ) ( 7.0 ) ( 7.7 )

Income tax (provision) benefit 2.5 ( 4.2 ) ( 4.5 ) ( 11.9 )

Income from continuing operations 12.5 13.9 44.6 54.6

Income from discontinued operations, net of tax — 40.1 — 44.7

Income (loss) from discontinued operations, net of tax — ( 35.3 ) — 9.4

Income (loss) on disposition of discontinued operations, net of tax ( 9.4 ) 351.7 ( 17.1 ) 355.0

11 unchanged sentences

Weighted-average number of common shares outstanding — diluted 46.132 46.650 46.253 46.455

Comprehensive income $ 0.1 $ 61.3 $ 14.5 $ 90.8

Comprehensive income (loss) $ ( 13.7 ) $ 324.2 $ 0.8 $ 415.0

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

SPX TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

18 unchanged sentences

Deferred income taxes 24.5 11.0

Assets of DBT and Heat Transfer (includes cash and cash equivalents of $ 5.4 and $ 7.8 at July 2, 2022 and December 31, 2021, respectively)

Assets of DBT and Heat Transfer (includes cash and cash equivalents of $ 3.9 and $ 7.8 at October 1, 2022 and December 31, 2021, respectively) (Note 3)

TOTAL ASSETS $ 2,482.5 $ 2,628.6

11 unchanged sentences

Other long-term liabilities 726.9 788.5

Liabilities of DBT and Heat Transfer 34.4 35.6

Liabilities of DBT and Heat Transfer (Note 3) 31.4 35.6

Total long-term liabilities 1,028.4 1,086.2

1 unchanged sentence

Stockholders' Equity:

Common stock ( 53,247,919 and 45,185,089 issued and outstanding at July 2, 2022, respectively, and 53,011,255 and 45,467,768 issued and outstanding at December 31, 2021, respectively)

Common stock ( 53,277,632 and 45,218,054 issued and outstanding at October 1, 2022, respectively, and 53,011,255 and 45,467,768 issued and outstanding at December 31, 2021, respectively)

Paid-in capital 1,331.9 1,334.2

1 unchanged sentence

Accumulated other comprehensive income 237.2 263.9

Common stock in treasury ( 8,062,830 and 7,543,487 shares at July 2, 2022 and December 31, 2021, respectively)

Common stock in treasury ( 8,059,578 and 7,543,487 shares at October 1, 2022 and December 31, 2021, respectively)

( 465.6 ) ( 443.9 )

2 unchanged sentences

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

SPX TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Three months ended July 2, 2022

Three months ended October 1, 2022

Common Stock Paid-In Capital Retained Deficit Accum.

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

Balance at April 2, 2022 $ 0.5 $ 1,321.2 $ ( 40.4 ) $ 266.9 $ ( 432.4 ) $ 1,115.8

Other Comprehensive Income Common Stock In Treasury SPX Technologies, Inc.

Stockholders’ Equity

Balance at July 2, 2022 $ 0.5 $ 1,327.3 $ ( 27.4 ) $ 254.0 $ ( 465.8 ) $ 1,088.6

Net income — — 3.1 — — 3.1

5 unchanged sentences

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

Common stock repurchases — — — — ( 33.7 ) ( 33.7 )

Balance at July 2, 2022 $ 0.5 $ 1,327.3 $ ( 27.4 ) $ 254.0 $ ( 465.8 ) $ 1,088.6

Six months ended July 2, 2022

Balance at October 1, 2022 $ 0.5 $ 1,331.9 $ ( 24.3 ) $ 237.2 $ ( 465.6 ) $ 1,079.7

Nine months ended October 1, 2022

Common Stock Paid-In Capital Retained Deficit Accum.

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

Other Comprehensive Income Common Stock In Treasury SPX Technologies, Inc.

Stockholders’ Equity

Balance at December 31, 2021 $ 0.5 $ 1,334.2 $ ( 51.8 ) $ 263.9 $ ( 443.9 ) $ 1,102.9

7 unchanged sentences

Common stock repurchases — — — — ( 33.7 ) ( 33.7 )

Balance at July 2, 2022 $ 0.5 $ 1,327.3 $ ( 27.4 ) $ 254.0 $ ( 465.8 ) $ 1,088.6

Three months ended July 3, 2021

Balance at October 1, 2022 $ 0.5 $ 1,331.9 $ ( 24.3 ) $ 237.2 $ ( 465.6 ) $ 1,079.7

Three months ended October 2, 2021

Common Stock Paid-In Capital Retained Deficit Accum.

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

Balance at April 3, 2021 $ 0.5 $ 1,315.8 $ ( 450.4 ) $ 251.2 $ ( 445.4 ) $ 671.7

Other Comprehensive Income Common Stock In Treasury SPX Technologies, Inc.

Stockholders’ Equity

Balance at July 3, 2021 $ 0.5 $ 1,321.2 $ ( 388.5 ) $ 250.6 $ ( 444.3 ) $ 739.5

Net income — — 330.3 — — 330.3

3 unchanged sentences

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

Balance at July 3, 2021 $ 0.5 $ 1,321.2 $ ( 388.5 ) $ 250.6 $ ( 444.3 ) $ 739.5

Six months ended July 3, 2021

Balance at October 2, 2021 $ 0.5 $ 1,328.2 $ ( 58.2 ) $ 244.5 $ ( 444.2 ) $ 1,070.8

Nine months ended October 2, 2021

Common Stock Paid-In Capital Retained Deficit Accum.

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

Other Comprehensive Income Common Stock In Treasury SPX Technologies, Inc.

Stockholders’ Equity

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

Net income — — 419.0 — — 419.0

Other comprehensive income, net — — — 2.1 — 2.1

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

Incentive plan activity — 9.8 — — — 9.8

1 unchanged sentence

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

Balance at July 3, 2021 $ 0.5 $ 1,321.2 $ ( 388.5 ) $ 250.6 $ ( 444.3 ) $ 739.5

Balance at October 2, 2021 $ 0.5 $ 1,328.2 $ ( 58.2 ) $ 244.5 $ ( 444.2 ) $ 1,070.8

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

SPX TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended

Nine months ended

2022 October 2,

Cash flows from (used in) operating activities:

4 unchanged sentences

Special charges, net 0.1 0.7

Gain on change in fair value of equity security ( 4.4 ) ( 7.4 )

(Gain) loss on change in fair value of equity security 3.0 ( 9.0 )

Deferred and other income taxes ( 16.9 ) 1.9

16 unchanged sentences

Net cash used in continuing operations ( 45.4 ) ( 119.3 )

Net cash used in discontinued operations ( 13.9 ) ( 1.2 )

Net cash used in investing activities ( 59.7 ) ( 83.4 )

Net cash from (used in) discontinued operations ( 13.9 ) 617.9

Net cash from (used in) investing activities ( 59.3 ) 498.6

Cash flows from (used in) financing activities:

7 unchanged sentences

Repurchases of common stock ( 33.7 ) —

Net cash from (used in) continuing operations ( 46.7 ) 1.3

Financing fees paid ( 1.9 ) —

Net cash used in continuing operations ( 41.2 ) ( 166.5 )

Net cash from (used in) discontinued operations 1.0 ( 0.3 )

Net cash from (used in) financing activities ( 46.4 ) 0.9

Net cash used in financing activities ( 40.2 ) ( 166.8 )

Change in cash and equivalents due to changes in foreign currency exchange rates 1.3 6.2

2 unchanged sentences

Consolidated cash and equivalents, end of period $ 187.3 $ 560.1

Six months ended

Nine months ended

2022 October 2,

Components of cash and equivalents:

3 unchanged sentences

The accompanying notes are an integral part of these statements.

SPX CORPORATION AND SUBSIDIARIES

SPX TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

(1) BASIS OF PRESENTATION

Unless otherwise indicated, “we,” “us” and “our” mean SPX Corporation and its consolidated subsidiaries (“SPX”).

Unless otherwise indicated, “we,” “us” and “our” mean SPX Technologies, Inc.

and its consolidated subsidiaries (“SPX”).

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting.

5 unchanged sentences

All of our VIE's are immaterial, individually and in aggregate, to our condensed consolidated financial statements.

Merger and Consummation of Holding Company Reorganization

As reported in the Form 8-K of SPX Technologies, Inc.

(the “Company”) filed on August 15, 2022, the Company is the successor registrant pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended, to SPX Corporation (“Legacy SPX”) as a result of the completion on August 15, 2022 of a holding company reorganization (“Holding Company Reorganization”) effected as a merger of Legacy SPX with and into SPX Merger, LLC, a subsidiary of the Company.

Each share of the Company’s common stock, par value $ 0.01 per share, issued and outstanding immediately prior to the Holding Company Reorganization was automatically converted into an equivalent corresponding share of Company common stock having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Legacy SPX common stock being converted.

Accordingly, upon consummation of the Holding Company Reorganization, Legacy SPX stockholders became stockholders of the Company.

Sale of Transformer Solutions Business

2 unchanged sentences

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

for an aggregate cash purchase price of $ 645.0 with net proceeds of $ 620.6 received in the third quarter of 2021.

During the first quarter of 2022, we agreed to the final adjustment of the purchase price which resulted in a payment to the Purchaser of $ 13.9 with an increase to the gain on sale of $ 0.2 .

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

Historically, Transformer Solutions’ operations 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 concluded that the sale of Transformer Solutions represented a strategic shift.

6 unchanged sentences

See Note 3 for additional details regarding DBT's presentation as a discontinued operation and Note 15 regarding the dispute resolution matters.

Acquisition of 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 was eligible for additional cash consideration of up to $ 45.0 , with payments scheduled to be made upon successful achievement of certain

operational and financial performance milestones.

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

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

As a result, we reversed the liability of $ 24.3 during the quarter, with the offset recorded to “Other operating (income) expense, net.” We also recorded an impairment charge to “Impairment of goodwill and intangible assets” of $ 24.3 during the quarter (See Note 9 for further discussion of this matter).

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

Acquisition of Sealite

6 unchanged sentences

We purchased ECS for cash consideration 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 $ 16.4 , with payment to be made in the fourth quarter of 2022 upon successful achievement of certain financial performance milestones.

Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $ 13.5 , with payment to be made in the fourth quarter of 2022 upon successful achievement of certain financial performance milestones.

At the time of the acquisition, we recorded a liability of $ 8.2 , which represented the estimated fair value of the contingent consideration.

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 certain large orders, resulting in a reduction of the estimated liability of $ 6.7 .

During the first and second quarters of 202 2, we further reduced the estimated liability by $ 0.9 and $ 0.4 , respectively, with such amounts recorded within “Other operating expense, net.” The estimated fair value of such contingent consideration, which we have reflected as a liability in our condensed consolidated balance sheets, was $ 0.0 and $ 1.5 at July 2, 2022 and December 31, 2021, respectively.

During the first and second quarters of 202 2, we further reduced the estimated liability by $ 0.9 and $ 0.4 , respectively, with such amounts recorded within “Other operating (income) expense, net.” The estimated fair value of such contingent consideration, which we have reflected as a liability in our condensed consolidated balance sheets, was $ 0.0 and $ 1.5 at October 1, 2022 and December 31, 2021, respectively.

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

3 unchanged sentences

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

During the second quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receiving $ 0.4 during the quarter.

During the second quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receiving $ 0.4 during the second quarter.

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

2 unchanged sentences

We purchased ITL for cash consideration of $ 41.8 , net of cash acquired of $ 1.1 .

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.

During the third quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receiving $ 1.4 during the quarter.

The post acquisition operating results of ITL are reflected withi n our Detection and Measurement reportable segment.

The assets acquired and liabilities assumed in the ECS, Cincinnati Fan, and ITL 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.

The assets acquired and liabilities assumed in the Cincinnati Fan and ITL 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.

Change in Accounting Method

4 unchanged sentences

Actual results could differ from these estimates.

The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

Interim results are not necessarily indicative of full year results.

3 unchanged sentences

We had one less day in the first quarter of 2022 and will have one more day in the fourth quarter of 2022 than in the respective 2021 periods.

It is not practicable to estimate the impact of the one less day on our consolidated operating results for the six months ended July 2, 2022, when compared to the consolidated operating results for the 2021 respective period.

It is not practicable to estimate the impact of the one less day on our consolidated operating results for the nine months ended October 1, 2022, when compared to the consolidated operating results for the 2021 respective period.

Reclassification of Prior-Year Amounts

Certain prior-year amounts have been reclassified to conform to the current-year presentation, including amounts related to the inclusion of DBT within discontinued operations and the change from the LIFO method of inventory accounting.

Correction of Prior-Year Classification

Subsequent to issuance of the December 31, 2021 financial statements, management concluded that the impairment charge of $ 24.3 related to our ULC business’ goodwill and intangible assets mentioned above should have been reported in a separate line item within operating income.

These amounts, which were previously classified within “Other operating (income) expense, net,” have been reclassified to “Impairment of goodwill and intangible assets” for the three and nine months ended October 2, 2021.

As a result of this correction, “Other operating (income) expense, net” for the three and nine months ended October 2, 2021 reflects income of $ 24.3 and $ 21.6 , respectively, whereas the expense disclosed prior to reclassification for the three and nine months ended October 2, 2021 was $ 0.0 and $ 2.7 , respectively.

The reclassification for the year ended December 31, 2021 will also be reflected within our Annual Report on Form 10-K for the year ending December 31, 2022.

(2) NEW ACCOUNTING PRONOUNCEMENTS

7 unchanged sentences

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.

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 our 2021 Annual Report on Form 10-K.

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

In conjunction with entering into an Amended and Restated Credit Agreement (the “Credit Agreement”) on August 12, 2022, we adopted this guidance with no material impact on our condensed consolidated financial statements.

Refer to Note 12 for additional information on the Credit Agreement.

In October 2021, the FASB issued ASU No.

12 unchanged sentences

2022-02, Financial Instruments - Credit Losses (Topic 326) - Troubled Debt Restructurings and Vintage Disclosures, which requires enhanced disclosure of certain loan refinancing and restructuring by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance.

This guidance also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases.

This guidance also requires the disclosure of current-period gross write-offs by year of origination for

financing receivables and net investments in leases.

The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and allows for early adoption in any interim period after issuance.

14 unchanged sentences

Sale of Transformer Solutions Business

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

As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer Solutions for which we received net cash proceeds of $ 620.6 , and recorded a gain of $ 355.0 in the third quarter of 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 three and six months ended July 3, 2021 are shown below:

Three months ended Six months ended

July 3, 2021 July 3, 2021

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

Three months ended Nine months ended

October 2, 2021 October 2, 2021

Revenues $ 94.4 $ 313.5

2 unchanged sentences

Selling, general and administrative 10.3 28.4

Other income, net 0.2 —

Income before income tax 3.6 27.9

Income tax benefit (1)

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

___________________________

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

Income tax provision ( 33.8 ) ( 6.8 )

Income (loss) from discontinued operations, net of tax $ ( 30.2 ) $ 21.1

Wind-Down of DBT Business

1 unchanged sentence

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

Major line items constituting pre-tax loss and after-tax loss of DBT for the three and six months ended July 3, 2021 are shown below:

Three months ended Six months ended

July 3, 2021 July 3, 2021

Major line items constituting pre-tax loss and after-tax loss of DBT for the three and nine months ended October 2, 2021 are shown below:

Three months ended Nine months ended

October 2, 2021 October 2, 2021

Revenues $ 0.1 $ 0.9

3 unchanged sentences

Special charges 0.6 1.2

Other income, net 0.7 0.5

Other expense, net 0.9 0.4

Interest income 0.1 0.2

2 unchanged sentences

Loss from discontinued operations, net of tax $ ( 5.1 ) $ ( 11.7 )

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 condensed consolidated balance sheets as of July 2, 2022 and December 31, 2021.

The major line items constituting DBT's assets and liabilities as of July 2, 2022 and December 31, 2021 are shown below:

July 2, 2022 December 31, 2021

The major line items constituting DBT's assets and liabilities as of October 1, 2022 and December 31, 2021 are shown below:

October 1, 2022 December 31, 2021

Cash and equivalents $ 3.9 $ 7.8

16 unchanged sentences

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

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 condensed consolidated balance sheets as of July 2, 2022 and December 31, 2021.

The major line items constituting Heat Transfer's assets and liabilities as of July 2, 2022 and December 31, 2021 are shown below:

July 2, 2022 December 31, 2021

The major line items constituting Heat Transfer's assets and liabilities as of October 1, 2022 and December 31, 2021 are shown below:

October 1, 2022 December 31, 2021

Accounts receivable, net $ — $ 0.1

8 unchanged sentences

As a result, it is possible that the resulting gains/losses on these and other previous divestitures may be materially adjusted in subsequent periods.

For the three and six months ended July 2, 2022 and July 3, 2021, results of operations from our businesses reported as discontinued operations were as follows:

Three months ended Six months ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

For the three and nine months ended October 1, 2022 and October 2, 2021, results of operations from our businesses reported as discontinued operations were as follows:

Three months ended Nine months ended

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Transformer Solutions (1)

Income (loss) from discontinued operations $ ( 0.6 ) $ 431.4 $ ( 0.8 ) $ 455.7

Income tax benefit — 29.9 0.1 27.0

Income tax (provision) benefit 0.1 ( 106.6 ) 0.2 ( 79.6 )

Income (loss) from discontinued operations, net ( 0.5 ) 324.8 ( 0.6 ) 376.1

11 unchanged sentences

Income (loss) from discontinued operations ( 11.7 ) 421.8 ( 21.1 ) 436.7

Income tax benefit 1.2 34.6 1.7 33.1

Income tax (provision) benefit 2.3 ( 105.4 ) 4.0 ( 72.3 )

Income (loss) from discontinued operations, net $ ( 9.4 ) $ 316.4 $ ( 17.1 ) $ 364.4

___________________________

(1) Income (loss) for the three and six months ended July 2, 2022 resulted primarily from revisions to liabilities retained in connection with the disposition.

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

(2) Loss for the three and six months ended July 2, 2022 resulted primarily from legal costs incurred in connection with various dispute resolution matters related to two large power projects.

(3) Income (loss) for the three and six months ended July 2, 2022 and July 3, 2021 resulted primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions.

(1) Loss for the three and nine months ended October 1, 2022 resulted primarily from revisions to liabilities retained in connection with the disposition.

Income for the three and nine months ended October 2, 2021 resulted primarily from the gain on sale of the business of $ 355.0 , as well as the results of operations for the periods.

(2) Loss for the three and nine months ended October 1, 2022 and October 2, 2021 resulted primarily from legal costs incurred in connection with various dispute resolution matters related to two large power projects.

(3) Income (loss) for the three and nine months ended October 1, 2022 and October 2, 2021 resulted primarily from asbestos-related charges and revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions.

(4) REVENUES FROM CONTRACTS

Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are affected by economic factors, with such disaggregation presented below for the three and six months ended July 2, 2022 and July 3, 2021:

Three months ended July 2, 2022

Three months ended October 1, 2022

Reportable Segments HVAC Detection and Measurement Total

10 unchanged sentences

$ 227.8 $ 142.7 $ 370.5

Six months ended July 2, 2022

Nine months ended October 1, 2022

Reportable Segments HVAC Detection and Measurement Total

10 unchanged sentences

$ 639.6 $ 392.0 $ 1,031.6

Three months ended July 3, 2021

Three months ended October 2, 2021

Reportable Segments HVAC Detection and Measurement Total

10 unchanged sentences

$ 179.3 $ 106.4 $ 285.7

Six months ended July 3, 2021

Nine months ended October 2, 2021

Reportable Segments HVAC Detection and Measurement Total

15 unchanged sentences

On a contract-by-contract basis, the contract assets and contract liabilities are reported net within our condensed consolidated balance sheets.

Our contract balances consisted of the following as of July 2, 2022 and December 31, 2021:

Contract Balances July 2, 2022 December 31, 2021 Change

Our contract balances consisted of the following as of October 1, 2022 and December 31, 2021:

Contract Balances October 1, 2022 December 31, 2021 Change

Contract Accounts Receivable (1)

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

T he $ 23.0 in crease in our net contract asset balance from December 31, 2021 to July 2, 2022 was due primarily to revenue recognized during the period, partially offset by cash payments received from customers during the period.

During the three and six months ended July 2, 2022, we recognized revenues of $ 10.1 and $ 33.7 , respectively, related to our contract liabilities at December 31, 2021.

Performance Obligations

As of July 2, 2022, the aggre gate amount all ocated to remaining performance obligations was $ 92.4 .

T he $ 42.6 in crease in our net contract balance from December 31, 2021 to October 1, 2022 was due primarily to revenue recognized during the period, partially offset by cash payments received from customers during the period.

During the three and nine months ended October 1, 2022, we recognized revenues of $ 5.8 and $ 39.5 , respectively, related to our contract liabilities at December 31, 2021.

As of October 1, 2022, the aggre gate amount all ocated to remaining performance obligations was $ 174.7 .

We expect to recognize revenue on approximately 48 % and 90 % of rem aining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

There have been no material changes to our operating and finance leases during the three and six months ended July 2, 2022.

There have been no material changes to our operating and finance leases during the three and nine months ended October 1, 2022.

(6) INFORMATION ON REPORTABLE SEGMENTS

16 unchanged sentences

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

Financial data for our reportable segments for the three and six months ended July 2, 2022 and July 3, 2021 are presented below:

Three months ended Six months ended

Financial data for our reportable segments for the three and nine months ended October 1, 2022 and October 2, 2021 are presented below:

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

HVAC reportable segment $ 227.8 $ 179.3 $ 639.6 $ 540.3

6 unchanged sentences

Long-term incentive compensation expense 2.1 3.4 7.7 9.4

Impairment of goodwill and intangible assets — 24.3 — 24.3

Special charges, net — ( 0.1 ) 0.1 0.7

Other operating expense 1.9 2.7 1.0 2.7

Other operating (income) expense, net — ( 24.3 ) 1.0 ( 21.6 )

Consolidated operating income $ 37.3 $ 17.7 $ 75.9 $ 59.8

(7) SPECIAL CHARGES, NET

Special charges, net, for the three and six months ended July 2, 2022 and July 3, 2021 are described in more detail below:

Three months ended Six months ended

Special charges, net, for the three and nine months ended October 1, 2022 and October 2, 2021 are described in more detail below:

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

HVAC reportable segment $ — $ ( 0.1 ) $ 0.1 $ 0.1

1 unchanged sentence

Total $ — $ ( 0.1 ) $ 0.1 $ 0.7

HVAC — Charges for the three and six months ended July 2, 2022 related to severance costs associated with a restructuring action at one of the segment's cooling businesses.

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

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

No significant future charges are expected to be incurred under actions approved as of July 2, 2022.

The following is an analysis of our restructuring liabilities for the six months ended July 2, 2022 and July 3, 2021:

Six months ended

HVAC — Charges for the nine months ended October 1, 2022 related to severance costs associated with a restructuring action at one of the segment's cooling businesses.

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

Detection and Measurement — Charges for the nine months ended October 2, 2021 related to severance costs for restructuring actions at the segment's location and inspection businesses.

No significant future charges are expected to be incurred under actions approved as of October 1, 2022.

The following is an analysis of our restructuring liabilities for the nine months ended October 1, 2022 and October 2, 2021:

Nine months ended

2022 October 2,

Balance at beginning of year $ 0.3 $ 0.8

4 unchanged sentences

(8) INVENTORIES, NET

Inventories at July 2, 2022 and December 31, 2021 comprised the following:

Inventories at October 1, 2022 and December 31, 2021 comprised the following:

2022 December 31,

6 unchanged sentences

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

The impact of this change on our condensed consolidated statements of operations and condensed consolidated statements of comprehensive income for the three and six months ended July 3, 2021 was as follows:

The impact of this change on our condensed consolidated statements of operations and condensed consolidated statements of comprehensive income for the three and nine months ended October 2, 2021 was as follows:

As Computed under LIFO Effect of Change As Adjusted

Consolidated Statement of Operations for three months ended July 3, 2021:

Consolidated Statement of Operations for three months ended October 2, 2021:

Income from continuing operations before income taxes $ 16.6 $ 1.5 $ 18.1

13 unchanged sentences

As Computed under LIFO Effect of Change As Adjusted

Consolidated Statement of Operations for six months ended July 3, 2021:

Consolidated Statement of Operations for nine months ended October 2, 2021:

Income from continuing operations before income taxes $ 64.5 $ 2.0 $ 66.5

13 unchanged sentences

(9) GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the six months ended July 2, 2022 were as follows:

The changes in the carrying amount of goodwill for the nine months ended October 1, 2022 were as follows:

2021 Goodwill

2 unchanged sentences

Impairments Foreign

Translation July 2,

Translation October 1,

HVAC reportable segment

10 unchanged sentences

___________________________

(1) Reflects (i) goodwill acquired with the ITL acquisition o f $ 12.0 , (i i) an incre ase in Sealite's goodwill of $ 0.2 resulting from revisions to the valuation of certain assets and liabilities, and (iii) an increase in Cincinnati Fan's goodwill of $ 0.1 resulting from revisions to the valuation of certain assets and liabilities.

As indicated in Note 1, the acquired assets, including goodwill, and liabilities assumed in the Cincinnati Fan, ECS, and ITL 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 ITL acquisition o f $ 10.7 , (ii) an increase in Sealite's goodwill of $ 0.2 resulting from revisions to the valuation of certain assets and liabilities, and (iii) an increase in Cincinnati Fan's goodwill of $ 0.1 resu lting from revisions to the valuation of certain assets and liabilities.

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

Other Intangibles, Net

Identifiable intangible assets at July 2, 2022 and December 31, 2021 comprised the following:

July 2, 2022 December 31, 2021

Identifiable intangible assets at October 1, 2022 and December 31, 2021 comprised the following:

October 1, 2022 December 31, 2021

Value Accumulated

11 unchanged sentences

___________________________

(1) The identifiable intangible assets associated with the ITL acquisition consist of customer relationships of $ 14.0 , definite-lived trademarks of $ 3.0 , technology of $ 2.9 , and non-compete agreements of $ 2.6 .

(1) The identifiable intangible assets associated wit h the ITL acquisition consist of customer relationships of $ 14.0 , definite-lived trademarks of $ 3.0 , technology of $ 2.9 , and non-compete agreements of $ 2.6 .

In connection with the acquisition of ITL, which has definite-lived intangibles as noted above, we updated our estimated annual amortization expense related to intangible assets to approximately $ 29.0 for the full year 2022 and $ 25.0 for 2023 and each of the four years thereafter.

At July 2, 2022, the net carrying va lue of intangible assets with determinable lives consisted of $ 98.2 in the HVAC reportable segment and $ 147.8 in the Detection and Measurement reportable segment.

At July 2, 2022, trademarks with indefinite lives consisted of $ 105.0 in the HVAC reportable segment and $ 65.1 in the Detection and Measurement reportable segment.

At October 1, 2022, the net carrying va lue of intangible assets with determinable lives consisted of $ 96.1 in the HVAC reportable segment and $ 139.4 in the Detection and Measurement reportable segment.

At October 1, 2022, trademarks with indefinite lives consisted of $ 104.6 in the HVAC reportable segment and $ 63.6 in the Detection and Measurement reportable segment.

We review goodwill and indefinite-lived intangible assets for impairment annually during th e fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of the end of the third quarter.

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and a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit.

During the fourth quarter of 2021, based on quantitative analyses of the goodwill and indefinite-lived intangible assets of our ULC reporting unit, we determined that the fair value of the reporting unit approximated the carrying value of its net assets.

The total goodwill of ULC wa s $ 12.0 as of July 2, 2022 .

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 the Sealite, ECS, Cincinnati Fan and ITL, acquisitions in 2021 and thus far in 2022, approximate their carrying value.

If ULC, Sealite, ECS, Cincinnati Fan or ITL 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.

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

As such, we performed a quantitative analysis on ULC’s indefinite-lived intangible assets and goodwill during the third quarter of 2021.

Based on such analysis, 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 “Impairment of goodwill and intangible assets” of $ 24.3 during the quarter, with $ 23.3 related to goodwill and the remainder to trademarks.

The total goodwill of ULC wa s $ 12.0 as of October 1, 2022 .

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 ULC's estimated fair value being less than the carrying value of its net assets.

In addition to ULC, the fair values of Sealite, ECS, Cincinnati Fan and ITL, acquisitions in 2021 and thus far in 2022, approximate their respective carrying values.

If any of these reporting units are unable to achieve their current financial forecast, we may be required to record an impairment charge in a future period related to their goodwill and/or indefinite-lived intangible assets.

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

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

10 Six months ended

10 Nine months ended

2022 October 2,

Balance at beginning of year $ 34.8 $ 35.3

7 unchanged sentences

(11) EMPLOYEE BENEFIT PLANS

On February 17, 2022, we transferred our existing liability under the SPX Postretirement Benefit Plans (the “Plans”) for a group of participants with retiree life insurance benefits to an insurance carrier for consideration payable to the insurance carrier of approximately $ 10.0 .

Of this consideration, $ 9.0 was paid during the quarter ended April 2, 2022, with the remainder paid in the second quarter of 2022.

Of this consideration, $ 9.0 was paid during the first quarter of 2022, with the remainder paid in the second quarter of 2022.

This transaction resulted in a settlement charge of $ 0.7 recorded to “Other income (expense), net” during the first quarter of 2022.

In addition, and in connection with this transfer, we remeasured the assets and liabilities of the Plans as of the transfer date, which resulted in an actuarial gain of $ 0.4 recorded to “Other income (expense), net” for the three months ended April 2, 2022.

Lastly, as a result of the transfer, we have eliminated the third-party cost and internal resource requirements associated with administering these benefits.

Participants in the SPX U.S.

4 unchanged sentences

In addition, we remeasured assets and liabilities of the U.S.

Plan at July 2, 2022, which resulted in an actuarial loss of $ 1.5 to "Other income (expense), net" during the quarter.

In connection with the remeasurement we updated our actuarial assumptions, the only change of significance being the discount rate, which increased from 2.83 % to 4.86 %.

Plan at July 2, 2022, which resulted in an actuarial loss of $ 1.5 recorded to “Other income (expense), net” during the quarter ended July 2, 2022.

In connection with the remeasurement, we updated our actuarial assumptions.

The only changes of significance related to the discount rate and expected return on assets, which increased from 2.83 % to 4.86 % and 3.25 % to 4.50 %, respectively.

Additional settlements by the U.S.

Plan during the quarter ended October 1, 2022 resulted in a charge to “Other income (expense), net” of $ 2.0 .

We also remeasured the assets and liabilities of the U.S.

Plan as of October 1, 2022, which resulted in an actuarial loss of $ 0.4 recorded to “Other income (expense), net” during the quarter ended October 1, 2022.

In connection with the remeasurement, we updated our actuarial assumptions.

The only changes of significance related to the discount rate and expected return on assets, which increased from 4.86 % to 5.70 % and 4.50 % to 5.00 %, respectively.

Net periodic benefit (income) expense for our pension and postretirement plans include the following components:

Domestic Pension Plans

Three months ended Six months ended

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Service cost $ — $ — $ — $ —

4 unchanged sentences

_________________

(1) C onsists of an actuarial loss of $ 1.5 and a settlement loss of $ 2.3 .

(1) For the three months ended October 1, 2022, consists of a settlement loss of $ 2.0 and an actuarial loss of $ 0.4 .

For the nine months ended October 1, 2022, consists of a settlement loss of $ 4.3 and an actuarial loss of $ 1.9 .

Foreign Pension Plans

Three months ended Six months ended

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Service cost $ — $ — $ — $ —

3 unchanged sentences

Postretirement Plans

Three months ended Six months ended

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Service cost $ — $ — $ — $ —

4 unchanged sentences

_________________

(1) The six months ended July 2, 2022 includes the impact of the transfer of the retiree life insurance benefits obligation.

(1) For t he nine months ended October 1, 2022, includes the impact of the transfer of the retiree life insurance benefits obligation.

(12) INDEBTEDNESS

The following summarizes our debt activity (both current and non-current) for the six months ended July 2, 2022:

2021 Borrowings Repayments Other July 2,

The following summarizes our debt activity (both current and non-current) for the nine months ended October 1, 2022:

2021 Borrowings Repayments Other October 1,

Revolving loans $ — $ — $ — $ — $ —

9 unchanged sentences

___________________________

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

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

Balances are net of unamortized debt issuance costs of $ 0.9 and $ 1.0 at July 2, 2022 and December 31, 2021, respectively.

(1) As noted below, we amended our senior credit agreement on August 12, 2022.

The amendment made available a new term loan facility in the amount of $ 245.0 , the proceeds of which were primarily used to repay the outstanding balance of $ 237.4 under the then-existing term loan facility.

(2) The term loan is repayable in quarterly installments equal to 0.625 % of the initial term loan balance of $ 245.0 , beginning in December 2023 and in each of the first three quarters of 2024, and 1.25 % during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027.

The remaining balance is payable in full on August 12, 2027.

Balances are net of unamortized debt issuance costs of $ 0.7 and $ 1.0 at October 1, 2022 and December 31, 2021, respectively.

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

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

(3) Primarily includes balances under a purchase card program of $ 2.1 and $ 2.2 and finance lease obligations of $ 1.0 and $ 1.1 at July 2, 2022 and December 31, 2021, respectively.

At October 1, 2022, we had $ 30.3 of available borrowing capacity under this facility.

(4) Primarily includes balances under a purchase card program of $ 1.9 and $ 2.2 and finance lease obligations of $ 0.7 and $ 1.1 at October 1, 2022 and December 31, 2021, respectively.

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

1 unchanged sentence

Senior Credit Facilities

A detailed description of our senior credit facilities is included in our 2021 Annual Report on Form 10-K.

At July 2, 2022, we had $ 439.0 of available borrowing capacity under our revolving credit facilities, after giving effect to $ 11.0 reserved for outstanding letters of credit.

In addition, at July 2, 2022, we had $ 43.3 of available issuance capacity under our foreign credit instrument facilities after giving effect to $ 11.7 reserved for outstanding letters of credit.

The weighted-average interest rate of outstanding borrowings under our senior credit agreement was approximately 3.0 % at July 2, 2022.

At July 2, 2022, we were in compliance with all covenants of our senior credit agreement.

On August 12, 2022, we entered into the Credit Agreement to, among other things, extend the term of the facilities 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 $ 770.0 which consists of the following facilities at October 1, 2022 (each with a final maturity of August 12, 2027):

• A term loan facility in an aggregate principal amount of $ 245.0 ;

• A multicurrency revolving credit facility, available for loans and letters of credit in Dollars, Euro, Sterling and other currencies, in an aggregate principal amount up to the equivalent of $ 500.0 (with sub-limits equal to the equivalents of $ 200.0 for financial letters of credit, $ 50.0 for non-financial letters of credit, and $ 150.0 for non-U.S.

• A bilateral foreign credit instrument facility, available for performance letters of credit and bank undertakings, in an aggregate principal amount in various currencies up to the equivalent of $ 25.0 .

The Credit Agreement also:

• Requires that we maintain a Consolidated Leverage Ratio (defined in the Credit Agreement) as of the last day of any fiscal quarter of not more than 3.75 to 1.00 (or (i) 4.00 to 1.00 for the four fiscal quarters after certain permitted acquisitions or (ii) 4.25 to 1.00 for the four fiscal quarters after certain permitted acquisitions with a minimum amount financed by unsecured debt);

• Requires that we maintain a Consolidated Interest Coverage Ratio (defined in the Credit Agreement) as of the last day of any fiscal quarter of at least 3.00 to 1.00;

• Allows SPX to seek additional commitments, without consent from the existing lenders, to add incremental term loan facilities and/or increase the commitments in respect of the revolving credit facility and/or the bilateral foreign credit instrument facility by up to an aggregate principal amount not to exceed (x) the greater of (i) $ 200.0 and (ii) the amount of Consolidated EBITDA (as defined in the Credit Agreement) for the four fiscal quarters ended most recently before the date of determination, plus (y) an unlimited amount so long as, immediately after giving effect thereto, our Consolidated Senior Secured Leverage Ratio (defined in the Credit Agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings, or analogous instruments and net of unrestricted cash and cash equivalents) at the date of determination secured by liens to Consolidated EBITDA for the four fiscal quarters ended most recently before such date) does not exceed 2.75 :1.00, plus (z) an amount equal to all voluntary prepayments of the term loan facility and voluntary prepayments accompanied by permanent commitment reductions of the revolving credit facility and foreign credit instrument facility;

• Establishes per annum fees charged and applies interest rate margins, as follows:

Ratio Revolving Commitment Fee Financial Letter of Credit Fee Foreign Credit Instrument (“FCI”) Commitment Fee

FCI Fee and Non-Financial Letter of Credit Fee Term Secured Overnight Financing Rate (“SOFR”) Loans/Alternative Currency Loans

Greater than or equal to 3.00 to 1.0

0.275 % 1.750 % 0.275 % 1.000 % 1.750 % 0.750 %

Between 2.00 to 1.0 and 3.00 to 1.0

0.250 % 1.500 % 0.250 % 0.875 % 1.500 % 0.500 %

Between 1.50 to 1.0 and 2.00 to 1.0

0.225 % 1.375 % 0.225 % 0.800 % 1.375 % 0.375 %

Less than 1.50 to 1.0

0.200 % 1.250 % 0.200 % 0.750 % 1.250 % 0.250 %

The interest rates applicable to loans under the Senior Credit Facilities are, at our option, equal to either (i) an alternate base rate (the highest of (a) the federal funds effective rate plus 0.5 %, (b) the prime rate of Bank of America, N.A., and (c) the one-month Term SOFR rate plus 1.0 %) or (ii) the Term SOFR rate for the applicable interest period plus 0.1 %, plus, in each case, an applicable margin percentage, which varies based on the Consolidated Leverage Ratio (defined in the Credit Agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings or analogous instruments and net of unrestricted cash and cash equivalents) at the date of determination to Consolidated EBITDA for the four fiscal quarters ended most recently before such date).

The interest rates applicable to loans in other currencies under the Senior Credit Facilities are, at the applicable borrower’s option, equal to either (a) an adjusted alternative currency daily rate or (b) an adjusted alternative currency term rate for the applicable interest period, plus, in each case, the applicable margin percentage.

The borrowers may elect interest periods of one , three or six months (and, if consented to by all relevant lenders, any other period not greater than twelve months) for term rate borrowings, subject in each case to availability in the applicable currency.

The weighted-average interest rate of outstanding borrowings under the Credit Agreement was approximately 4.5 % at October 1, 2022.

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

The applicable borrower will also pay fronting fees on the outstanding amounts of financial and non-financial letters of credit at the rates of 0.125 % per annum and 0.25 % per annum, respectively.

SPX Enterprises, LLC, the direct wholly owned subsidiary of the Company, is the borrower under each of above facilities, and SPX may designate certain foreign subsidiaries to be borrowers under the revolving credit facility and the foreign credit instrument facility.

All borrowings and other extensions of credit under the Credit Agreement are subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties.

The letters of credit under the revolving credit facility are stand-by letters of credit requested by SPX on behalf of any of our subsidiaries or certain joint ventures.

The foreign credit instrument facility is used to issue foreign credit instruments, including bank undertakings to support our operations.

The Credit Agreement requires mandatory prepayments in amounts equal to the net proceeds from the sale or other disposition of (including from any casualty to, or governmental taking of) property in excess of specified values (other than in the ordinary course of business and subject to other exceptions) by SPX.

Mandatory prepayments will be applied first to repay amounts outstanding under any term loans and then to amounts outstanding under the revolving credit facility (without reducing the commitments thereunder).

No prepayment is required generally to the extent the net proceeds are reinvested (or committed to be reinvested) in permitted acquisitions, permitted investments or assets to be used in the business of SPX within 360 days (and if committed to be reinvested, actually reinvested within 180 days after the end of such 360-day period) of the receipt of such proceeds.

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

Indebtedness under the Credit Agreement is guaranteed by:

• Each existing and subsequently acquired or organized domestic material subsidiary with specified exceptions;

• SPX with respect to the obligations of our foreign borrower subsidiaries under the revolving credit facility and the bilateral foreign credit instrument facility.

Indebtedness under the Credit Agreement is secured by a first priority pledge and security interest in 100 % of the capital stock of our domestic subsidiaries (with certain exceptions) or our domestic subsidiary guarantors and 65 % of the voting capital stock (and 100 % of the non-voting capital stock) of material first-tier foreign subsidiaries (with certain exceptions).

If SPX obtains a corporate credit rating from Moody’s and S&P and such corporate credit rating is less than “Ba2” (or not rated) by Moody’s and less than “BB” (or not rated) by S&P, then SPX and our domestic subsidiary guarantors are required to grant security interests, mortgages and other liens on substantially all of their assets.

If SPX’s corporate credit rating is “Baa3” or better by Moody’s or “BBB-” or better by S&P and no defaults would exist, then all collateral security will be released and the indebtedness under the Credit Agreement will be unsecured.

The Credit Agreement also contains covenants that, among other things, restrict our ability to incur additional indebtedness, grant liens, make investments, loans or guarantees, make restricted junior payments, including dividends, redemptions of capital stock, and voluntary prepayments or repurchase of certain other indebtedness, engage in mergers, acquisitions or sales of assets, enter into sale and leaseback transactions, or engage in certain transactions with affiliates.

The Credit Agreement contains customary representations, warranties, affirmative covenants and events of default.

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

If our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) greater than or equal to 2.75 to 1.00, the aggregate amount of such repurchases and dividend declarations cannot exceed (A) $ 100.0 in any fiscal year plus (B) to the extent not previously utilized for restricted junior payments or investments, an additional amount for all such repurchases and dividend declarations made after August 12, 2022 equal to the sum of (i) $ 100.0 , plus (ii) a positive amount equal to 50 % of cumulative Consolidated Net Income (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 24, 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.

At October 1, 2022, we had $ 489.0 of available borrowing capacity under our revolving credit facilities, after giving effect to $ 11.0 reserved for outstanding letters of credit.

In addition, at October 1, 2022, we had $ 12.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to $ 12.8 reserved for outstanding letters of credit.

At October 1, 2022, we were in compliance with all covenants of the Credit Agreement.

In connection with the August 2022 amendment of the Credit Agreement, we recorded charges of $ 1.1 to “Loss on amendment/refinancing of senior credit agreement” related to the write-off of unamortized deferred financing costs totaling $ 0.7 and transaction costs of $ 0.4 .

Additionally, $ 1.5 of fees paid in connection with the August 2022 amendment were capitalized, with $ 1.2 related to our revolving loans and $ 0.3 related to the term loan.

During 2021, we reduced the issuance capacity of our then-existing foreign credit instrument facilities resulting in a charge of $ 0.2 to “Loss on amendment/refinancing of senior credit agreement” associated with the write-off of unamortized deferred financing costs.

(13) DERIVATIVE FINANCIAL INSTRUMENTS

1 unchanged sentence

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.

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 (“Swaps”).

The Swaps have a remaining notional amount of $ 237.5 , cover the period from March 2021 to November 202 4, 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 July 2, 2022 and December 31, 2021, the unrealized gain, net of tax, recorded in accumulated other comprehensive income ( “ AOCI ”) was $ 8.6 and $ 0.5 , respectively.

In addition, as of July 2, 2022, the fair value of our interest rate swap agreements totaled $ 11.5 (with $ 1.5 recorded as a current asset and $ 10.0 as a non-current asset), and $ 0.6 at December 31, 2021 (with $ 2.5 recorded as a non-current asset and $ 1.9 as a current liability).

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

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

The Swaps have a remaining notional amount of $ 234.4 , cover the period from March 2021 to November 202 4, and effectively convert borrowings under our term loan for this period to a fixed rate of 1.061 %, plus the applicable margin.

In connection with entering into the Credit Agreement, the Swaps were amended to be based on SOFR as opposed to LIBOR.

As mentioned in Note 2, we applied the optional expedients per ASU No.

2020-04 and No.

2021-01 and, thus, continue to designate and account for our interest rate swap agreements as cash flow hedges.

As of October 1, 2022 and December 31, 2021, the unrealized gain, net of tax, recorded in accumulated other comprehensive income ( “ AOCI ”) was $ 11.8 and $ 0.5 , respectively.

In addition, as of October 1, 2022, the fair value of our interest rate swap agreements totaled $ 15.6 (with $ 7.2 recorded as a current asset and $ 8.4 as a non-current asset), and $ 0.6 at December 31, 2021 (with $ 2.5 recorded as a non-current asset and $ 1.9 as a current liability).

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.

Currency Forward Contracts

3 unchanged sentences

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

We had FX forward contracts with an aggregate notional amount of $ 27.8 and $ 8.7 outstanding as of July 2, 2022 and December 31, 2021, respectively, with all of the $ 27.8 scheduled to mature within one year.

The fair value of our FX forward contracts was less than $ 0.1 at July 2, 2022 and December 31, 2021.

We had FX forward contracts with an aggregate notional amount of $ 21.7 and $ 8.7 outstanding as of October 1, 2022 and December 31, 2021, respectively, with all of the $ 21.7 scheduled to mature within one year.

The fair value of our FX forward contracts was $ 0.5 at October 1, 2022 (recorded as a current asset) and was less than $ 0.1 at December 31, 2021.

Beginning in the second quarter of 2022, we have designated and accounted for certain of our FX forward contracts, with a notional amount of $ 3.3 , as cash flow hedges.

As of July 2, 2022, the unrealized gain/loss recorded in AOCI related to these cash flow hedges was less than $0.1.

As of October 1, 2022, the unrealized gain/loss recorded in AOCI related to these cash flow hedges was less than $ 0.1 .

Changes in fair value of our FX forward contracts designated as cash flow hedges are reclassified into earnings, as a component of “Revenues” when the forecasted transaction impacts earnings.

Commodity Contracts

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The following table sets forth the number of weighted-average shares outstanding used in the computation of basic and diluted income per share:

Three months ended Six months ended

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Weighted-average number of common shares used in basic income per share 45.144 45.331 45.382 45.244

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Weighted-average number of common shares and dilutive securities used in diluted income per share 46.132 46.650 46.253 46.455

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period were 0.350 and 0.791 , r espectively, for the three mon ths ended July 2, 2022, and 0.292 and 0.739 , respectively, for the six months ended July 2, 2022.

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period were 0.307 and 0.652 , respectively, for the three months ended July 3, 2021, and 0.269 and 0.632 , respectively, for the six months ende d July 3, 2021.

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period were 0.243 and 0.655 , r espectively, for the three mon ths ended October 1, 2022, and 0.270 and 0.720 , respectively, for the nine months ended October 1, 2022.

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

Long-Term Incentive Compensation

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A detailed description of the awards granted prior to 2022 is included in our 2021 Annual Report on Form 10-K.

C ompensation expense within income from continuing operations related to long-term incentive awards totaled $ 2.5 and $ 3.3 for the three months ended July 2, 2022 and July 3, 2021, respectively, and $ 5.6 an d $ 6.0 for the six months ended July 2, 2022 and July 3, 2021, respectively.

The related tax benefit was $ 0.4 and $ 0.5 for the three months ended July 2, 2022 and July 3, 2021, respectively, and $ 0.9 and $ 1.0 for the six months ended July 2, 2022 and July 3, 2021, respectively.

C ompensation expense within income from continuing operations related to long-term incentive awards totaled $ 2.1 and $ 3.4 for the three months ended October 1, 2022 and October 2, 2021, respectively, and $ 7.7 an d $ 9.4 for the nine months ended October 1, 2022 and October 2, 2021, respectively.

The related tax benefit was $ 0.3 and $ 0.6 f or the three months ended October 1, 2022 and October 2, 2021, respectively, and $ 1.2 and $ 1.6 for the nine months ended October 1, 2022 and October 2, 2021, respectively.

Repurchases of Common Stock

On May 10, 2022, our Board of Directors re-authorized management, in its sole discretion, to repurchase, in any fiscal year, up to $ 100.0 of our common stock, subject to maintaining compliance with all covenants of our Senior Credit Facilities.

Pursuant to this re-authorization, during the three months ended July 2, 2022, we repurchased approximately 0.7 shares of our common stock for aggregate cash payments of $ 33.7 .

As of July 2, 2022, the remaining maximum approximate amount of our common stock that may be purchased under this authorization is $ 66.3 .

Pursuant to this re-authorization, during the quarter ended July 2, 2022, we repurchased 0.707 shares of our common stock for aggregate cash payments of $ 33.7 .

As of October 1, 2022, the remaining maximum approximate amount of our common stock that may be purchased under this authorization is $ 66.3 .

Accumulated Other Comprehensive Income

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended July 2, 2022 were as follows:

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended October 1, 2022 were as follows:

Adjustment Net Unrealized Gains

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(1) Net of tax provision o f $ 2.9 and $ 2.3 as of July 2, 2022 and April 2, 2022, respectively.

(2) Net of tax provision of $ 3.2 and $ 3.5 as of July 2, 2022 and April 2, 2022, respectively.

The balances as of July 2, 2022 and April 2, 2022 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the six months ended July 2, 2022 were as follows:

(1) Net of tax provision o f $ 4.0 and $ 2.9 as of October 1, 2022 and July 2, 2022, respectively.

(2) Net of tax provision of $ 3.0 and $ 3.2 as of October 1, 2022 and July 2, 2022, respectively.

The balances as of October 1, 2022 and July 2, 2022 include unamortized prior service credits.

The changes in the components of accumulated other comprehensive income, net of tax, for the nine months ended October 1, 2022 were as follows:

Adjustment Net Unrealized Gains

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(1) Net of tax provision of $ 2.9 a nd $ 0.1 as of July 2, 2022 and December 31, 2021, respectively.

(2) Net of tax provision of $ 3.2 and $ 3.7 as of July 2, 2022 and December 31, 2021, respectively.

The balances as of July 2, 2022 and December 31, 2021 include unamortized prior service credits.

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

(1) Net of tax provision of $ 4.0 a nd $ 0.1 as of October 1, 2022 and December 31, 2021, respectively.

(2) Net of tax provision of $ 3.0 and $ 3.7 as of October 1, 2022 and December 31, 2021, respectively.

The balances as of October 1, 2022 and December 31, 2021 include unamortized prior service credits.

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

Adjustment Net Unrealized

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

Other comprehensive income before reclassifications 0.9 0.2 — 1.1

Other comprehensive loss before reclassifications ( 5.0 ) ( 0.4 ) — ( 5.4 )

Amounts reclassified from accumulated other comprehensive income (loss) — 0.2 ( 0.9 ) ( 0.7 )

Current-period other comprehensive income (loss) 0.9 ( 0.6 ) ( 0.9 ) ( 0.6 )

Current-period other comprehensive loss ( 5.0 ) ( 0.2 ) ( 0.9 ) ( 6.1 )

Balance at end of period $ 235.1 $ ( 2.2 ) $ 11.6 $ 244.5

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(1) Net of tax benefit of $ 0.7 and $ 0.4 as of July 3, 2021 and April 3, 2021, respectively.

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

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

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

(1) Net of tax benefit of $ 0.7 as of October 2, 2021 and July 3, 2021, respectively.

(2) Net of tax provision of $ 4.0 and $ 4.3 as of October 2, 2021 and July 3, 2021, respectively.

The balances as of October 2, 2021 and July 3, 2021 include unamortized prior service credits.

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

Adjustment Net Unrealized

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

Other comprehensive income before reclassifications 1.5 3.5 — 5.0

Other comprehensive income (loss) before reclassifications ( 3.5 ) 3.1 — ( 0.4 )

Amounts reclassified from accumulated other comprehensive income (loss) — ( 0.9 ) ( 2.7 ) ( 3.6 )

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__________________________

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

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

The balances as of July 3, 2021 and December 31, 2020 include unamortized prior service credits.

The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the three months ended July 2, 2022 and July 3, 2021:

(1) Net of tax benefit of $ 0.7 and $ 1.4 as of October 2, 2021 and December 31, 2020, respectively.

(2) Net of tax provision of $ 4.0 and $ 4.9 as of October 2, 2021 and December 31, 2020, respectively.

The balances as of October 2, 2021 and December 31, 2020 include unamortized prior service credits.

The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the three months ended October 1, 2022 and October 2, 2021:

Amount Reclassified from AOCI

Three months ended

July 2, 2022 July 3, 2021 Affected Line Item in the Condensed

October 1, 2022 October 2, 2021 Affected Line Item in the Condensed

Consolidated Statements of Operations

(Gains) losses on qualifying cash flow hedges:

FX forward contracts $ ( 0.2 ) $ — Revenues

Commodity contracts — ( 0.3 ) Income from discontinued operations, net of tax

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$ ( 0.8 ) $ ( 0.9 )

The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the six months ended July 2, 2022 and July 3, 2021:

The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the nine months ended October 1, 2022 and October 2, 2021:

Amount Reclassified from AOCI

Six months ended

July 2, 2022 July 3, 2021 Affected Line Item in the Condensed

Nine months ended

October 1, 2022 October 2, 2021 Affected Line Item in the Condensed

Consolidated Statements of Operations

(Gains) losses on qualifying cash flow hedges:

FX forward contracts $ ( 0.2 ) $ — Revenues

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

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

Our recorded liab ilities related to these matters totaled $ 632.4 and $ 658.8 at July 2, 2022 and December 31, 2021, respectively.

Of these amounts, $ 556.7 and $ 584.3 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at July 2, 2022 and December 31, 2021, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these matters are based on a number of assumptions, including historical claims and payment experience.

Our recorded liab ilities related to these matters totaled $ 614.0 and $ 658.8 at October 1, 2022 and December 31, 2021, respectively.

Of these amounts, $ 538.9 and $ 584.3 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at October 1, 2022 and December 31, 2021, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these matters are based on a number of assumptions, including historical claims and payment experience.

While we base our assumptions on facts currently known to us, they entail inherently subjective judgments and uncertainties.

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

Our recorded assets and liabilities related to asbestos-related claims were as follows at July 2, 2022 and December 31, 2021:

July 2, 2022 December 31, 2021

Our recorded assets and liabilities related to asbestos-related claims were as follows at October 1, 2022 and December 31, 2021:

October 1, 2022 December 31, 2021

Insurance recovery assets (1)

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(1) Of these amounts, $ 456.6 and $ 473.6 are included in “Other assets” at July 2, 2022 and December 31, 2021, respectively, while the remainder is included in “Other current assets.”

(2) Of these amounts, $ 536.9 and $ 561.4 are included in “Other long-term liabilities” at July 2, 2022 and December 31, 2021, respectively, while the remainder is included in “ Accrued expenses.

(1) Of these a mounts, $ 424.2 and $ 473.6 are included in “Other assets” at October 1, 2022 and December 31, 2021, respectively, while the remainder is included in “Other current assets.”

(2) Of the se amounts, $ 520.4 and $ 561.4 are included in “Other long-term liabilities” at October 1, 2022 and December 31, 2021, respectively, while the remainder is included in “Accrued expenses .

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

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• The period over which we can reasonably project asbestos-related claims (currently projecting through 2057).

The following table presents information regarding activity for the asbestos-related claims for the six months ended July 2, 2022 and July 3, 2021:

Six months ended

July 2, 2022 July 3, 2021

The following table presents information regarding activity for the asbestos-related claims for the nine months ended October 1, 2022 and October 2, 2021:

Nine months ended

October 1, 2022 October 2, 2021

Pending claims, beginning of period 10,065 9,782

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

During the six months ended July 2, 2022 and July 3, 2021, our payments for asbestos-related claims, net of respective insurance recoveri es of $ 17.0 and $ 15.3 , were $ 11.2 and $ 8.1 , r espectively.

During the nine months ended October 1, 2022 and October 2, 2021, our (receipts) payments for asbestos-related claims, net of respective insurance recoveries of $ 27.7 and $ 39.8 , were $ 20.2 and $( 2.2 ), respectively.

The nine months ended October 1, 2021 includes insurance proceeds of $ 15.0 , associated with the settlement of an asbestos insurance coverage matter.

A significant increase in claims, costs and/or issues with existing insurance coverage (e.g., dispute with or insolvency of insurer(s)) could have a material adverse impact on our share of future payments related to these matters, and, as a result, have a material impact on our financial position, results of operations and cash flows.

During the three and six months ended July 2, 2022, we recorded charges of $ 2.3 to continuing operations and $ 0.2 to discontinued operations related to revisions of recorded liabilities for asbestos-related claims.

During the three and six months ended July 3, 2021, we recorded a charge of $ 2.7 to continuing operations related to revisions of recorded assets for asbestos-related claims.

There w ere no other changes in estimates associated with the assets and liabilities related to our asbestos product liability matters during the three and six months ended July 2, 2022 and July 3, 2021.

During the three and nine months ended October 1, 2022, we recorded charges for asbestos-related matters of $ 21.7 and $ 24.0 , respectively, with $ 16.5 and $ 18.8 , respectively, recorded to continuing operations and the remainder to discontinued operations.

Of such charges, $ 21.7 (continuing operations - $ 16.5 and discontinued operations - $ 5.2 ) resulted from a ruling by a North Carolina trial court, during the third quarter of 2022, that certain excess insurance carriers associated with our asbestos product liability matters are not required to cover the costs of defending suits that are dismissed without an indemnity payment.

During the nine months ended October 2, 2021, we recorded a charge of $ 2.7 related to revisions of recorded assets for asbestos-related claims.

Large Power Projects in South Africa

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

The hearing on this matter is expected to occur in December 2022.

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.

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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.

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).

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 even though the vast majority of these claims had not been brought appropriately before a dispute adjudication board as required under the relevant subcontracts.

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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 $ 48.6 ), 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 DBT's contracts and therefore most, if not all, of its claims against DBT are not valid.

The remainder of the damages in the revised claim largely appear to be direct in nature (approximately South African Rand 790.0 or $ 44.2 ).

On September 21, 2022, an arbitration tribunal ruled that only South African Rand 349.6 (or $ 19.6 ) of MHI's revised claim had been brought appropriately before a dispute adjudication board as required under the relevant subcontracts, with MHI's other claims dismissed from the arbitration proceedings.

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

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

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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 $ 23.4 ) 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 $ 25.7 ) is unlikely to occur over the next twelve months.

As such, we have reflected the South African Rand 418.3 (or $ 25.7 ) as a non-current asset within our condensed consolidated balance sheets as of July 2, 2022 and December 31, 2021.

On October 11, 2022, a dispute adjudication panel ruled MHI drew on amounts in excess of the bond values stipulated in the contracts and was required to refund DBT South African Rand 90.8 (or $ 5.1 ) of the previously demanded amounts, plus interest of South African Rand 12.5 (or $ 0.7 ).

MHI paid these amounts on October 14, 2022.

We have reflected the remaining South African Rand 327.5 (or $ 18.3 ) within “ Assets of DBT and Heat Transfer ” on the condensed consolidated balance sheets as of October 1, 2022 and December 31, 2021.

The remaining bond of South Africa Rand 29.2 (or $ 1.6 ) 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 the remaining bond, SPX Corporation has guaranteed DBT’s performance on these projects to the prime contractors, including MHI.

In addition to the remaining bond, SPX Technologies, Inc.

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.

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Based on current information, we believe that our operations are in substantial compliance with applicable environmental laws and regulations, and we are not aware of any violations that could have a material effect, individually or in the aggregate, on our business, financial condition, and results of operations or cash flows.

We had liabilities for site investigation and/or remediation at 18 sites that we own or control, or formerly owned and controlled, as of July 2, 2022 and December 31, 2021.

We had liabilities for site investigation and/or remediation at 18 sites that we own or control, or formerly owned and controlled, as of October 1, 2022 and December 31, 2021.

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

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We take into account third-party indemnification from financially viable parties in determining our accruals where there is no dispute regarding the right to indemnification.

In the case of contamination at offsite, third-party disposal sites, as of July 2, 2022 and December 31, 2021, we have been notified that we are potentially responsible and have received other notices of potential liability pursuant to various environmental laws at 9 sites, at which the liability has not been settled and all of which have been active in the past few years.

In the case of contamination at offsite, third-party disposal sites, as of October 1, 2022 and December 31, 2021, we have been notified that we are potentially responsible and have received other notices of potential liability pursuant to various environmental laws at 9 sites, at which the liability has not been settled and all of which have been active in the past few years.

These laws may impose liability on certain persons that are considered jointly and severally liable for the costs of investigation and remediation of hazardous substances present at these sites, regardless of fault or legality of the original disposal.

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Uncertain Tax Benefits

As of July 2, 2022 , we had gross unrecognized tax benefi ts of $ 6.3 (net unrecognized tax benefits of $ 5.6 ).

As of October 1, 2022 , we had gross unrecognized tax benefi ts of $ 6.3 (net unrecognized tax benefits of $ 5.6 ).

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

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

As of July 2, 2022, gross accrued interest totaled $ 2.8 (net accrued interest of $ 2.3 ).

As of July 2, 2022, we had no accrual for penalties included in our unrecognized tax benefits.

As of October 1, 2022, gross accrued interest totaled $ 2.8 (net accrued interest of $ 2.3 ).

As of October 1, 2022, we had no accrual for penalties included in our unrecognized tax benefits.

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

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Other Tax Matters

For the three months ended July 2, 2022, we recorded an income tax provision of $ 4.4 on $ 23.5 of pre-tax income from continuing operations, resulting in an effective rate of 18.7 %.

This compares to an income tax provision for the three months ended July 3, 2021 of $ 2.4 on $ 20.1 of pre-tax income from continuing operations, resulting in an effective rate of 11.9 %.

The most significant item impacting the income tax provision for the second quarters of 2022 and 2021 was $ 0.7 and $ 2.2 of tax benefits, respectively, related to revisions to liabilities for uncertain tax positions.

In addition, the tax provision for the second quarter of 2021 included interest associated with various refund claims.

For the six months ended July 2, 2022, we recorded an income tax provision of $ 7.0 on $ 39.1 of pre-tax income from continuing operations, resulting in an effective rate of 17.9 %.

This compares to an income tax provision for the six months ended July 3, 2021 of $ 7.7 on $ 48.4 of pre-tax income from continuing operations, resulting in an effective rate of 15.9 %.

The most significant items impacting the income tax provision during the first half of 2022 and 2021 were (i) $ 0.7 and $ 1.0 , respectively, of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the periods and (ii) the $ 0.7 and $ 2.2 , respectively, of the tax benefits noted above that were recorded in the second quarter of 2022 and 2021.

For the three months ended October 1, 2022, we recorded an income tax benefit of $ 2.5 on $ 10.0 of pre-tax income from continuing operations, resulting in an effective rate of ( 25.0 )%.

This compares to an income tax provision for the three months ended October 2, 2021 of $ 4.2 on $ 18.1 of pre-tax income from continuing operations, resulting in an effective rate of 23.2 %.

The most significant item impacting the income tax benefit for the third quarter of 2022 was a tax benefit of $ 4.2 related to the release of valuation allowances recognized against certain deferred tax assets, as we now expect to realize these deferred tax assets due to the recent Holding Company Reorganization (see Note 1).

The most significant item impacting the income tax provision for the third quarter of 2021 was $ 0.7 of expense related to the revaluation of certain deferred tax liabilities due to an enacted tax rate increase.

For the nine months ended October 1, 2022, we recorded an income tax provision of $ 4.5 on $ 49.1 of pre-tax income from continuing operations, resulting in an effective rate of 9.2 %.

This compares to an income tax provision for the nine months ended October 2, 2021 of $ 11.9 on $ 66.5 of pre-tax income from continuing operations, resulting in an effective rate of 17.9 %.

The most significant items impacting the income tax provision during the first nine months of 2022 were (i) the $ 4.2 of tax benefit noted above related to the release of valuation allowances resulting from the Holding Company Reorganization, (ii) $ 0.7 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, and (iii) $ 0.7 tax benefits related to revisions to liabilities for uncertain tax positions.

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

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

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We have various foreign income tax returns under examination.

The most significant of these is in Germany for the 2010 through 2014 tax years.

We believe that any uncertain tax positions related to these examinations have been adequately provided for.

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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 July 2, 2022 and December 31, 2021.

As provided within the CARES Act, we deferred payments of our social security payroll taxes for the period March 27, 2020 to December 31, 2020, with such deferral totaling $ 3.7 as of July 2, 2022.

therefore, no resulting adjustments have been recorded to such balances as of October 1, 2022 and December 31, 2021.

As provided within the CARES Act, we deferred payments of our social security payroll taxes for the period March 27, 2020 to December 31, 2020, with such deferral totaling $ 3.7 as of October 1, 2022.

This amount is required to be paid by the end of 2022.

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

Also, at the time of sale, Balcke Dürr provided cash collateral of Euro 4.0 and the parent company of the buyer provided a guarantee of Euro 5.0 as a security for the above indemnifications (E u ro 0.0 and Euro 0.0 , respectively, at July 2, 2022).

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 change in the liability and asset during the six months ended July 3, 2021.

Six months ended

Summarized below are the change in the liability and asset during the nine months ended October 2, 2021.

Nine months ended

October 2, 2021

Guarantees and Bonds Liability (1)

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

Contingent Consideration for Sensors & Software and EC S Acquisitions — In connection with the acquisition of Sensors & Software, the sellers were eligible for additional cash consideration of up to $ 4.0 , with payment of such contingent

consideration dependent upon the achievement of certain milestones.

Contingent Consideration for Sensors & Software, EC S, and ULC Acquisitions — In connection with the acquisition of Sensors & Software, the sellers were eligible for additional cash consideration of up to $ 4.0 , with payment of such contingent consideration dependent upon the achievement of certain milestones.

The estimated fair value of such contingent consideration totaled $ 1.3 , and was paid during the quarter ended April 2, 2022.

In connection with the acquisition of ECS, the respective seller is eligible for additional cash consideration of up to $ 16.4 , with payment of such contingent consideration dependent upon the achievement of certain milestones.

In connection with the acquisition of ECS, the seller was eligible for additional cash consideration of up to $ 13.5 , with payment of such contingent consideration dependent upon the achievement of certain milestones.

The estimated fair value of such contingent consideration was $ 8.2 as of the date of acquisition.

During the fourth quarter of 2021, we concluded that the probability of achieving the financial performance milestone had lessened due to a delay in the execution of certain large orders, resulting in a reduction of the contingent fair value/liability of $ 6.7 .

During the first and second quarters of 2022, we further reduced the fair value/liability by $ 0.9 and $ 0.4 , respectively, with such amounts recorded to "Other operating expense, net." The estimated fair value of such contingent consideration was $ 0.0 and $ 1.5 at July 2, 2022 and December 31, 2021, respectively, with such amounts reflected as a liability within the respective condensed consolidated balance sheets.

During the fourth quarter of 2021, we concluded that the probability of achieving the financial performance milestone had lessened due to a delay in the execution of certain large

orders, resulting in a reduction of the contingent fair value/liability of $ 6.7 .

During the first and second quarters of 2022, we further reduced the fair value/liability by $ 0.9 and $ 0.4 , respectively, with such amounts recorded to "Other operating (income) expense, net." The estimated fair value of such contingent consideration was $ 0.0 and $ 1.5 at October 1, 2022 and December 31, 2021, respectively, with the latter amount reflected as a liability within the respective condensed consolidated balance sheet.

We estimated the fair value of the contingent consideration for this acquisition based on the probability of ECS achieving the applicable milestones.

As relates to the ULC acquisition, and 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 recorded to “Other operating (income) expense, net.”

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.

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

During the quarter ended October 2, 2021, we concluded that the lack of achievement of the milestones mentioned above for the ULC acquisition, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill.

As such, we performed a quantitative analysis on ULC’s indefinite-lived intangible assets and goodwill during the third quarter of 2021.

Based on such analysis, 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 “Impairment of goodwill and intangible assets” of $ 24.3 during the quarter, with $ 23.3 related to goodwill and the remainder to trademarks.

Refer to Note 9 for additional details.

Valuation Methods Used to Measure Fair Value on a Recurring Basis

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

As of July 2, 2022, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities.

As of October 1, 2022, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities.

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

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

During the three and six months ended July 2, 2022 and July 3, 2021, we re corded gains of $ 0.0 and $ 2.2 , respectively and $ 4.4 and $ 7.4 to “Other income (expense), net” to reflect an increase in the estimated fair value of the equity security.

As of July 2, 2022 and December 31, 2021, the equity security had an estimated fair value of $ 43.2 and $ 38.8 , respectively.

Indebtedness and Other — The estimated fair value of our debt instruments as of July 2, 2022 and December 31, 2021 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments.

During the three and nine months ended October 1, 2022 and October 2, 2021, we re corded gains (losses) of $( 7.4 ) and $( 3.0 ), respectively and $ 1.6 and $ 9.0 , respectively to “Other income (expense), net” to reflect the change in the estimated fair value of the equity security.

As of October 1, 2022 and December 31, 2021, the equity security had an estimated fair value of $ 35.8 and $ 38.8 , respectively.

Indebtedness and Other — The estimated fair value of our debt instruments as of October 1, 2022 and December 31, 2021 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments.

Se e Note 12 f or further details.

(18) SUBSEQUENT EVENT

On August 4, 2022, we announced the intent to implement a reorganization of our corporate legal structure by executing a tax-free merger of SPX Corporation with and into SPX Merger, LLC, a newly-formed Delaware limited liability company that is a subsidiary of a newly-formed Delaware corporation, SPX Technologies, Inc.

(“SPX Technologies”).

As a result of the transaction, SPX Technologies will become the holding company for the SPX group of companies, and will be the publicly traded entity.

Immediately after consummation of the transaction, SPX Technologies will have, on a consolidated basis, the same assets, businesses, operations, executive officers, officers and directors as SPX Corporation had immediately prior to the consummation of the transaction.

As a result of the new structure, the operating assets of SPX will be separated from certain legacy liabilities and associated insurance assets.

Upon completion of the new structure, which we are targeting to occur on or about August 15, 2022, the SPX Corporation common stock will continue trading on the New York Stock Exchange on an uninterrupted basis with no change to the ticker symbol “SPXC.” The stock will trade under a new CUSIP (78473E 103).

The transaction will be accomplished pursuant to Section 251(g) of the Delaware General Corporation Law and no action will be required by SPX Corporation stockholders.

On November 1, 2022, SPX divested three wholly-owned subsidiaries (“the subsidiaries”) that hold all of its asbestos liabilities and certain assets, including related insurance assets, to Canvas Holdco LLC (“Canvas”), an entity formed by a joint venture of Global Risk Capital LLC and an affiliate of Premia Holdings Ltd.

In connection with the transaction, SPX contributed $ 138.8 in cash to the subsidiaries, financed with cash on hand;

while Canvas made a capital contribution to the subsidiaries of $ 8.0 .

SPX anticipates that the divestiture will result in a loss of approximately $ 70.0 to be recorded in the fourth quarter of 2022, which will include the write-off of certain deferred income tax assets recorded by the subsidiaries.

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What changed 10-Q

Item 1. Financial Statements