What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-25 · 511 added, 574 removed, 1552 unchanged (41% of the section changed)

Financial Statements And Supplementary Data

SPX Corporation and Subsidiaries

SPX Technologies, Inc.

and Subsidiaries

Index To Consolidated Financial Statements

December 31, 2022

SPX Corporation and Subsidiaries

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

SPX Technologies, Inc.

and Subsidiaries

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

Consolidated Financial Statements:

Consolidated Statements of Operations for the years ended December 31, 202 1 , 20 20 and 20 19

Consolidated Statements of Comprehensive Income for the years ended December 31, 202 1 , 20 20 and 20 19

Consolidated Statements of Operations for the Y ears E nded December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Income (Loss) for the Y ears E nded December 31, 2022, 2021 and 2020

Consolidated Balance Sheets as of December 31, 2022 and 2021

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

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

Consolidated Statements of Stockholders' Equity for the Y ears E nded December 31, 2022, 2021 and 2020

Consolidated Statements of Cash Flows for the Y ears E nded December 31, 2022, 2021 and 2020

Notes to Consolidated Financial Statements

1 unchanged sentence

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of SPX Corporation

To the stockholders and the Board of Directors of SPX Technologies, Inc.

Opinion on the Financial Statements

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

We have audited the accompanying consolidated balance sheets of SPX Technologies, Inc.

and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

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

Change in Accounting Principle

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

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Contingent Liabilities and Other Matters — Large Power Projects in South Africa — Refer to Notes 2 and 15 to the financial statements

Critical Audit Matter Description

Since 2008, DBT Technologies (PTY) LTD (“DBT”) (South African subsidiary of the Company) had been executing on two large power projects in South Africa (Kusile and Medupi), which it has now substantially completed its scope of work.

Over such time, the business environment surrounding these projects was difficult, as DBT, along with many other contractors on the projects, experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including DBT and its subcontractors), and various suppliers.

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

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

The Company does not believe it has probable losses associated with these claims and disputes.

We identified the South African power project claims and disputes as a critical audit matter because the evaluation of the probability of potential outcomes of these various claims and disputes and related disclosures involves significant judgment by management.

This required a high degree of auditor judgment and an increased extent of effort when evaluating the Company’s legal and accounting positions and related disclosures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the South African power project claims and disputes included the following, among others:

• We tested the effectiveness of controls related to the South African power project claims and disputes.

• We obtained and evaluated legal confirmations from the Company’s internal and external counsels.

• We held discussions with the Company’s internal and external counsels to determine the status of the South African power project claims and disputes, the contractual provisions for settlement or other legal resolution, and their awareness of any pending or threatened litigation, claims, and assessments omitted.

• We read minutes of meetings of the Board of Directors and its committees and conducted public domain searches for evidence of unrecorded loss contingencies or contradictory evidence related to the Company’s positions related to the South African power project claims and disputes.

• We evaluated the accuracy and completeness of the Company’s disclosures in the financial statements for consistency with our knowledge of matters related to the South African power projects claims and disputes.

Contingent Liabilities and Other Matters — Asbestos Product Liabilities and Insurance Recovery Assets — Refer to Notes 2 and 15 to the financial statements

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill — Refer to Notes 2 and 10 to the financial statements

Critical Audit Matter Description

The Company maintains liabilities for asbestos-related claims.

These claims are largely offset by insurance recovery assets.

Recorded asbestos product liabilities are based on a number of assumptions, including historical claims and payment experience, and actuarial estimates of the future period during which additional claims are reasonably foreseeable.

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

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

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

In testing the goodwill of its reporting units for potential impairment, the Company applies either a qualitative or quantitative test, in accordance with ASC 350, Intangibles – Goodwill and Other.

A qualitative approach may be applied when the Company concludes that it is not “more likely than not” that the fair value of a reporting unit is less than its carrying value.

A quantitative approach is performed by comparing the fair value of a reporting unit with its carrying amount (“quantitative assessment”).

For reporting units tested for impairment using the quantitative assessment, the Company determines the fair value of each reporting unit using both the income approach and the market approach.

The income approach requires management to make a number of business and valuation assumptions for each reporting unit including annual assumptions of projected revenue growth rates, projected profit margins and discount rate factors.

The market approach requires management to estimate fair value using marketplace fair value data derived from a comparable industry grouping of publicly traded companies and from pricing multiples implied from sales of companies similar to the Company’s reporting units (“market multiples”).

The Company’s goodwill balance was $455.3 as of December 31, 2022.

We identified the valuation of goodwill for two of the Company’s reporting units as a critical audit matter due to the historic performance of each reporting unit as compared to projections and because the determination of the reporting unit fair values was based on significant assumptions that are sensitive to changes and are affected by expected future market and economic conditions.

Auditing the judgments used by management in the quantitative impairment tests required a high degree of auditor judgment and an increased extent of effort, which included the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

• With the assistance of our actuarial and insurance specialist, we:

◦ Developed independent estimates of the asbestos product liabilities and compared our estimates to management’s estimates.

◦ Assessed the ongoing financial solvency of insurance carriers and the recoverability of the recorded insurance recovery assets.

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

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

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

Our audit procedures related to the Company’s assumptions and valuation methodology included the following, among others:

• We tested the design and operating effectiveness of controls over management’s quantitative impairment tests, including controls over forecasts of future cash flows based on estimates of revenue growth rates, profit margins and the determinations of the discount rate, as well as the determination of comparable market multiples.

• We evaluated management’s ability to accurately forecast projected revenue growth rates and profit margins by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to:

– Internal communications to management and the Board of Directors

– Historical results

– Third-party economic research, industry performance, and peer company performance

• With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology, the discount rate, and the industry pricing multiples by performing certain procedures, that included:

– Evaluating whether the fair value models being used are appropriate considering the Company’s circumstances and valuation premise identified

– Evaluating the market multiples by considering the selected comparable industry grouping of publicly traded companies

– Testing the underlying source information and mathematical accuracy of the calculations

/s/ Deloitte & Touche LLP

2 unchanged sentences

We have served as the Company’s auditor since 2002.

SPX Corporation and Subsidiaries

SPX Technologies, Inc.

and Subsidiaries

Consolidated Statements of Operations

9 unchanged sentences

Special charges, net 0.4 1.0 2.4

Other operating expenses, net 20.2 9.0 1.8

Other operating (income) expense, net 74.9 ( 4.1 ) 9.0

Operating income 51.0 73.7 96.9

6 unchanged sentences

Income from continuing operations 19.8 59.0 73.8

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

Income from discontinued operations, net of tax — 5.7 28.9

Gain (loss) on disposition of discontinued operations, net of tax ( 19.6 ) 360.7 ( 3.7 )

1 unchanged sentence

Net income $ 0.2 $ 425.4 $ 99.0

Net loss attributable to noncontrolling interests — — —

Net income attributable to SPX Corporation common stockholders 425.4 99.0 65.3

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

Net income attributable to SPX Corporation common stockholders after

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

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

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

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

Net income $ 425.4 $ 99.0 $ 70.9

Basic income (loss) per share of common stock:

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

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

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

Income from continuing operations $ 0.44 $ 1.30 $ 1.65

Income (loss) from discontinued operations ( 0.44 ) 8.09 0.57

Net income per share $ — $ 9.39 $ 2.22

Weighted-average number of common shares outstanding — basic 45.345 45.289 44.628

Diluted income (loss) per share of common stock:

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

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

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

Income from continuing operations $ 0.43 $ 1.27 $ 1.61

Income (loss) from discontinued operations ( 0.43 ) 7.88 0.55

Net income per share $ — $ 9.15 $ 2.16

Weighted-average number of common shares outstanding — diluted 46.221 46.495 45.766

The accompanying notes are an integral part of these statements.

SPX Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

SPX Technologies, Inc.

and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(in millions)

9 unchanged sentences

Other comprehensive income (loss), net ( 6.4 ) 15.4 4.2

Total comprehensive income 440.8 103.2 64.7

Total comprehensive loss attributable to noncontrolling interests — — —

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

Total comprehensive income (loss) $ ( 6.2 ) $ 440.8 $ 103.2

The accompanying notes are an integral part of these statements.

SPX Corporation and Subsidiaries

SPX Technologies, Inc.

and Subsidiaries

Consolidated Balance Sheets

6 unchanged sentences

Inventories, net 244.0 189.8

Other current assets (includes income taxes receivable of $ 8.7 and $ 27.3 at December 31, 2021 and 2020, respectively)

Assets of discontinued operations — 124.4

Other current assets 41.9 73.1

Total current assets 721.1 903.4

9 unchanged sentences

Deferred income taxes 2.7 11.0

Assets of discontinued operations — 219.1

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

Assets of DBT and Heat Transfer (includes cash and equivalents of $ 9.3 and $ 7.8 at December 31, 2022 and 2021, respectively) (Note 4)

TOTAL ASSETS $ 1,930.9 $ 2,628.6

7 unchanged sentences

Current maturities of long-term debt 2.0 13.0

Liabilities of discontinued operations — 115.8

Total current liabilities 333.8 439.5

2 unchanged sentences

Other long-term liabilities 208.3 788.5

Liabilities of discontinued operations — 31.4

Liabilities of DBT and Heat Transfer (Note 4) 31.8 35.6

11 unchanged sentences

The accompanying notes are an integral part of these statements.

SPX Corporation and Subsidiaries

SPX Technologies, Inc.

and Subsidiaries

Consolidated Statements of Stockholders' Equity

6 unchanged sentences

Balance at December 31, 2019

$ 0.5 $ 1,302.4 $ ( 575.7 ) $ 244.3 $ ( 460.0 ) $ 511.5

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

Net income — — 99.0 — — 99.0

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

Other comprehensive income, net — — — 4.2 — 4.2

Incentive plan activity — 17.5 — — — 17.5

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

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

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

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

Balance at December 31, 2020

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

0.5 1,319.9 ( 477.2 ) 248.5 ( 451.6 ) 640.1

Net income — — 425.4 — — 425.4

4 unchanged sentences

Balance at December 31, 2021

0.5 1,334.2 ( 51.8 ) 263.9 ( 443.9 ) 1,102.9

Net income — — 0.2 — — 0.2

Other comprehensive income, net — — — 15.4 — 15.4

Other comprehensive loss, net — — — ( 6.4 ) — ( 6.4 )

Incentive plan activity — 12.6 — — — 12.6

1 unchanged sentence

Restricted stock unit vesting — ( 19.4 ) — — 12.1 ( 7.3 )

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

Balance at December 31, 2022

$ 0.5 $ 1,338.3 $ ( 51.6 ) $ 257.5 $ ( 465.5 ) $ 1,079.2

The accompanying notes are an integral part of these statements.

SPX Corporation and Subsidiaries

SPX Technologies, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

6 unchanged sentences

Income from continuing operations 19.8 59.0 73.8

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

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

Loss on divestiture of asbestos-related assets and liabilities 73.9 — —

Special charges, net 0.4 1.0 2.4

Gain on change in fair value of equity security ( 11.8 ) ( 8.6 ) ( 7.9 )

(Gain) loss on change in fair value of equity security 3.0 ( 11.8 ) ( 8.6 )

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

5 unchanged sentences

Other, net 0.5 4.3 5.0

Changes in operating assets and liabilities, net of effects from acquisitions:

Contribution to divest asbestos-related assets and liabilities ( 138.8 ) — —

Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:

Accounts receivable and other assets ( 0.3 ) ( 19.8 ) 33.5

2 unchanged sentences

Cash spending on restructuring actions ( 0.4 ) ( 1.6 ) ( 1.5 )

Net cash from continuing operations 131.2 105.2 110.0

Net cash from discontinued operations 43.4 21.1 38.6

Net cash from operating activities 174.6 126.3 148.6

Net cash from (used in) continuing operations ( 115.2 ) 131.2 105.2

Net cash from (used in) discontinued operations ( 21.6 ) 43.4 21.1

Net cash from (used in) operating activities ( 136.8 ) 174.6 126.3

Cash flows from (used in) investing activities:

2 unchanged sentences

Capital expenditures ( 15.9 ) ( 9.6 ) ( 15.3 )

Other — — ( 0.2 )

Net cash used in continuing operations ( 52.2 ) ( 306.0 ) ( 119.9 )

9 unchanged sentences

Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options and other ( 3.5 ) ( 3.3 ) 2.2

( 3.3 ) 2.2 ( 3.7 )

Repurchases of common stock ( 33.7 ) — —

Financing fees paid ( 1.9 ) — —

15 unchanged sentences

Components of cash and equivalents:

Cash and cash equivalents $ 388.2 $ 64.0 $ 50.7

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

Total cash and cash equivalents $ 396.0 $ 68.3 $ 54.7

Cash and equivalents $ 147.8 $ 388.2 $ 64.0

Cash and equivalents included in assets of DBT and Heat Transfer 9.3 7.8 4.3

Total cash and equivalents $ 157.1 $ 396.0 $ 68.3

The accompanying notes are an integral part of these statements.

5 unchanged sentences

Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only (see Note 4 for information on discontinued operations).

Principles of Consolidation — The consolidated financial statements include SPX Corporation’s (“SPX”, “our”, or “we”) accounts prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) after the elimination of intercompany transactions.

Merger and Consummation of Holding Company Reorganization — As of August 15, 2022, SPX Technologies, Inc.

(“SPX”, “our”, “we”, or 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 (the “Holding Company Reorganization”) effected as a merger of Legacy SPX with and into SPX Merger, LLC, a subsidiary of the Company.

Each share of Legacy SPX’s common stock, par value $ 0.01 per share, issued and outstanding immediately prior to the consummation of the Holding Company Reorganization was automatically converted into an equivalent corresponding share of the Company's 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.

The terms “SPX,” “we” and “our” include Legacy SPX for periods prior to the consummation of the Holding Company Reorganization as the context requires.

Principles of Consolidation — The consolidated financial statements include our accounts prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) after the elimination of intercompany transactions.

Investments in unconsolidated companies where we exercise significant influence but do not have control are accounted for using the equity method.

14 unchanged sentences

See Note 4 for additional details.

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

• Wind-Down of DBT Technologies Business – As a culmination of our strategic shift away from power generation markets, in 2021 we substantially ceased all operations of, and have ceased accepting new businesses in, our South African subsidiary, DBT Technologies (PTY) LTD (“DBT”).

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

5 unchanged sentences

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

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

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

The purchase price was subject to potential adjustment based on Transformer Solutions’ cash, debt and working capital on the date the Transaction was consummated, as well as for specified transaction expenses and other specified items.

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

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

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

During 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 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 represents a strategic shift.

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

See Note 4 for additional details.

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

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

Divestiture of Asbestos Liabilities and Certain Assets — On November 1, 2022, we divested three wholly-owned subsidiaries that hold 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 divestiture (the “Asbestos Portfolio Sale”), we contributed $ 138.8 in cash to the divested subsidiaries, financed with cash on hand;

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

The divestiture resulted in a loss of $ 73.9 , recorded to “Other operating (income) expense, net,” which includes the write-off of certain deferred income tax assets recorded by the divested subsidiaries.

The divested subsidiaries have agreed to indemnify us and our affiliates for their asbestos-related liabilities, which encompassed all of our consolidated asbestos-related liabilities and contingent liabilities immediately prior to the divestiture.

These indemnification obligations are not subject to any cap or time limitation.

As a result of this transaction, the Company divested all obligations with respect to pending and future asbestos claims relating to these matters.

The board of managers of the divested subsidiaries each received a solvency opinion from an independent advisory firm that the divested subsidiaries were solvent after giving effect to the Asbestos Portfolio Sale.

The agreement for the Asbestos Portfolio Sale contains customary representations and warranties with respect to the divested subsidiaries, the Company, and Canvas.

Pursuant to the agreement, the Company and Canvas will each indemnify the other for breaches of representation and warranties or breaches of covenants, subject to certain limitations as set forth in the agreement.

Refer to Note 4 for additional details.

Acquisitions in 2022:

• ITL - On March 31, 2022, we completed the acquisition of International Tower Lighting, LLC ( “ ITL ” ), a leader in the design and manufacture of highly-engineered Aids to Navigation systems, including obstruction lighting for telecommunications towers, wind turbines and numerous other terrestrial obstructions.

We purchased ITL for cash proceeds of $ 40.4 , net of cash acquired of $ 1.1 .

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

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

Acquisitions in 2021:

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

4 unchanged sentences

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

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

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

During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of a large order, resulting in a reduction of the estimated liability o f $ 6.7 , with such amount recorded within "Other operating expenses, net" in the 2021 consolidated statement of operations.

Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $ 15.0 , with payment to be made in 2022 upon successful achievement of certain financial performance milestones.

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

During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of a large order, resulting in a reduction of the estimated liability o f $ 6.7 , w ith such amount recorded within “Other operating (income) expense, net ” in the 2021 consolidated statement of operations .

During the first and second quarters of 2022, we further reduced the estimated liability by $ 0.9 and $ 0.4 , respectively, with such amount recorded within “Other operating (income) expense, net ” in the 2022 consolidated statement of operations.

The estimated fair value of such contingent consideration, which we have reflected as a liability in our consolidated balance sheets, was $ 0.0 and $ 1.5 at December 31, 2022 and 2021, respectively.

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

2 unchanged sentences

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

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

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

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

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

Acquisitions in 2020:

2 unchanged sentences

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

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

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

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

As a result, we revers ed the liability of $ 24.3 , with the offset recorded to “Other operating (income) expense, net” and also recorded an impairment charge related to ULC ’ s goodwill and intangible assets of $ 24.3 .

See Note 10 for further discussion of impairments related to ULC.

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

1 unchanged sentence

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

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

Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $ 3.7 , with payment scheduled to be made upon successful achievement of defined financial performance milestones during the twelve months following the date of acquisition.

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

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

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

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

The estimated fair value of such contingent consideration of $ 1.3 is reflected as a liability in the accompanying consolidated balance sheet as of December 31, 2021 and was paid during 2022.

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

Acquisitions in 2019:

• Sabik – On February 1, 2019, we completed the acquisition of Sabik Marine (“Sabik”), primarily a manufacturer of obstruction lighting products, for a purchase price of $ 77.2 , net of cash acquired of $ 0.6 .

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

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

(“SGS”), a manufacturer of industrial refrigeration products, for cash proceeds of $ 11.5 , including contingent consideration of $ 1.5 that was paid during the first quarter of 2020.

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

• Patterson-Kelley – On November 12, 2019, we completed the acquisition of Patterson-Kelley, LLC (“Patterson-Kelley”), a manufacturer and distributor of commercial boilers and water heaters, for cash proceeds of $ 59.9 .

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

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

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

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

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

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

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

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

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

Foreign currency transaction gains and losses, as well as gains and losses related to foreign currency forward contracts, are included in “Other income (expense), net,” with the related net losses totaling $ 1.1 , $ 0.9 and $ 0.6 in 2022, 2021 and 2020, respectively.

7 unchanged sentences

We perform periodic reviews of the recoverability of these capitalized software costs.

At the time we determine that capitalized amounts are not recoverable based on the estimated cash flows to be generated from the applicable software, we write off any unrecoverable capitalized amounts.

If, and at the time, we determine that capitalized amounts are not recoverable based on the estimated cash flows to be generated from the applicable software, we write off any unrecoverable capitalized amounts.

Capitalized software, net of amortization, totaled $ 1.2 and $ 0.1 as of December 31, 2022 and 2021, respectively.

12 unchanged sentences

We periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, federal or foreign statutory tax audits or estimates and judgments used.

Derivative Financial Instruments — We use foreign currency forward contracts to manage our exposures to fluctuating currency exchange rates, forward contracts to manage the exposure on forecasted purchases of commodity raw materials (“commodity contracts”) and interest rate protection agreements to manage our exposures to fluctuating interest rate risk on variable rate debt.

Derivative Financial Instruments — We use foreign currency forward contracts to manage our exposures to fluctuating currency exchange rates and interest rate protection agreements to manage our exposures to fluctuating interest rate risk on variable rate debt.

In addition, prior to the sale of Transformers Solutions, we used forward contracts to manage the exposure on forecasted purchases of commodity raw materials (“commodity contracts”).

Derivatives are recorded on the balance sheet and measured at fair value.

6 unchanged sentences

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

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

Correction of Prior-Year Classification and Disclosure – 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 our consolidated statement of operations for the year ended December 31, 2021.

This amount, which was previously classified within “Other operating (income) expense, net,” has been reclassified to “Impairment of goodwill and intangible assets” for the year ended December 31, 2021.

As a result of this immaterial correction, “Other operating (income) expense, net” for the year ended December 31, 2021 reflects income of $ 4.1 whereas the expense disclosed prior to reclassification for the year ended December 31, 2021 was $ 20.2 .

In addition, management concluded that, although the assessment of our reportable segments was performed using the appropriate measures as defined by the Segment Reporting Topic of the Codification, the disclosure of operating income for each of our reportable segments (“Segment Income”) was not consistent with the measure used by our Chief Operating Decision Maker (“CODM”) when evaluating the results of, or allocating resources to, our reportable segments.

We previously disclosed that Segment Income is determined before considering impairments and special charges, long-term incentive compensation, certain other operating income/expense, and other indirect corporate expenses.

Our CODM also excludes the impact of intangible asset amortization, inventory step-up charges, and certain other acquisition-related costs from Segment Income.

Accordingly, Segment Income, as presented in Note 7, now excludes all of the items noted above.

This change had no impact to the amounts previously presented in our consolidated statements of operations for the years ended December 31, 2021 and 2020.

Although the impact of this change to previously disclosed Segment Income is not material, we revised the prior year presentation to be consistent with the current year disclosure.

The impact of this change on the Segment Income previously presented for the years ended December 31, 2021 and 2020 is summarized below:

December 31, 2021 December 31, 2020

As Previously Presented Effect of Change Current Presentation As Previously Presented Effect of Change Current Presentation

HVAC reportable segment $ 104.2 $ 3.5 $ 107.7 $ 102.7 $ 3.5 $ 106.2

Detection and Measurement reportable segment 69.7 23.2 92.9 69.1 11.8 80.9

Total income for segments 173.9 26.7 200.6 171.8 15.3 187.1

Corporate expense 60.5 — 60.5 49.7 — 49.7

Acquisition related costs (1)

— 5.1 5.1 — 1.3 1.3

Long-term incentive compensation expense 12.8 — 12.8 13.1 — 13.1

Amortization of intangible assets — 21.6 21.6 — 14.0 14.0

Impairment of goodwill and intangible assets 30.0 — 30.0 0.7 — 0.7

Special charges, net 1.0 — 1.0 2.4 — 2.4

Other operating (income) expense, net ( 4.1 ) — ( 4.1 ) 9.0 — 9.0

Consolidated operating income $ 73.7 $ — $ 73.7 $ 96.9 $ — $ 96.9

_______________________________________________________________

(1) Includes cost incurred in connection with acquisitions, including additional “Cost of products sold” related to the step-up of inventory (to fair value) acquired in connection with acquisitions of $ 2.6 and $ 0.3 during the years ended December 31, 2021 and 2020, respectively, as well as integration costs of $ 0.7 and $ 1.0 during the years ended December 31, 2021 and 2020, respectively.

The year ended December 31, 2021 also includes a non-cash impairment charge of $ 1.8 .

(2) Use of Estimates

6 unchanged sentences

Certain other estimates and assumptions are further explained in the related notes.

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

In addition, we

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

Accounts Receivable Allowances — We provide allowances for estimated losses on uncollectible accounts based on our historical experience, current and future economic and market conditions, and the evaluation of the likelihood of success in

collecting specific customer receivables.

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

Summarized below is the activity for these allowance accounts.

35 unchanged sentences

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

Risk Management Matters — We are subject to claims associated with risk management matters (e.g., product liability, predominately associated with alleged exposure to asbestos-containing materials, general liability, automobile, and workers’ compensation claims).

The liabilities we record for these claims are based on a number of assumptions, including historical claims and payment experience and, with respect to asbestos claims, actuarial estimates of the future period during which additional claims are reasonably foreseeable.

We also have recorded insurance recovery assets associated with the asbestos product liability matters.

These assets represent amounts that we believe we are or will be entitled to recover under agreements we have with insurance companies.

The assets we record for these insurance recoveries are based on a number of assumptions, including the continued solvency of the insurers, and our legal interpretation of our rights for recovery under the agreements we have with the insurers.

Risk Management Matters — We are subject to claims associated with risk management matters (e.g., product liability, general liability, automobile, and workers’ compensation claims).

The liabilities we record for these claims are based on a number of assumptions, including historical claims and payment experience and, prior to the Asbestos Portfolio Sale, with respect to asbestos claims, actuarial estimates of the future period during which additional claims were reasonably foreseeable.

Prior to the Asbestos Portfolio Sale, we also recorded insurance recovery assets associated with the asbestos product liability matters.

These assets represented amounts that we believe we were entitled to recover under agreements we had with insurance companies.

The assets we recorded for these insurance recoveries were based on a number of assumptions, including the continued solvency of the insurers, and our legal interpretation of our rights for recovery under the agreements we had with the insurers.

In addition, we are self-insured for certain of our workers’ compensation, automobile, product, general liability, disability and health costs, and we maintain adequate accruals to cover our retained liabilities.

21 unchanged sentences

Non-current portion of warranty $ 21.8 $ 23.0 $ 23.7

__________________________________________________________________

Income Taxes — We perform reviews of our income tax positions on a continuous basis and accrue for potential uncertain tax positions in accordance with the Income Taxes Topic of the Codification.

Accruals for these uncertain tax positions are classified as “Income taxes payable” and “Deferred and other income taxes” in the accompanying consolidated balance sheets based on an expectation as to the timing of when the matter will be resolved.

Accruals for these uncertain tax positions may be classified as “Income taxes payable” and “Deferred and other income taxes” in the accompanying consolidated balance sheets based on an expectation as to the timing of when the matter will be resolved.

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

1 unchanged sentence

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

When we believe that it is more

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

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

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

18 unchanged sentences

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

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

The amendment requires that an entity recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

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

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

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

The new provisions eliminate the requirements to disclose (i) transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) policies related to valuation processes and the timing of transfers between levels of the fair value hierarchy, and (iii) net asset value disclosure of estimates of timing of future liquidity events.

The FASB also modified disclosure requirements of Level 3 fair value measurements.

This guidance is effective for annual periods beginning after December 15, 2019.

We adopted this guidance on January 1, 2020, with no impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No.

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

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

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

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

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

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

The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on June 30, 2023.

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

2021-01 and No.

3 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, 2024.

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

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

In 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 consolidated financial statements.

Refer to Note 13 for additional information on the Credit Agreement.

In October 2021, the FASB issued ASU No.

4 unchanged sentences

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

(4) Acquisitions and Discontinued Operations

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

(4) Acquisitions, Discontinued Operations, and the Asbestos Portfolio Sale

As indicated in Note 1, on September 2, 2020, November 11, 2020, April 19, 2021, August 2, 2021, December 15, 2021, and March 31, 2022, we completed the acquisitions of ULC, Sensors & Software, Sealite, ECS, Cincinnati Fan, and ITL, respectively.

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

3 unchanged sentences

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

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

2021 2020 2019

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

Revenues $ 313.5 $ 427.4

2 unchanged sentences

Selling, general and administrative 28.4 32.7

Special charges — — 0.3

Other income, net — 0.9

2 unchanged sentences

Income after tax $ 20.9 $ 42.9

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

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

Accounts receivable, net $ 50.9

Contract assets 48.6

Inventories, net 21.7

Other current assets 3.2

Property, plant and equipment:

Buildings and leasehold improvements 63.1

Machinery and equipment 141.1

Accumulated depreciation ( 131.0 )

Property, plant and equipment, net 79.7

Goodwill 131.3

Other assets 8.1

Total assets - discontinued operations $ 343.5

Accounts payable $ 34.1

Contract liabilities 57.2

Accrued expenses 24.5

Deferred and other income taxes 22.3

Other long-term liabilities 9.1

Total liabilities - discontinued operations $ 147.2

Wind-Down of DBT Business

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

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

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

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

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

2021 2020 2019

$ 0.5 $ 4.0 $ ( 6.1 )

Revenues $ 0.5 $ 4.0

Costs and expenses:

1 unchanged sentence

Selling, general and administrative 15.1 14.8

Special charges 1.3 0.8 2.6

Special charges, net 1.3 0.8

Other income (expense), net ( 1.2 ) 1.9

3 unchanged sentences

Loss after tax $ ( 15.2 ) $ ( 14.2 )

________________________________________________

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

See below for further discussion.

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

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

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

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

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

The assets and liabilities of DBT have been included within “ Assets of DBT and Heat Transfer ” and “ Liabilities of DBT and Heat Transfer, ” respectively, on the consolidated balance sheets as of December 31, 2022 and 2021.

19 unchanged sentences

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

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

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

Revenues $ 3.9

2 unchanged sentences

Selling, general and administrative 0.1

Special charges (credits), net 0.4 ( 0.4 )

Other income, net — 0.3

Income (loss) before tax 0.3 ( 1.8 )

Income tax (provision) benefit ( 0.1 ) 0.4

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

Special charges, net 0.4

Income before tax 0.3

Income tax provision ( 0.1 )

Income after tax $ 0.2

The assets and liabilities of Heat Transfer have been included within “ Assets of DBT and Heat Transfer ” and “ Liabilities of DBT and Heat Transfer, ” respectively, on the consolidated balance sheets as of December 31, 2022 and 2021.

8 unchanged sentences

Total liabilities of Heat Transfer $ 0.2 $ 0.4

Other Discontinued Operations Activity

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

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

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

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 years ended December 31, 2022, 2021 and 2020, results of operations from our businesses reported as discontinued operations were as follows:

1 unchanged sentence

Transformer Solutions

Income from discontinued operations $ 454.9 $ 56.9 $ 39.4

Income tax provision (1)

Income (loss) from discontinued operations (1)

$ ( 0.6 ) $ 454.9 $ 56.9

Income tax (provision) benefit (2)

0.9 ( 51.8 ) ( 14.0 )

Income from discontinued operations, net 0.3 403.1 42.9

Loss from discontinued operations (3)

( 17.3 ) ( 37.8 ) ( 16.6 )

Income tax benefit 2.1 2.7 2.4

4 unchanged sentences

Income (loss) from discontinued operations, net ( 0.3 ) ( 0.3 ) 0.2

All other (4)

Loss from discontinued operations ( 6.0 ) ( 7.6 ) ( 4.8 )

Income tax (provision) benefit 6.3 1.1 ( 0.4 )

Income tax benefit 1.6 6.3 1.1

Loss from discontinued operations, net ( 4.4 ) ( 1.3 ) ( 3.7 )

Income (loss) from discontinued operations ( 24.3 ) 409.2 35.8

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

Income tax (provision) benefit 4.7 ( 42.8 ) ( 10.6 )

Income (loss) from discontinued operations, net $ ( 19.6 ) $ 366.4 $ 25.2

________________________________________________

(1) Loss for the year ended December 31, 2022 resulted primarily from revisions to liabilities retained in connection with the disposition.

Income for the year ended December 31, 2021 resulted primarily from the gain on sale of the business of $ 382.2 , as well as the results of operations for the year.

Income for the year ended December 31, 2020 related to the results of operations for the year.

(2) During the fourth quarter of 2021, we liquidated certain recently acquired entities.

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

(3) Loss for the years ended December 31, 2022, 2021, and 2020 resulted primarily from legal costs incurred in connection with various dispute resolution matters related to two large power projects.

In addition, and as previously noted, the year ended December 31, 2021 includes a charge of $ 19.9 related to the write-off of historical translation amounts.

(4) Loss for the years ended December 31, 2022, 2021, and 2020 resulted primarily from asbestos-related charges and revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions.

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

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

Asbestos Portfolio Sale

As indicated in Note 1, we completed the Asbestos Portfolio Sale on November 1, 2022.

Below is a summary of the impact of the Asbestos Portfolio Sale, including the loss on sale, on our consolidated financial statements:

Cash contribution

Assets divested:

Accounts receivable, net ( 5.0 )

Other current assets ( 50.0 )

Other assets ( 420.3 )

Deferred tax assets ( 27.0 )

Liabilities divested:

Accrued liabilities

Other long-term liabilities

Loss on Asbestos Portfolio Sale, before transaction costs ( 69.2 )

Transaction costs

Loss on Asbestos Portfolio Sale

(5) Revenues from Contracts

11 unchanged sentences

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

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

As of December 31, 2022, the aggregate amount allocated to remaining performance obligations after the effect of practical expedients was $ 158.5 .

We expect to recognize revenue on

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

We expect to recognize revenue on approximately 72 % and 89 % of the remaining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

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

29 unchanged sentences

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

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

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

Performance obligations for our HVAC product lines relate primarily to the delivery of equipment and components, construction and reconstruction of cooling towers and other

components, and providing installation, replacement/spare parts and various other services.

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

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

6 unchanged sentences

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

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

Performance obligations for these product lines relate to delivery of equipment and components, installation and other short-term services, long-term maintenance and software subscription services, pipeline remediation services and development of robotics.

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

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

2 unchanged sentences

Payment terms for equipment and components are typically 30 to 60 days after shipment or delivery, while payment for services typically occurs at completion for shorter-term engagements (less than three months in duration) and throughout the service period for longer-term engagements (generally greater than three months in duration).

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

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

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

10 unchanged sentences

Underground locators, inspection and rehabilitation equipment, and robotic systems — 262.1 262.1

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

Communication technologies, obstruction lighting, and fare collection systems — 285.0 285.0

$ 913.8 $ 547.1 $ 1,460.9

6 unchanged sentences

Major product lines

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

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

Boilers, comfort heating, and ventilation 318.3 — 318.3

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

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

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

$ 752.1 $ 467.4 $ 1,219.5

8 unchanged sentences

Boilers, comfort heating, and ventilation 293.7 — 293.7

Underground locators and inspection and rehabilitation equipment — 194.3 194.3

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

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

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

$ 740.8 $ 387.3 $ 1,128.1

20 unchanged sentences

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

The $ 2.8 increase in our net contract balance from December 31, 2020 to December 31, 2021 was due primarily to revenue recognized during the period, partially offset by cash payments received from customers during the period.

T he $ 32.6 increase i n our net contract balance from December 31, 2021 to December 31, 2022 was d ue primarily to revenue recognized during the period, partially offset by cash payments received from customers during the period.

During 2022, we recognized revenues of $ 38.0 related to our contract liabilities at December 31, 2021.

27 unchanged sentences

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flow from operating leases $ 9.4 $ 9.1

Operating cash flows used in operating leases $ 11.4 $ 9.4

Operating cash flows from finance leases — —

Financing cash flows from finance leases 0.6 1.3

Financing cash flows used in finance leases 0.4 0.6

Non-cash activities:

2 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

December 31, 2021 December 31, 2020

Operating Leases:

Affected Line Item in the Consolidated Balance Sheets

Operating lease ROU assets (1)

$ 41.7 $ 40.5 Other assets

Operating lease ROU assets $ 46.3 $ 41.7 Other assets

Operating lease current liabilities $ 10.1 $ 7.7 Accrued expenses

6 unchanged sentences

Total finance lease liabilities $ 0.7 $ 1.1

___________________________________________________________________

(1) Includes favorable leasehold interests as of December 31, 2021 and 2020 of $ 6.4 and $ 6.6 , respectively, recorded as part of the acquisition of Patterson-Kelley.

The weighted average remaining lease terms (years) of our leases as of December 31, 2022 and December 31, 2021, were as follows:

22 unchanged sentences

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

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

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

Segment Income is determined before considering impairment and special charges, long-term incentive compensation, certain other operating income/expense, other indirect corporate expenses, intangible asset amortization expense, inventory step-up charges, and certain other acquisition-related costs.

This is consistent with the way our CODM evaluates the results of each segment.

HVAC Reportable Segment

3 unchanged sentences

Detection and Measurement Reportable Segment

Our Detection and Measurement reportable segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, bus fare collection systems, communication technologies, and obstruction lighting.

Our Detection and Measurement reportable segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, fare collection systems, communication technologies, and obstruction lighting.

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

1 unchanged sentence

Corporate Expense

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

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

Financial data for our reportable segments for the years ended December 31, 2022, 2021 and 2020 were as follows:

7 unchanged sentences

Corporate expense 68.6 60.5 49.7

Acquisition related and other costs (1)

Long-term incentive compensation expense 10.9 12.8 13.1

Amortization of intangible assets 28.5 21.6 14.0

Impairment of goodwill and intangible assets (2)

13.4 30.0 0.7

Special charges, net 0.4 1.0 2.4

Other operating expenses, net (1)

Other operating (income) expense, net (3)

74.9 ( 4.1 ) 9.0

Consolidated operating income $ 51.0 $ 73.7 $ 96.9

32 unchanged sentences

_______________________________________________________________

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

For 2020, includes charges of $ 9.4 for asbestos product liability matters, net of a gain of $ 0.4 related to revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

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

(1) Represents cost incurred in connection with acquisitions of $ 1.9 , $ 3.3 , and $ 1.3 , including additional “Cost of products sold” related to the step-up of inventory (to fair value) acquired in connection with these acquisitions of $ 1.1 , $ 2.6 and $ 0.3 during the years ended December 31, 2022, 2021 and 2020, respectively.

The year ended December 31, 2021 also includes a non-cash impairment charge of $ 1.8 .

(2) The year ended December 31, 2022 includes impairment charges of $ 12.9 related to the goodwill and trademarks of ULC and $ 0.5 related to certain other trademarks.

The year ended December 31, 2021 includes impairment charges of $ 29.5 related to the goodwill and trademarks of ULC and $ 0.5 related to certain other trademarks.

The year ended December 31, 2020 includes impairment charges of $ 0.7 related to certain other trademarks.

(3) The year ended December 31, 2022 includes a loss on the Asbestos Portfolio Sale of $ 73.9 as well as charges of $ 2.3 for asbestos product liability matters incurred prior to the Asbestos Portfolio Sale, partially offset by a reduction in the fair value/liability associated with contingent consideration related to the ECS acquisition of $ 1.3 .

For 2021, includes income of $ 24.3 and $ 6.7 related to the reduction of the liabilities associated with contingent consideration for the ULC and ECS acquisitions, respectively, partially offset by charges of (i) $ 26.3 for asbestos product liability matters and (ii) $ 0.6 related to revisions to the liability associated with the contingent consideration for the Sensors & Software acquisition.

For 2020, includes charges of $ 9.4 for asbestos product liability matters, net of a gain of $ 0.4 related to revisions to certain liabilities retained in connection with the 2016 sale of the dry cooling business.

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

(3) Insurance recovery assets are associated with asbestos product liability matters.

Refer to Note 15 for additional details.

(5) Insurance recovery assets were associated with asbestos product liability matters.

As indicated in Note 1, we divested these assets on November 1, 2022 in connection with the Asbestos Portfolio Sale.

Refer to Notes 1 and 4 for additional details.

(6) Revenues are included in the above geographic areas based on the country that recorded the revenue.

18 unchanged sentences

Employee termination costs $ 0.1 $ 1.0 $ 1.0

Facility consolidation costs — — 0.5

Other cash costs, net — — 1.0

2 unchanged sentences

2022 Charges:

Costs Facility

Consolidation

Cash Costs, Net Non-Cash

4 unchanged sentences

Total $ 0.1 $ — $ 0.3 $ 0.4

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

HVAC – Charges for 2022 related to severance costs associated with a restructuring action at one of the segment’s cooling businesses.

This action resulted in the termination of 2 employees.

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

These actions resulted in the termination of 44 employees.

Detection & Measurement – Charges for 2022 related to asset impairment charges associated with the relocation of certain operations at the segment’s obstruction lighting business.

2021 Charges:

Costs Facility

Consolidation

Cash Costs, Net Non-Cash

4 unchanged sentences

Total $ 1.0 $ — $ — $ 1.0

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

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

This action resulted in the termination of 6 employees.

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

These actions resulted in the termination of 44 employees.

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

The action resulted in the termination of 5 employees.

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

2020 Charges:

Costs Facility

Consolidation

Cash Costs, Net Non-Cash

4 unchanged sentences

Total $ 1.0 $ 1.0 $ 0.4 $ 2.4

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

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

These actions resulted in the termination of 11 employees.

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

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

The action resulted in the termination of 5 employees.

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

The following is an analysis of our restructuring liabilities for the years ended December 31, 2022, 2021 and 2020:

7 unchanged sentences

(9) Inventories, Net

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

Inventories are accounted for under the first-in, first-out method and are comprised of the following at December 31, 2022 and 2021:

Finished goods $ 73.0 $ 55.1

3 unchanged sentences

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

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

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

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

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

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

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

As Computed under LIFO Effect of Change As Adjusted

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

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

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

Income from continuing operations, net of tax 76.3 — 76.3

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

Net income 65.3 — 65.3

Adjustment related to redeemable noncontrolling interest 5.6 — 5.6

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

Basic income (loss) per share of common stock:

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

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

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

Diluted income per share of common stock:

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

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

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

Total comprehensive income $ 64.7 $ — $ 64.7

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

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

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

Income from continuing operations 72.1 1.7 73.8

Gain from discontinued operations, net of tax 25.1 0.1 25.2

Net income $ 97.2 $ 1.8 $ 99.0

Basic income per share of common stock:

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

Gain from discontinued operations, net of tax 0.57 — 0.57

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

Diluted income per share of common stock:

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

Gain from discontinued operations, net of tax 0.55 — 0.55

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

Total comprehensive income $ 101.4 $ 1.8 $ 103.2

Consolidated Balance Sheet as of December 31, 2020:

Inventories, net $ 143.1 $ 11.9 $ 155.0

Current assets of discontinued operations 121.6 2.8 124.4

Deferred and other income taxes 23.5 3.1 26.6

Non-current liabilities of discontinued operations 30.7 0.7 31.4

Retained deficit ( 488.1 ) 10.9 ( 477.2 )

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

As Computed under LIFO As Reported under FIFO Effect of Change

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

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

Income from continuing operations, net of tax 50.3 59.0 8.7

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

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

Basic income per share of common stock:

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

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

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

Total Comprehensive Income $ 434.3 $ 440.8 $ 6.5

Diluted income per share of common stock:

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

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

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

Inventories, net $ 166.3 $ 189.8 $ 23.5

Deferred and other income taxes 25.3 31.3 6.0

Retained deficit ( 69.3 ) ( 51.8 ) 17.5

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

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

(10) Goodwill and Other Intangible Assets

2 unchanged sentences

from Business

Combinations (1) Impairments (2)

Combinations (1)

Impairments (2)

Translation December 31,

11 unchanged sentences

___________________________________________________________________

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

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

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

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

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

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

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

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

(1) Reflects (i) goodwill acquired with the ITL acquisition of $ 10.8 , (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 $ 8.9 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 ITL acquisition have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

(2) During the fourth quarter of 2022, in connection with the annual impairment analyses of ULC’s goodwill and indefinite-lived intangible assets, we determined that the carrying value of ULC’s net assets exceeded the estimated fair value of the business, resulting in an impairment charge of $ 12.9 , with $ 12.0 related to goodwill and $ 0.9 to the ULC trademarks.

After such impairment charge, ULC had no goodwill and $ 5.4 of trademarks included in our consolidated balance sheet as of December 31, 2022.

The changes in the carrying amount of goodwill, for the year ended December 31, 2021, were as follows:

1 unchanged sentence

from Business

Combinations (1) Impairments Foreign

Combinations (1)

Impairments (2)

Translation December 31,

11 unchanged sentences

___________________________________________________________________

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

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

(2) As indicated in Note 1, we concluded during the third quarter of 2021 that the operating and financial performance 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 quantitative analyses of ULC’s goodwill and indefinite-lived intangible assets for impairment during the third quarter of 2021.

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

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

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

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

Identifiable intangible assets were as follows:

14 unchanged sentences

___________________________________________________________________

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

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

(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 .

(2) During the fourth quarter of 2022, in connection with our annual impairment analyses, we recorded impairment charges of $ 1.4 , with $ 0.9 related to ULC’s trademarks (see above) and the remainder to certain other trademarks.

Other changes during 2022 related primarily to foreign currency translation.

Amortization expense was $ 28.5 , $ 21.6 and $ 14.0 for the years ended December 31, 2022, 2021 and 2020, respectively.

Estimated amortization expense is approximately $ 28.0 for 2022 and $ 23.0 over each of the four years thereafter related to these intangible assets.

Estimated amortization expense is approximately $ 25.0 for 2023 and each of the four years thereafter.

At December 31, 2022, the net carrying value of intangible assets with determinable lives consisted of $ 94.6 in the HVAC reportable segment and $ 138.3 in the Detection and Measurement reportable segment.

2 unchanged sentences

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

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

In reviewing goodwill for impairment, we initially perform a qualitative analysis.

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

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

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

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

After such impairment charges, ULC’s total goodwill was $ 12.0 as of December 31, 2021.

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

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

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

During the fourth quarter of 2022, we performed quantitative analyses on the goodwill of our Cincinnati Fan and ULC reporting units.

The Cincinnati Fan analysis indicated that the fair value of its net assets exceeded the related carrying value by less than 10 %.

A change in assumptions used in Cincinnati Fan’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.

If Cincinnati Fan is unable to achieve its current financial forecast, we may be required to record an impairment charge in a future period related to its goodwill.

As of December 31, 2022, Cincinnati Fan’s goodwill totaled $ 54.8 .

As previously discussed, our fourth quarter 2022 quantitative analysis of the ULC reporting unit resulted in an impairment charge of $ 12.9 , with $ 12.0 related to goodwill and $ 0.9 to the ULC trademarks.

After recording this impairment charge, there is no goodwill remaining related to the ULC acquisition.

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

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

In addition to the impairment charges related to the ULC trademarks of $ 0.9 and $ 1.3 , respectively, during 2022 and 2021, we recorded impairment charges of $ 0.5 , $ 0.5 and $ 0.7 , respectively, during 2022, 2021, and 2020 related to certain other trademarks.

(11) Employee Benefit Plans

11 unchanged sentences

We continuously monitor the value of assets by class and routinely rebalance our portfolio with the goal of meeting our target allocations.

The strategy for bonds emphasizes investment-grade corporate and government debt with maturities matching a portion of the longer duration pension liabilities.

The bonds strategy also includes a high yield element, which is generally shorter in duration.

The strategy for bonds emphasizes investment-grade corporate and government debt with maturities matching the longer duration pension liabilities.

The bonds strategy also includes a high yield element, although minimal, which is generally shorter in duration.

The strategy for equity assets is to minimize concentrations of risk by investing primarily in companies in a diversified mix of industries worldwide, while targeting neutrality in exposure to global versus regional markets, fund types and fund managers.

48 unchanged sentences

Short-term investments (5)

10.4 10.4 — —

Total $ 292.7 $ 6.0 $ 285.8 $ 0.9

34 unchanged sentences

pension plans in amounts equal to the minimum funding requirements of the Employee Retirement Income Security Act of 1974, plus additional amounts that may be approved from time to time.

During 2021 , we made no contributions to our qualified domestic pension plans, and direct benefit payments of $ 5.5 to our non-qualified domestic pension plans.

In 2022, we do not expect to make any minimum required funding contributions to our qualified domestic pension plans and expect to make direct benefit payments of $ 5.3 to our non-qualified domestic pension plans.

In 2021, we made contr ibutions of $ 0.9 to our foreign pension plans.

During 2022 , we made no contributions to our qualified domestic pension plans, and direct benefit paym ents of $ 5.6 to our non-qualified domestic pension plans.

In 2023, we do not expect to make any minimum required funding contributions to our qualified domestic pension plans and expect to make direct benefit payments of $ 5.3 to our non-qualif ied domestic pension plans.

In 2022, we made contr ibutions o f $ 1.0 to our foreign pension plans.

In 2023, we expect to make contributions of $ 0.9 to our foreign pension plans.

21 unchanged sentences

Interest cost 10.5 8.4 3.7 3.4

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

Actuarial gains ( 66.4 ) ( 12.9 ) ( 52.7 ) ( 4.8 )

Settlements ( 17.1 ) ( 10.5 ) — ( 3.0 )

20 unchanged sentences

Net amount recognized $ ( 70.1 ) $ ( 75.0 ) $ 6.4 $ 11.2

Amount recognized in accumulated other comprehensive income (pre-tax) consists of — net prior service (credits) costs ( 0.1 ) ( 0.2 ) 1.2 1.2

Amount recognized in accumulated other comprehensive income (pre-tax) consists of — net prior service costs (credits) $ — $ ( 0.1 ) $ 1.0 $ 1.2

The following is information about our pension plans that had accumulated benefit obligations in excess of the fair value of their plan assets at December 31, 2022 and 2021:

5 unchanged sentences

Fair value of plan assets 170.2 251.8 — —

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

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

The accumulated benefit obligation for all domestic and foreign pension plans was $ 246.9 and $ 109.5 , r espectively, at December 31, 2022 and $ 335.4 and $ 182.4 , respectively, at December 31, 2021.

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

Domestic Pension Plans

9 unchanged sentences

___________________________________________________________________

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

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

Foreign Pension Plans

4 unchanged sentences

Expected return on plan assets ( 5.6 ) ( 5.8 ) ( 5.7 )

Amortization of unrecognized prior service costs 0.1 — —

Recognized net actuarial (gains) losses (1)

6.4 ( 1.8 ) 0.2

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

Total net periodic pension benefit (income) expense $ 4.6 $ ( 4.2 ) $ ( 1.7 )

___________________________________________________________________

6 unchanged sentences

Discount rate (1)

3.99 % 2.35 % 3.16 %

Rate of increase in compensation levels N/A N/A N/A

11 unchanged sentences

Rate of increase in compensation levels N/A N/A N/A

___________________________________________________________________

(1) The discount rate for the year ended December 31, 2022 includes adjustments due to remeasurements in the U.S.

Plan during the second and third quarters.

We review the pension assumptions annually.

3 unchanged sentences

Postretirement Benefit Plans

Transfer of Retiree Life Insurance Benefits - 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 paid to the insurance carrier of $ 10.0 .

This transaction resulted in a settlement loss of $ 0.7 recorded to “Other income (expense), net” during 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”.

Employer Contributions and Future Benefit Payments — Our postretirement medical plans are unfunded and have no plan assets, but are instead funded by us on a pay-as-you-go basis in the form of direct benefit payments or policy premium payments.

9 unchanged sentences

Interest cost 1.1 1.0

Actuarial (gains) losses ( 3.9 ) 1.9

Loss on settlement of retiree life insurance benefits 0.7 —

Actuarial gains ( 7.0 ) ( 3.9 )

Transfer to insurance carrier for cash consideration ( 10.0 ) —

Benefits paid ( 4.4 ) ( 5.9 )

7 unchanged sentences

The actuarial gains and losses for our postretirement benefit plans in 2022 and 2021 were primarily related to a change in the discount rate used to measure the benefit obligations of those plans.

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

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

Year ended December 31,

3 unchanged sentences

Amortization of unrecognized prior service credits ( 4.4 ) ( 4.7 ) ( 4.7 )

Settlement loss (1)

Recognized net actuarial (gains) losses ( 7.0 ) ( 3.9 ) 1.9

Net periodic postretirement benefit (income) expense $ ( 7.6 ) $ ( 1.2 ) $ 0.9

Net periodic postretirement benefit income $ ( 9.6 ) $ ( 7.6 ) $ ( 1.2 )

___________________________________________________________________

(1) Relates to the transfer of the retiree life insurance benefits obligation.

Actuarial assumptions used in accounting for our domestic postretirement plans were as follows:

6 unchanged sentences

Discount rate used in determining net periodic postretirement benefit expense (1)

2.84 % 2.00 % 2.97 %

Discount rate used in determining year-end postretirement benefit obligation 5.50 % 2.56 % 2.00 %

___________________________________________________________________

(1) The discount rate for the year ended December 31, 2022 includes an adjustment due to a remeasurement in the Plans that took place in the first quarter.

The accumulated postretirement benefit obligation was determined using the terms and conditions of our various plans, together with relevant actuarial assumptions and health care cost trend rates.

7 unchanged sentences

employees may voluntarily contribute up to 50 % of their compensation into the DC Plan and we match a portion of participating employees’ contributions.

Our matching contributions are primarily made in newly issued shares of company common stock and are issued at the prevailing market price.

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

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

Our matching contributions are primarily made in newly issued shares of SPX common stock and are issued at the prevailing market price.

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

Under the DC Plan, we c ontribute d 0.149 , 0.135 and 0.192 shares of our common stock to employee accounts in 2022, 2021 and 2020, respectively.

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

We recorded $ 7.8 in 2021, $ 7.7 in 2020 and $ 7.0 in 2019 as compensation expense related to the matching contribution.

Certain collectively-bargained employees participate in the DC Plan with company contributions not being made in company common stock, although company common stock is offered as an investment option under these plans.

We recorded $ 7.8 i n 2022, $ 7.8 in 2021 and $ 7.7 in 2020 as compensation expense related to the matching contribution.

Certain collectively-bargained employees participate in the DC Plan with company contributions not being made in SPX common stock, although SPX common stock is offered as an investment option under these plans.

We also maintain a Supplemental Retirement Savings Plan (“SRSP”), which permits certain members of our senior management and executive groups to defer eligible compensation in excess of the amounts allowed under the DC Plan.

7 unchanged sentences

(12) Income Taxes

Income from continuing operations before income taxes and the (provision for) benefit from income taxes consisted of the following:

Income (loss) from continuing operations before income taxes and the (provision for) benefit from income taxes consisted of the following:

Year ended December 31,

2022 2021 2020

Income from continuing operations:

Income (loss) from continuing operations:

United States $ ( 37.7 ) $ 17.2 $ 39.6

29 unchanged sentences

Adjustments to contingent consideration ( 0.9 ) % ( 8.9 ) % — %

Non-deductible loss on Asbestos Portfolio Sale (2)

53.7 % — % — %

Other ( 1.8 ) % ( 3.0 ) % ( 1.3 ) %

4 unchanged sentences

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

(2) The income tax benefit associated with the loss of $ 73.9 on the Asbestos Portfolio Sale totaled $ 1.1 .

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

6 unchanged sentences

Working capital accruals 17.5 17.0

Research and experimental expenditures 13.6 —

Other 8.1 9.8

13 unchanged sentences

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

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

At December 31, 2022, we h ad $ 24.9 of federal, $ 242.9 of state, and $ 171.0 of foreign tax loss carryforwards available.

We also had federal and state tax credit carryforwards of $ 6.9 .

Of these amounts, $ 8.4 expire in 2023 and $ 235.7 expire at various times between 2024 and 2040.

The remaining carryforwards have no expiration date.

The remaining carryforwards have no expir ation date.

Realization of deferred tax assets, including those associated with net operating loss and credit carryforwards, is dependent upon generating sufficient taxable income in the appropriate tax jurisdiction.

3 unchanged sentences

Our valuation allowance decreased by $ 20.7 in 2022 and by $ 2.2 in 2021.

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

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

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

The 2022 decrease was primarily driven by the utilization of certain attributes in foreign jurisdictions.

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

3 unchanged sentences

subsidiaries in those operations.

As of December 31, 2021, we have $ 172.0 of undistributed earnings of our foreign subsidiaries.

As of December 31, 2022, we had $ 225.6 of undistributed earnings of our foreign subsidiaries.

The majority of these earnings have already been reinvested in our overseas businesses.

4 unchanged sentences

taxation upon the remittance of dividends and under certain other circumstances.

It is not practicable to estimate the amount of a deferred tax liability related to the undistributed earnings of our foreign subsidiaries in the event that these earnings are no longer considered to be indefinitely reinvested, due to the hypothetical nature of the calculation.

It is not practicable to estimate the amount of a deferred tax liability related to the

undistributed earnings of our foreign subsidiaries in the event that these earnings are no longer considered to be indefinitely reinvested, due to the hypothetical nature of the calculation.

Unrecognized Tax Benefits

4 unchanged sentences

As of December 31, 2022, gross accrued interest total ed $ 1.9 (net accrued interest of $ 1.7 ), while the related amounts as of December 31, 2021 and 2020 were $ 2.6 (net accrued interest of $ 2.2 ) and $ 3.8 (net accrued interest of $ 3.0 ), respectively.

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

Our income tax provision for the years ended December 31, 2022, 2021, and 2020 included gross interest income of $ 0.6 , $ 1.0 , and $ 0.2 , respectively, resulting from adjustments to our liability for uncertain tax positions.

As of December 31, 2022, 2021, and 2020, we had no accrua l for penalties included in our unrecognized tax benefits.

9 unchanged sentences

Settlements — — ( 0.3 )

Lapse of statute of limitations ( 1.1 ) ( 1.7 ) ( 1.5 )

Statute expirations ( 1.9 ) ( 1.1 ) ( 1.7 )

Change due to foreign currency exchange rates ( 0.1 ) 0.1 0.1

1 unchanged sentence

Other Tax Matters

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

During 2022, our income tax provision was impacted most significantly by (i) the loss on the Asbestos Portfolio Sale (see Note 4) which generated a tax benefit of only $ 1.1 , (ii) a tax benefit of $ 4.7 related to the release of valuation allowances recognized against certain deferred tax assets, as we now expect to realize these deferred tax assets, primarily due to the 2022 Holding Company Reorganization (see Note 1), (iii) $ 3.0 of tax benefits related to statute expirations and other revisions to liabilities for uncertain tax positions, and (iv) $ 1.7 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the year.

During 2020, our income tax provision was impacted most significantly by (i) earnings in jurisdictions with lower statutory tax rates, (ii) $ 4.2 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions, and (iii) $ 2.8 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the year.

During 2019, our income tax provision was impacted most significantly by (i) $ 1.6 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the year, (ii) $ 1.3 of tax benefits related to our U.S.

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

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

Accruals for these uncertain tax positions are recorded in “Income taxes payable” and “Deferred and other income taxes” in the accompanying consolidated balance sheets based on the expectation as to the timing of when the matters will be resolved.

Accruals for these uncertain tax positions are recorded in “Income taxes payable” and “Deferred and other income taxes” in the accompanying consolidated

balance sheets based on the expectation as to the timing of when the matters will be resolved.

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

6 unchanged sentences

We have various foreign income tax returns under examination.

The most significant of these are 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.

1 unchanged sentence

As audits and examinations are still in process, the timing of the ultimate resolution and any payments that may be required for the above matters cannot be determined at this time.

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)

On March 27, 2020, the CARES Act was enacted into law and provides changes to various tax laws that impact businesses.

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

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

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

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

(13) Indebtedness

2 unchanged sentences

Revolving loans $ — $ — $ — $ — $ —

$ 129.8 $ 209.9 $ ( 339.7 ) $ — $ —

Term loan (1)(2)

1 unchanged sentence

Trade receivables financing arrangement (3)

28.0 179.0 ( 207.0 ) — —

Other indebtedness (4)

5 unchanged sentences

_____________________________________________________________

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

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

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

(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 December 31, 2022 and December 31, 2021, respectively.

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

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

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

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

At December 31, 2022, we had $ 45.7 of available borrowing capacity under this facility .

(4) Primarily includes balances under a purchase card program of $ 1.8 and $ 2.2 and finance lease obligations of $ 0.7 and $ 1.1 at December 31, 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.

As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

(5) “Other” primarily includes debt assumed, foreign currency translation on any debt instruments denominated in currencies other than the U.S.

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

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

(5) “Other” includes the impact of amortization of debt issuance costs associated with the term loan.

Maturities of long-term debt payable during each of the five years subsequent to December 31, 2022 are $ 2.0 , $ 7.9 , $ 12.3 , $ 12.3 , and $ 211.2 respectively.

Senior Credit Facilities

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

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

The facility reduction resulted in a write-off of deferred finance costs of $ 0.2 , recorded to “Interest expense” in the accompanying consolidated statement of operations for the year ended December 31, 2021.

After this reduction, and repayments of term loans through

December 31, 2021, our committed senior secured financing consists of the following at December 31, 2021 (each with a final maturity of December 17, 2024):

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

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

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

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

• A bilateral foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $ 20.0 .

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 December 31, 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 each fiscal quarter to not more than 3.75 to 1.00 (or up to 4.25 to 1.00 for the four fiscal quarters after certain permitted acquisitions);

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

• Establishes per annum fees charged and applies interest rate margins to Eurodollar and alternate base rate loans, in each case based on the Consolidated Leverage Ratio, as follows:

Ratio Domestic

Fee Letter of

• 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 1.00

6 unchanged sentences

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

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

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

The 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 our Senior Credit Facilities was approximately 5.8 % at December 31, 2022.

On December 9, 2021, in preparation of our adoption of ASU No.

2020-04 and No.

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

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

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

We also pay fronting fees on the outstanding amounts of letters of credit and foreign credit instruments (in the participation facility) at the rates of 0.125 % per annum and 0.25 % per annum, respectively.

SPX is the borrower under each of the above facilities, and certain of our foreign subsidiaries are (and we may designate other foreign subsidiaries to be) borrowers under the global revolving credit facility and the foreign credit instrument facilities.

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 domestic 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 foreign 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 or our subsidiaries.

Mandatory prepayments will be applied to repay, first, amounts outstanding under any term loans and, then, amounts (or cash collateralize letters of credit) outstanding under the global revolving credit facility and the domestic 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 our business within 360 days (and if committed to be reinvested, actually reinvested within 360 days after the end of such 360-day period) of the receipt of such proceeds.

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

Any voluntary prepayment of loans will be subject to reimbursement of the lenders’ breakage costs in the case of a prepayment of 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 global revolving credit facility, the participation foreign credit instrument 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) held by SPX or our domestic subsidiary guarantors and 65 % of the capital stock of our material first-tier foreign subsidiaries (with certain 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 then exist, all collateral security is to be released and the indebtedness under the Credit Agreement would be unsecured.

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 is to 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, guarantees, or advances, 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, and otherwise restrict certain corporate activities.

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

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

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

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.

100 % of such deficit) plus (iii) certain other amounts, less our previous usage of such additional amount for certain other investments and restricted junior payments.

At December 31, 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.

1 unchanged sentence

At December 31, 2022, we were in compliance with all covenants of our 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.

Other Borrowings and Financing Activities

11 unchanged sentences

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

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

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

In addition, as of December 31, 2021, the fair value of our interest rate swap agreements was $ 0.6 (with $ 2.5 recorded as a non-current asset and $ 1.9 as a current liability), and $ 7.8 at December 31, 2020 (with $ 1.4 recorded as a current liability and the remainder in long-term liabilities).

The Swaps have a remaining notional amount of $ 231.3 , cover the period through November 2024, and effectively convert this portion of the borrowings under our senior credit facilities to a fixed rate of 1.077 %, 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 3, we applied the optional expedient 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 December 31, 2022 and 2021, the unrealized gain, net of tax, recorded in AOCI was $ 11.0 and $ 0.5 , respectively.

In addition, the fair value of our interest rate swap agreements was $ 14.7 (with $ 8.7 recorded as a current asset and $ 6.0 as a non-current asset) as of December 31, 2022, and $ 0.6 (with $ 2.5 recorded as a non-current asset and $ 1.9 as a current liability) as of December 31, 2021.

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.

2 unchanged sentences

Our objective is to preserve the economic value of non-functional currency-denominated cash flows and to minimize the impact of changes as a result of currency fluctuations.

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

Our principal currency exposures relate to the South African Rand, British Pound Sterling (“GBP”), and Euro.

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

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

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

We had FX forward contracts with an aggregate notional amount of $ 6.9 and $ 8.7 outstanding as of December 31, 2022 and 2021, respectively, with all of the $ 6.9 scheduled to mature within one year.

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

Commodity Contracts

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

The commodity contracts related solely to Transformer Solutions.

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

For our Transformer Solutions business, we historically entered into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials.

As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer Solutions, which has been presented within discontinued operations.

Immediately prior to the sale, we extinguished the existing commodity contracts and reclassified from AOCI a net loss of $ 0.6 to “Gain (loss) on disposition of discontinued operations, net of tax” within our consolidated statement of operations for the year ended December 31, 2021.

Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and, to the extent these commodity contracts were effective in offsetting the variability of the forecasted purchases, the change in fair value was included in AOCI.

Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and, to the extent the commodity contracts were effective in offsetting the variability of the forecasted purchases, the change in fair value was included in AOCI.

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

As of December 31, 2020, the fair values of these contracts was a current asset of $ 2.4 .

Since these commodity contracts related to our Transformer Solutions business, the amount has been recorded within assets of discontinued operations in the accompanying consolidated balance sheet.

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

Concentrations of Credit Risk

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

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

We periodically evaluate the credit standing of these financial institutions and insurance companies.

Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, and interest rate swap and foreign currency forward contracts.

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

We periodically evaluate the credit standing of these financial institutions.

We maintain cash levels in bank accounts that, at times, may exceed federally-insured limits.

8 unchanged sentences

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

These claims relate to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims), environmental matters, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims).

These claims relate to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims), environmental matters, product liability matters (which, prior to the Asbestos Portfolio Sale, were predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims).

Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate.

2 unchanged sentences

Our recorded liabilities related to these matters totaled $ 39.5 and $ 658.8 at December 31, 2022 and 2021, respectively.

Of these amounts, $ 584.3 and $ 499.8 are included in “Other long-term liabilities” within our consolidated balance sheets at December 31, 2021 and 2020, respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these matters are based on a number of assumptions, including historical claims and payment experience.

Of these amounts, $ 30.8 and $ 584.3 are included in “Other long-term liabilities” within our consolidated balance sheets at December 31, 2022 and 2021, respectively, with the remainder included in “Accrued expenses.” The decline in liabilities is primarily related to the Asbestos Portfolio Sale.

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.

As a result, our current assumptions for estimating these liabilities may not prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings.

As a result, our current assumptions for estimating these liabilities may not

prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings.

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

Our asbestos-related claims are typical in certain of the industries in which we operate or pertain to legacy businesses we no longer operate.

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

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

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

Asbestos Matters

Prior to the Asbestos Portfolio Sale, our asbestos-related claims were typical in certain of the industries in which we operate or pertain to legacy businesses we no longer operate.

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

Insurance recovery assets (1)

$ 526.2 $ 496.4

Liabilities for claims (2)

_____________________________________________________________

(1) Of these amounts $ 473.6 and $ 446.4 are included in “ Other assets” at December 31, 2021 and 2020, respectively, while the remainder is included in “ Other current assets.”

(2) Of these amounts $ 561.4 and $ 479.9 are included in “ Other long-term liabilities” at December 31, 2021 and 2020, respectively, while the remainder is included in “ Accrued expenses.”

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

In estimating our liabilities for asbestos-related claims, we consider, among other things, the following:

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

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

The liabilities we recorded for asbestos-related claims were based on a number of assumptions.

In estimating our liabilities for asbestos-related claims, we considered, among other things, the following:

• The number of pending claims by disease type and jurisdiction.

2 unchanged sentences

◦ Average claim settlement amounts.

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

The following table presents information regarding activity for asbestos-related claims for the years ended December 31, 2021, 2020 and 2019:

Year ended December 31

2021 2020 2019

Pending claims, beginning of year 9,782 11,079 13,767

Claims filed 2,826 2,449 3,607

Claims resolved ( 2,543 ) ( 3,746 ) ( 6,295 )

Pending claims, end of year 10,065 9,782 11,079

The assets we record for asbestos-related claims represent amounts that we believe we are or will be entitled to recover under agreements we have with insurance companies.

The amount of these assets are based on a number of assumptions, including the continued solvency of the insurers and our legal interpretation of our rights for recovery under the agreements we have with the insurers.

Our current assumptions for estimating these assets may not prove accurate, and we may be required to adjust these assets in the future.

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

• The period over which we could reasonably project asbestos-related claims (projected through 2057 at December 31, 2021 ).

The assets we recorded for asbestos-related claims represented amounts that we believe we were entitled to recover under agreements we had with insurance companies.

The amount of these assets was based on a number of assumptions, including the continued solvency of the insurers and our legal interpretation of our rights for recovery under the agreements we had with the insurers.

During the years ended December 31, 2022, 2021, and 2020, our (receipts) payments for asbestos-related claims, net of respective insurance recoveries of $ 31.6 , $ 53.9 , and $ 35.4 , were $ 20.1 , $( 0.3 ) and $ 19.3 , respectively.

The year ended December 31, 2021 includes insurance proceeds of $ 15.0 , associated with the settlement of an asbestos insurance coverage matter.

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

During the years ended December 31, 2022, 2021, and 2020 , we recorded charges of $ 24.2 , $ 51.2 , and $ 21.3 , respectively, as a result of changes in estimates associated with the liabilities and assets related to asbestos-related claims.

1 unchanged sentence

Large Power Projects in South Africa

Overview - Since 2008, DBT had been executing on two large power projects in South Africa (Kusile and Medupi), on which it has now substantially completed its scope of work.

Overview - Since 2008, DBT had been executing on two large power projects in South Africa (Kusile and Medupi), on which it has substantially completed its scope of work.

1 unchanged sentence

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

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

DBT and other parties involved with the projects (e.g., prime contractors, subcontractors, suppliers, etc.), and (iv) the possibility that DBT may become subject to additional claims, which could be significant.

It is possible that some outstanding claims may not be resolved until after the prime contractors complete their scopes of work.

18 unchanged sentences

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

This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our accompanying consolidated statement of operations for the year ended December 31, 2021.

This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our accompanying consolidated statements of operations.

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 occurred in December 2022, with the ruling from such hearing yet to be received.

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

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

This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our accompanying consolidated st atement of operations for the year ended December 31, 2021.

This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our accompanying consolidated statements of operations.

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.

2 unchanged sentences

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

Similar to the interim claim, we

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

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

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

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

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.

The remainder of the claims in both the interim notification and the revised version largely appear to be direct in nature (approximately South African Rand 790.0 or $ 46.1 ).

On September 21, 2022, an arbitration tribunal ruled that only South African Rand 349.6 (or $ 20.4 ) 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.

On November 25, 2022, MHI notified DBT of its intent to refer the claims dismissed from the arbitration to a new dispute adjudication panel.

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 accompanying consolidated financial statements with respect to these claims.

DBT intends to vigorously defend itself against these claims.

Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims;

(ii) complexity of contractual relationships between the end customer, MHI, and DBT;

(ii) complexity of contractual

relationships between the end customer, MHI, and DBT;

(iii) legal interpretation of the contract provisions and application of South African law to the contracts;

4 unchanged sentences

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

MHI has made other claims against DBT totaling South African Rand 176.2 (or $ 11.0 ).

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

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

MHI has made other claims against DBT totaling South African Rand 176.2 (or $ 10.3 ) and has also alleged that it has incurred additional remedial costs related to portions of DBT’s scope of work.

DBT has numerous defenses against these claims, as well as claims, if any, that may result from the above unsubstantiated allegations, and, thus, we do not believe that DBT has a probable loss associated with these claims.

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

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

4 unchanged sentences

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 $ 24.4 ) 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 $ 26.2 ) is unlikely to occur over the next twelve months.

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

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

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 $ 5.0 at the time of payment) of the previously demanded amounts, plus interest of South African Rand 12.5 (or $ 0.7 at the time of payment).

MHI paid these amounts on October 14, 2022.

We have reflected the remaining South African Rand 327.5 (or $ 19.1 ) within “ Assets of DBT and Heat Transfer ” on the accompanying consolidated balance sheet as of December 31, 2022.

The remaining bond of South African Rand 29.2 (or $ 1.7 ) was issued to MHI as a performance guarantee in the event of a breach of DBT’s contractual obligations.

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

In addition to this bond, SPX Corporation has guaranteed DBT’s performance on these projects to the prime contractors, including MHI.

In addition, 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.

The sub-contractor maintains a right to seek recovery o f such amount and, thus, the amount received by DBT has not been reflected in our accompanying consolidated statement of operations for the year ended December 31, 2021.

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

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

The sub-contractor maintains a right to seek recovery o f such amount and, thus, the amount received by DBT has not been reflected in our consolidated statements of operations.

Claim for Contingent Consideration Related to ULC Acquisition

In connection with our acquisition of ULC in September 2020, the seller of ULC was eligible for additional cash consideration of up to $ 45.0 upon achievement of certain operating 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 performance milestones noted above were not achieved.

As a result, we reversed the liability of $ 24.3 during the third quarter of 2021, with the offset recorded to “Other operating (income) expense, net.”

On August 23, 2022, the seller of ULC initiated a breach-of-contract lawsuit against us in the United States District Court for the Eastern District of New York claiming that it is entitled to a portion of the additional cash consideration totaling $ 15.0 linked to certain operating performance milestones.

SPX has numerous defenses against this claim and, thus, we do not believe we have a probable loss associated with the claim.

Litigation Matters

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

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

results of operations or cash flows;

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

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

4 unchanged sentences

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

As of December 31, 2021, we had liabilities for site investigation and/or remediation at 18 sites ( 25 sites at December 31, 2020) that we own or control.

We had liabilities for site investigation and/or remediation at 17 sites, that we own or control, as of December 31, 2022 ( 18 sites as of 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.

5 unchanged sentences

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 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 ( 11 sites at December 31, 2020) at which the liability has not been settled, of which 9 sites have been active in the past few years.

In the case of contamination at offsite, third-party disposal sites, as of December 31, 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.

17 unchanged sentences

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

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

These agreements cover each executive’s entitlements in the event that the executive’s employment is terminated for

other than cause, death or disability, or the executive resigns with good reason.

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

1 unchanged sentence

Income Per Share

The following table sets forth the computations of the components used for the calculation of basic and diluted income (loss) per share:

The following table sets forth the computations of the components used for the calculation of basic and diluted income per share:

Year ended December 31,

2022 2021 2020

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

Income from continuing operations $ 19.8 $ 59.0 $ 73.8

Income (loss) from discontinued operations, net of tax $ ( 19.6 ) $ 366.4 $ 25.2

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

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

Weighted-average number of common shares used in basic income per share 45.345 45.289 44.628

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

Dilutive securities — Employee stock options and restricted stock units 0.876 1.206 1.138

Weighted-average number of common shares and dilutive securities used in diluted income per share 46.221 46.495 45.766

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

For the years ended December 31, 2022, 2021, and 2020, 0.240 , 0.245 , and 0.300 , respectively, of unvested restricted stock units were excluded from the computation of diluted earnings per share as the assumed proceeds for these instruments exceeded the average market value of the underlying common stock for the related years.

For the years ended December 31, 2022, 2021, and 2020, 0.695 , 0.627 , and 0.793 , respectively, of outstanding stock options were excluded from the computation of diluted earnings per share as the assumed proceeds for these instruments exceeded the average market value of the underlying common stock for the related years.

Common Stock and Treasury 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 Credit Agreement.

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

As of December 31, 2022, the remaining maximum approximate amount of our common stock that may be purchased under this authorization is $ 66.3 .

At December 31, 2022, we had 200.0 authorized shares of common stock (par value $ 0.01 ).

9 unchanged sentences

Restricted stock units — 0.191 0.191

Share repurchases — ( 0.707 ) ( 0.707 )

Other 0.340 — 0.340

4 unchanged sentences

Up to 3.851 shares of our common stock were available for grant at December 31, 2022 under the 2019 Plan.

The 2019 Plan permits the issuance of new shares or shares from treasury upon the exercise of options, vesting of time-based restricted stock units (“RSU’s”) and performance stock units (“PSU’s”), or the granting of restricted stock shares (“RS’s”).

Each RSU, RS and PSU granted reduces availability by two shares.

Each RSU and PSU granted reduces availability by two shares.

Similar awards were permitted to be granted under the Prior Plan before the approval of the 2019 Plan.

PSU’s, RSU’s and RS’s may be granted to certain eligible employees or non-employee directors in accordance with applicable equity compensation plan documents and agreements.

PSU’s and RSU’s may be granted to certain eligible employees or non-employee directors in accordance with applicable equity compensation plan documents and agreements.

Subject to participants’ continued employment and other plan terms and conditions, the restrictions lapse and awards generally vest over a period of time, generally one or three years .

In some instances, such as death, disability, or retirement, stock may vest concurrently with or following an employee’s termination.

PSU’s are eligible to vest at the end of the performance period, with performance based on the total return of our stock over the three-year performance period against a peer group within the S&P 600 Capital Goods Index, while the RSU’s and RS’s vest based on the passage of time since grant date.

PSU’s, RSU’s, and RS’s that do not vest within the applicable vesting period are forfeited.

We grant RSU’s or RS’s to non-employee directors under the 2006 Non-Employee Directors’ Stock Incentive Plan (the “Directors’ Plan”) and the 2019 Plan.

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

PSU’s are eligible to vest at the end of the performance period, with performance based on the total return of our stock over the three-year performance period against a peer group within the S&P 600 Capital Goods Index, while the RSU’s vest based on the passage of time since grant date.

PSU’s and RSU’s that do not vest within the applicable vesting period are forfeited.

We grant RSU’s to non-employee directors under the 2019 Plan.

The 2022, 2021 and 2020 grants to non-employee directors generally vest over a 1 year-period, with the 2022 grants scheduled to vest in their entirety immediately prior to the annual meeting of stockholders in May 2023.

4 unchanged sentences

The fair value of each award is amortized over the lesser of the award’s requisite or derived service period, which is generally up to three years .

Compensation expense within income from continuing operations related to PSU’s, RSU’s, RS’s and stock options totale d $ 12.9 , $ 12.0 and $ 10.0 for the years ended December 31, 2021, 2020 and 2019, respectively, with the related tax benefit being $ 2.2 , $ 2.0 and $ 2.4 for the years ended December 31, 2021, 2020 and 2019, respectively.

Compensation expense within income from continuing operations related to PSU’s, RSU’s and stock options totale d $ 10.9 , $ 12.9 and $ 12.0 for the years ended December 31, 2022, 2021 and 2020, respectively, with the related tax benefit being $ 1.7 , $ 2.2 and $ 2.0 for the years ended December 31, 2022, 2021 and 2020, respectively.

In years prior to 2020, annual long-term cash awards were granted to executive officers and other members of senior management.

These awards are eligible to vest at the end of a three-year performance measurement period, with performance based on our achievement of a target segment income amount over the three-year measurement period.

These awards were eligible to vest at the end of a three-year performance measurement period, with performance based on our achievement of a target segment income amount over the three-year measurement period.

Long-term incentive compensation expense for 2022, 2021, and 2020 included $ 0.0 , $( 0.1 ) and $ 1.1 , respectively, associated with long-term cash awards.

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

The Monte Carlo simulation model utilizes multiple input variables that determine

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

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

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

We issued PSU’s to eligible participants on March 1, 2022 and 2021, and February 20, 2020.

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

5 unchanged sentences

March 1, 2022

SPX Corporation 42.88 % — % 0.25 % 60.24 %

SPX 43.04 % — % 1.44 % 62.44 %

Peer group within S&P 600 Capital Goods Index 50.98 % n/a 1.44 %

February 20, 2020

SPX Corporation 29.47 % — % 1.35 % 35.47 %

March 1, 2021

SPX 42.88 % — % 0.25 % 60.24 %

Peer group within S&P 600 Capital Goods Index 51.25 % n/a 0.25 %

February 20, 2020

SPX Corporation 32.70 % — % 2.53 % 38.75 %

SPX 29.47 % — % 1.35 % 35.47 %

Peer group within S&P 600 Capital Goods Index 34.93 % n/a 1.35 %

2 unchanged sentences

The average risk-free interest rate is based on the one-year through three-year daily treasury yield curve rate as of the grant date.

The following table summarizes the PSU, RSU, and RS activity from December 31, 2018 through December 31, 2021:

Unvested PSU’s, RSU’s, and RS’s Weighted-Average

The following table summarizes the PSU and RSU activity from December 31, 2019 through December 31, 2022:

Unvested PSU’s and RSU’s Weighted-Average

Grant-Date Fair

13 unchanged sentences

December 31, 2022 0.530 $ 51.38

As of December 31, 2021, there was $ 10.9 of unrecognized compensation cost related to PSU’s, RSU’s and RS’s.

As of December 31, 2022, there was $ 9.8 of unrecognized compensation cost related to PSU’s and RSU’s.

We expect this cost to be recognized over a weighted-average period of 1.9 years.

Stock Options

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

On March 1, 2022 and 2021, and February 20, 2020, we granted stock options totaling 0.105 , 0.105 , and 0.125 , respectively.

The exercise price per share of these options is $ 48.97 , $ 58.34 , and $ 50.09 , resp ectively, and the maximum contractual term of these options is ten years .

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

The fair value of each stock option granted on March 1 2022 and 2021, and February 20, 2020 was $ 19.33 , $ 23.49 , and $ 17.40 , respectively.

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

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

March 1, 2022 March 1, 2021 February 20, 2020

Annual expected stock price volatility 38.62 % 41.15 % 33.48 %

2 unchanged sentences

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

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

Annual expected stock price volatility for the March 1 2022 and 2021, and February 20, 2020 grants were based on a weighted average of SPX’s stock volatility since the Spin-Off and an average of the most recent six-year historical volatility of a peer company group.

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

22 unchanged sentences

Adjustment Net Unrealized

Gains (losses) on

Postretirement

2 unchanged sentences

Other comprehensive income (loss) before reclassifications ( 13.6 ) 11.7 0.1 ( 1.8 )

Amounts reclassified from accumulated other comprehensive income (loss) 19.9 ( 0.4 ) ( 3.6 ) 15.9

Amounts reclassified from accumulated other comprehensive income — ( 1.2 ) ( 3.4 ) ( 4.6 )

Current-period other comprehensive income (loss) ( 13.6 ) 10.5 ( 3.3 ) ( 6.4 )

1 unchanged sentence

__________________________________________________________________

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

(1) Net of tax provision of $ 3.7 and $ 0.1 as of December 31, 2022 and 2021 , respectively.

(2) Net of tax provision of $ 2.7 and $ 3.7 as of December 31, 2022 and 2021 , respectively.

The balances as of December 31, 2022 and 2021 include unamorti zed prior service credits.

1 unchanged sentence

Adjustment Net Unrealized

Gains (Losses) on

Hedges (1) Pension and

Postretirement

Liability Adjustment and Other (2) Total

Liability Adjustment (2) Total

Balance at December 31, 2020 $ 238.6 $ ( 4.4 ) $ 14.3 $ 248.5

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive income (loss) 19.9 ( 0.4 ) ( 3.6 ) 15.9

— 2.9 ( 3.6 ) ( 0.7 )

Current-period other comprehensive income (loss) 14.1 4.9 ( 3.6 ) 15.4

1 unchanged sentence

__________________________________________________________________

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

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

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

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

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

The following summarizes amounts reclassified from each component of accumulated comprehensive income for the years ended December 31, 2022 and 2021:

2 unchanged sentences

(Gains) losses on qualifying cash flow hedges:

FX forward contracts $ ( 0.1 ) $ — Revenues

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

3 unchanged sentences

$ ( 1.2 ) $ ( 0.4 )

Pension and postretirement items:

Gains on pension and postretirement items:

Amortization of unrecognized prior service credits - Pre-tax $ ( 4.4 ) $ ( 4.8 ) Other income (expense), net

2 unchanged sentences

Loss on reclassification of foreign currency translation adjustments:

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

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

Income taxes — —

Common Stock in Treasury

During the years ended December 31, 2021, 2020 and 2019, “Common stock in treasury” was decreased by the settlement of restricted stock units issued from treasury stock of $ 7.7 , $ 8.4 and $ 15.8 , respectively.

During the years ended December 31, 2022, 2021 and 2020, “Common stock in treasury” was decreased by the settlement of restricted stock units, net of recipient tax withholdings, issued from treasury stock of $ 12.1 , $ 7.7 and $ 8.4 , respectively.

During the year ended December 31, 2022, “Common stock in treasury” was increased by the previously mentioned repurchase of our common stock for aggregate cash payments of $ 33.7 .

Preferred Stock

20 unchanged sentences

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.

As of December 31, 2021, the guarantees had expired and bonds had been returned.

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

December 31, 2021 December 31, 2020 December 31, 2019

Guarantees and Bonds Liability (1)

Indemnification Assets (1)

December 31, 2021 December 31, 2020

Guarantees and Bonds Liability (1)

8 unchanged sentences

___________________________

(1) In connection with the sale, we estimated the fair value of the existing parent company guarantees and bank and surety bonds considering the probability of default by Balcke Dürr and an estimate of the amount we would be obligated to pay in the event of a default.

3 unchanged sentences

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

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

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

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

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

Contingent Consideration for Sensors & Software, ECS, and ULC Acquisitions — In connection with the acquisition of Sensors & Software, the sellers were eligible for additional cash consideration of up to $ 3.7 , with payment of such contingent consideration dependent upon the achievement of certain milestones.

The estimated fair value of such contingent consideration totaled $ 1.3 as of December 31, 2021 with the amount reflected as a liability within the respective consolidated balance sheet.

The $ 1.3 was paid during 2022.

As it 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 were not achieved, resulting in the reversal of the related liability of $ 24.3 .

In connection with the acquisition of ECS, the seller was eligible for additional cash consideration of up to $ 15.0 , 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 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 2022, we further reduced the fair value/liability by $ 1.3 .

The estimated fair value of such contingent consideration was $ 0.0 and $ 1.5 at December 31, 2022 and December 31, 2021, respectively, with the latter amount reflected as a liability within the respective consolidated balance sheet.

We estimate the fair value of contingent consideration based on the probability of the acquired business achieving the applicable milestones.

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

1 unchanged sentence

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

Refer to Note 10 for additional details.

Valuation Methods Used to Measure Fair Value on a Recurring Basis

6 unchanged sentences

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

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

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

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

The value is updated annually, during the first quarter, based on the investee ’ s most recent audited financial statements.

During the years ended December 31, 2022, 2021, and 2020, we recorded gains (losses) of $( 3.0 ), $ 11.8 a nd $ 8.6 , respectively, to “Other income (expense), net” related to changes in the estimated fair value of such equity security.

In addition, we received a distribution during 2020 of $ 3.5 included within “cash flows from operating activities” in our consolidated statement of cash flows.

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

4 unchanged sentences

2022 2021 2022 2021 2022 2021 2022 2021

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

Revenues $ 307.1 $ 287.2 $ 354.0 $ 296.6 $ 370.5 $ 285.7 $ 429.3 $ 350.0

Gross profit 104.0 104.4 124.6 102.3 133.1 95.8 162.2 129.3

104.4 90.5 102.3 89.4 95.8 92.1 129.3 123.5

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

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

13.0 23.0 19.1 17.7 12.5 13.9 ( 24.8 ) 4.4

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

Income (loss) from discontinued operations, net of tax (1)(2)

( 1.6 ) 3.8 ( 6.1 ) 44.2 ( 9.4 ) 316.4 ( 2.5 ) 2.0

Net income (loss)

$ 11.4 $ 26.8 $ 13.0 $ 61.9 $ 3.1 $ 330.3 $ ( 27.3 ) $ 6.4

Basic income per share of common stock:

Basic income (loss) per share of common stock:

Continuing operations, net of tax $ 0.29 $ 0.51 $ 0.42 $ 0.39 $ 0.28 $ 0.31 $ ( 0.55 ) $ 0.10

Discontinued operations, net of tax ( 0.04 ) 0.08 ( 0.13 ) 0.98 ( 0.21 ) 6.98 ( 0.05 ) 0.04

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

Diluted income per share of common stock:

Net income (loss) $ 0.25 $ 0.59 $ 0.29 $ 1.37 $ 0.07 $ 7.29 $ ( 0.60 ) $ 0.14

Diluted income (loss) per share of common stock:

Continuing operations, net of tax $ 0.28 $ 0.50 $ 0.41 $ 0.38 $ 0.27 $ 0.30 $ ( 0.55 ) $ 0.10

Discontinued operations, net of tax ( 0.03 ) 0.08 ( 0.13 ) 0.95 ( 0.20 ) 6.78 ( 0.05 ) 0.04

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

Net income (loss) $ 0.25 $ 0.58 $ 0.28 $ 1.33 $ 0.07 $ 7.08 $ ( 0.60 ) $ 0.14

___________________________________________________________________

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

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

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

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

First Second Third Fourth

2021 2020 2021 2020 2021 2020 2020

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

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

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

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

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

(1) During the second and third quarters of 2022, we recognized pre-tax actuarial losses of $ 3.8 and $ 2.4 , respectively, associated with our pension and postretirement benefit plans.

During the fourth quarter of 2022 and 2021, we recognized pre-tax actuarial gains of $ 8.0 and $ 9.9 , respectively, associated with our pension and postretirement benefit plans.

During the third quarter of 2022, we recorded charges of $ 21.7 ($ 16.5 to continuing operations and $ 5.2 to discontinued operations) as a result of changes in estimates associated with the assets recorded for asbestos product liability matters.

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

See Note 15 for additional details.

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

During the fourth quarter of 2022, we recorded a loss of $ 73.9 as a result of the Asbestos Portfolio Sale.

During the fourth quarter of 2022, we recorded impairment charges of $ 13.4 related to (i) the goodwill and indefinite-lived intangible assets of ULC ( $ 12.9 ) and (ii) certain other indefinite-lived intangible assets ($ 0.5 ) .

See Note 10 for additional details.

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

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

1 unchanged sentence

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

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

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

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

1 unchanged sentence

Our fourth quarter ends on December 31.

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

The interim closing dates for the first, second and third quarters of 2022 were April 2, July 2 and October 1, compared to the respective April 3, July 3 and October 2, 2021 dates.

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

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

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

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data