What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-04 · 327 added, 661 removed, 539 unchanged (65% of the section changed)

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AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

in millions, except per share amounts)

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Three months ended

2023 April 2,

Revenues $ 399.8 $ 307.1

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Intangible amortization 6.3 9.3

Impairment of goodwill and intangible assets — 24.3 — 24.3

Special charges, net — ( 0.1 ) 0.1 0.7

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

Other operating income — ( 0.9 )

Operating income 49.8 11.4

Other income (expense), net ( 24.6 ) 3.8 ( 19.8 ) 17.6

Other income, net 2.5 6.5

Interest expense ( 2.4 ) ( 2.4 )

Interest income 0.5 0.1

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

Income from continuing operations before income taxes 50.4 15.6

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

Income tax provision ( 11.3 ) ( 2.6 )

Income from continuing operations 39.1 13.0

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

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

Gain (loss) on disposition of discontinued operations, net of tax 3.7 ( 1.6 )

Income (loss) from discontinued operations, net of tax 3.7 ( 1.6 )

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Weighted-average number of common shares outstanding — diluted 46.402 46.445

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

Comprehensive income $ 44.6 $ 14.4

The accompanying notes are an integral part of these statements.

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Deferred income taxes 2.6 2.7

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

Assets of DBT and Heat Transfer (includes cash and equivalents of $ 7.9 and $ 9.3 at April 1, 2023 and December 31, 2022, respectively) (Note 3)

TOTAL ASSETS $ 2,021.4 $ 1,930.9

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Stockholders' Equity:

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

Common stock ( 53,442,050 and 45,476,237 is sued and outstanding at April 1, 2023, respectively, and 53,350,918 and 45,291,989 issued and outstanding at December 31, 2022, respectively)

Paid-in capital 1,335.3 1,338.3

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Accumulated other comprehensive income 259.3 257.5

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

Common stock in treasury ( 7,965,813 and 8,058,929 shares at April 1, 2023 and December 31, 2022, respectively)

( 460.2 ) ( 465.5 )

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Three months ended October 1, 2022

Common Stock Paid-In Capital Retained Deficit Accum.

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

Stockholders’ Equity

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

Net income — — 3.1 — — 3.1

Other comprehensive loss, net — — — ( 16.8 ) — ( 16.8 )

Incentive plan activity

— 2.7 — — — 2.7

Long-term incentive compensation expense

— 2.1 — — — 2.1

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

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

Nine months ended October 1, 2022

Common Stock Paid-In Capital Retained Deficit Accum.

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

Stockholders’ Equity

Three months ended April 1, 2023

Stock Paid-In

Capital Retained

Deficit Accum.

Comprehensive

Income Common

Treasury Total

Stockholders’

Balance at December 31, 2022 $ 0.5 $ 1,338.3 $ ( 51.6 ) $ 257.5 $ ( 465.5 ) $ 1,079.2

Net income — — 42.8 — — 42.8

Other comprehensive loss, net — — — ( 26.7 ) — ( 26.7 )

Other comprehensive income, net — — — 1.8 — 1.8

Incentive plan activity

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Restricted stock unit vesting — ( 11.3 ) — — 5.3 ( 6.0 )

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

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

Three months ended October 2, 2021

Common Stock Paid-In Capital Retained Deficit Accum.

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

Stockholders’ Equity

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

Net income — — 330.3 — — 330.3

Other comprehensive loss, net — — — ( 6.1 ) — ( 6.1 )

Incentive plan activity — 3.0 — — — 3.0

Long-term incentive compensation expense — 4.2 — — — 4.2

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

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

Nine months ended October 2, 2021

Balance at April 1, 2023 $ 0.5 $ 1,335.3 $ ( 8.8 ) $ 259.3 $ ( 460.2 ) $ 1,126.1

Three months ended April 2, 2022

Common Stock Paid-In Capital Retained Deficit Accum.

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

Stockholders’ Equity

Other Comprehensive Income Common Stock In Treasury Total Stockholders’ Equity

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

Net income — — 11.4 — — 11.4

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

Other comprehensive income, net — — — 3.0 — 3.0

Incentive plan activity — 2.5 — — — 2.5

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Restricted stock unit vesting — ( 18.6 ) — — 11.5 ( 7.1 )

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

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

The accompanying notes are an integral part of these statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

2022 October 2,

Three months ended

2023 April 2,

Cash flows from (used in) operating activities:

Net income $ 42.8 $ 11.4

Income (loss) from discontinued operations, net of tax ( 17.1 ) 364.4

Gain (loss) from discontinued operations, net of tax 3.7 ( 1.6 )

Income from continuing operations 39.1 13.0

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

Special charges, net 0.1 0.7

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

Gain on change in fair value of equity security ( 3.6 ) ( 4.4 )

Deferred and other income taxes ( 3.5 ) 4.3

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Other, net ( 1.5 ) 0.6

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

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

Accounts receivable and other assets ( 15.1 ) 10.4

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Net cash from (used in) continuing operations 0.8 ( 48.6 )

Net cash from (used in) discontinued operations ( 21.1 ) 58.2

Net cash from (used in) operating activities ( 110.5 ) 153.8

Net cash used in discontinued operations ( 5.2 ) ( 8.6 )

Net cash used in operating activities ( 4.4 ) ( 57.2 )

Cash flows from (used in) investing activities:

Proceeds related to company-owned life insurance policies, net 0.1 —

Business acquisitions, net of cash acquired ( 40.0 ) ( 120.0 )

Business acquisition, net of cash acquired — ( 41.8 )

Capital expenditures ( 4.0 ) ( 2.1 )

Net cash used in continuing operations ( 3.9 ) ( 43.9 )

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

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

Net cash used in discontinued operations — ( 13.9 )

Net cash used in investing activities ( 3.9 ) ( 57.8 )

Cash flows from (used in) financing activities:

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Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options ( 4.1 ) ( 6.4 )

Repurchases of common stock ( 33.7 ) —

Financing fees paid ( 1.9 ) —

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

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

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

Net cash from (used in) continuing operations 62.9 ( 11.0 )

Net cash used in discontinued operations — ( 0.4 )

Net cash from (used in) financing activities 62.9 ( 11.4 )

Change in cash and equivalents due to changes in foreign currency exchange rates 1.0 ( 0.1 )

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Consolidated cash and equivalents, end of period $ 212.7 $ 269.5

Nine months ended

2022 October 2,

Three months ended

2023 April 2,

Components of cash and equivalents:

Cash and cash equivalents $ 183.4 $ 553.7

Cash and cash equivalents included in assets of DBT and Heat Transfer 3.9 6.4

Cash and equivalents $ 204.8 $ 262.8

Cash and equivalents included in assets of DBT and Heat Transfer 7.9 6.7

Total cash and equivalents $ 212.7 $ 269.5

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

in millions, except per share data and asbestos-related claims)

in millions, except per share data)

(1) BASIS OF PRESENTATION

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Merger and Consummation of Holding Company Reorganization

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

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

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

As of August 15, 2022, SPX Technologies, Inc.

(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.

Sale of Transformer Solutions Business

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

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

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

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

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

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

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

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

See Note 3 for additional details.

Wind-Down of DBT Technologies Business

During the fourth quarter of 2021, we substantially ceased all operations of DBT Technologies (PTY) LTD (“DBT”).

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

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

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

Acquisition of ULC

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

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

operational and financial performance milestones.

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

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

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

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

Acquisition of Sealite

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

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

We purchased Sealite for cash consideration of $ 80.3 , net of cash acquired of $ 2.3 , which included a final settlement of working capital that resulted in a reduction of the purchase price of $ 1.3 in the third quarter of 2021.

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

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

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”), 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 15 for additional details.

Acquisition of ECS

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

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

Under the terms of the purchase and sales agreement, the seller was eligible for additional cash consideration of up to $ 15.4 , with payment to be made in the fourth quarter of 2022 upon successful achievement of certain financial performance milestones.

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

During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of certain large orders, resulting in a reduction of the estimated liability of $ 6.7 .

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

The 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 of $ 6.7 .

During the first quarter of 2022, we further reduced the estimated liability by $ 0.9 , with such amount recorded with in “Other operating income.” The estimated fair value of such contingent consideration was $ 0.0 at April 1, 2023 and December 31, 2022.

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

Acquisition of Cincinnati Fan

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

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

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

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

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

Acquisition of 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 consideration of $ 41.8 , net of cash acquired of $ 1.1 .

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

We purchased ITL for cash proceeds of $ 40.4 , net of (i) cash acquired of $ 1.1 and (ii) an adjustment to the purchase price received during the third quarter of 2022 related to acquired working capital of $ 1.4 .

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

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

Change in Accounting Method

During the fourth quarter of 2021, as a means of harmonizing our accounting method for inventory across all of our businesses, we converted the inventory accounting for certain domestic businesses within our HVAC reportable segment from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method.

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

See Note 8 for additional information.

Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

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Our fourth quarter ends on December 31.

The interim closing dates for the first, second and third quarters of 2022 are April 2, July 2, and October 1, compared to the respective April 3, July 3 and October 2, 2021 dates.

The interim closing dates for the first, second and third quarters of 2023 are April 1, July 1, and September 30, compared to the respective April 2, July 2, and October 1, 2022 dates.

We had one less day in the first quarter of 2023 and will have one more day in the fourth quarter of 2023 than in the respective 2022 periods.

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

Reclassification of Prior-Year Amounts

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

Correction of Prior-Year Classification

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

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

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

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

It is not practicable to estimate the impact of the one less day on our consolidated operating results for the three months ended April 1, 2023, when compared to the consolidated operating results for the 2022 respective period.

Correction of Prior-Year Classification and Disclosure

During the fourth quarter of 2022, we concluded that, although the assessment of our reportable segments was performed using the appropriate measures as defined by the Segment Reporting Topic of the Accounting Standards Codification (“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 was 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 6, now excludes all of the items noted above.

This change had no impact to the amounts previously presented in our condensed consolidated statement of operations for the three months ended April 2, 2022.

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 three months ended April 2, 2022 is summarized below:

April 2, 2022

As Previously Presented Effect of Change Current Presentation

HVAC reportable segment $ 15.2 $ 5.4 $ 20.6

Detection and Measurement reportable segment 15.0 4.0 19.0

Total income for segments 30.2 9.4 39.6

Corporate expense 16.6 — 16.6

Acquisition-related costs (1)

Long-term incentive compensation expense 3.1 — 3.1

Amortization of intangible assets — 9.3 9.3

Other operating income ( 0.9 ) — ( 0.9 )

Consolidated operating income $ 11.4 $ — $ 11.4

______________________________

(1) Represents additional “Cost of products sold” related to the step-up of inventory (to fair value) acquired in connection with an acquisition of $ 0.1 during the three months ended April 2, 2022.

(2) NEW ACCOUNTING PRONOUNCEMENTS

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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 Financial Accounting Standards Board (“FASB”) issued two amendments to existing guidance, Accounting Standards Update (“ASU”) No.

In an effort to address the various challenges created by such discontinuance, the Financial Accounting Standards Board (“FASB”) issued three amendments to existing guidance, Accounting Standards Update (“ASU”) No.

2021-01, and No.

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Application of the guidance in the amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2024.

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

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

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

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

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

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

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

In March 2022, the FASB issued ASU No.

2022-01, Derivatives and Hedging (Topic 815):

Fair Value Hedging - Portfolio Layer Method.

This ASU allows multiple hedged layers to be designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments.

This guidance applies to all entities that elect to apply the portfolio layer method of hedge accounting in accordance with Topic 815 and is effective for public entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements.

In March 2022, the FASB issued ASU No.

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

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

financing receivables and net investments in leases.

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

We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements.

In June 2022, the FASB issued ASU No.

2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

This guidance also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction.

The guidance also requires the following disclosures for equity securities subject to contractual sale restrictions:

1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet;

2) the nature and remaining duration of the restriction(s);

and 3) the circumstances that could cause a lapse in the restriction(s).

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, and allows for early adoption in any interim period after issuance.

We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements.

In conjunction with entering into an amended and restated credit agreement on August 12, 2022, we adopted this guidance with no material impact on our condensed consolidated financial statements.

(3) ACQUISITIONS AND DISCONTINUED OPERATIONS

As indicated in Note 1, on April 19, 2021, August 2, 2021, December 15, 2021, and March 31, 2022, we completed the acquisitions of Sealite, ECS, Cincinnati Fan, and ITL, respectively.

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

As indicated in Note 1, on March 31, 2022, we completed the acquisition of ITL.

The pro forma effects of this acquisition are not material to our condensed consolidated results of operations.

Sale of Transformer Solutions Business

As discussed in Note 1, on October 1, 2021, we completed the sale of Transformer Solutions for which we received net cash proceeds of $ 620.6 , and recorded a gain of $ 355.0 in the third quarter of 2021.

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

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

Three months ended Nine months ended

October 2, 2021 October 2, 2021

Revenues $ 94.4 $ 313.5

Costs and expenses:

Cost of product sold 80.5 257.2

Selling, general and administrative 10.3 28.4

Income before income tax 3.6 27.9

Income tax provision ( 33.8 ) ( 6.8 )

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

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

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

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.

We completed the wind-down of our DBT Technologies (PTY) LTD (“DBT”) business in the fourth quarter of 2021.

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

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

Three months ended Nine months ended

October 2, 2021 October 2, 2021

Revenues $ 0.1 $ 0.9

Costs and expenses:

Cost of product sold 0.5 1.4

Selling, general and administrative 3.4 11.4

Special charges 0.6 1.2

Other expense, net 0.9 0.4

Interest income 0.1 0.2

Loss before income tax ( 5.2 ) ( 13.3 )

Income tax benefit 0.1 1.6

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

The assets and liabilities of DBT have been included within “ Assets of DBT and Heat Transfer ” and “ Liabilities of DBT and Heat Transfer, ” respectively, on the condensed consolidated balance sheets as of October 1, 2022 and December 31, 2021.

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

October 1, 2022 December 31, 2021

The major line items constituting DBT ’ s assets and liabilities as of April 1, 2023 and December 31, 2022 are shown below:

April 1, 2023 December 31, 2022

Cash and equivalents $ 7.9 $ 9.3

16 unchanged sentences

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

The assets and liabilities of Heat Transfer have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of October 1, 2022 and December 31, 2021.

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

October 1, 2022 December 31, 2021

Accounts receivable, net $ — $ 0.1

The assets and liabilities of Heat Transfer have been included within “ Assets of DBT and Heat Transfer ” and “ Liabilities of DBT and Heat Transfer, ” respectively, on the condensed consolidated balance sheets as of April 1, 2023 and December 31, 2022.

The major line items constituting Heat Transfer ’ s assets and liabilities as of April 1, 2023 and December 31, 2022 are shown below:

April 1, 2023 December 31, 2022

Other current assets $ 0.2 $ 0.2

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

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

Three months ended Nine months ended

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

Transformer Solutions (1)

For the three months ended April 1, 2023 and April 2, 2022, results of operations from our businesses reported as discontinued operations were as follows:

Three months ended

April 1, 2023 April 2, 2022

Income (loss) from discontinued operations (1)

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

$ 3.0 $ ( 1.6 )

Income tax benefit 0.7 0.4

Income (loss) from discontinued operations, net 3.7 ( 1.2 )

2 unchanged sentences

Loss from discontinued operations, net — ( 0.4 )

Heat Transfer

Loss from discontinued operations — ( 0.1 ) ( 0.2 ) ( 0.3 )

Income tax (provision) benefit — — — —

Loss from discontinued operations, net — ( 0.1 ) ( 0.2 ) ( 0.3 )

All other (3)

Loss from discontinued operations ( 5.4 ) ( 4.3 ) ( 5.9 ) ( 5.4 )

Income tax benefit 1.4 1.1 1.5 5.7

Income (loss) from discontinued operations, net ( 4.0 ) ( 3.2 ) ( 4.4 ) 0.3

Income (loss) from discontinued operations 3.0 ( 2.1 )

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

Income tax benefit 0.7 0.5

Income (loss) from discontinued operations, net $ 3.7 $ ( 1.6 )

___________________________

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

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

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

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

(1) Income for the three months ended April 1, 2023 resulted primarily from income recorded in connection with a dispute resolution matter (see Note 15 for additional details), partially offset by legal costs incurred in connection with various dispute resolution matters related to two large power projects.

The loss for the three months ended April 2, 2022 resulted primarily from legal costs incurred in connection with various dispute resolution matters related to two large power projects.

(2) Loss for the three months ended April 2, 2022 resulted primarily from revisions to liabilities retained in connection with prior dispositions.

(4) REVENUES FROM CONTRACTS

Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are affected by economic factors, with such disaggregation presented below for the three and nine months ended October 1, 2022 and October 2, 2021:

Three months ended October 1, 2022

Reportable Segments HVAC Detection and Measurement Total

Major product lines

Package and process cooling equipment and services, and engineered air quality solutions $ 134.5 $ — $ 134.5

Boilers, comfort heating, and ventilation 93.3 — 93.3

Underground locators, inspection and rehabilitation

equipment, and robotic systems — 61.5 61.5

Communication technologies, obstruction lighting, and bus fare collection systems — 81.2 81.2

$ 227.8 $ 142.7 $ 370.5

Timing of Revenue Recognition

Revenues recognized at a point in time $ 212.2 $ 117.1 $ 329.3

Revenues recognized over time 15.6 25.6 41.2

$ 227.8 $ 142.7 $ 370.5

Nine months ended October 1, 2022

Reportable Segments HVAC Detection and Measurement Total

Major product lines

Package and process cooling equipment and services, and engineered air quality solutions $ 381.8 $ — $ 381.8

Boilers, comfort heating, and ventilation 257.8 — 257.8

Underground locators, inspection and rehabilitation

equipment, and robotic systems — 194.1 194.1

Communication technologies, obstruction lighting, and bus fare collection systems — 197.9 197.9

$ 639.6 $ 392.0 $ 1,031.6

Timing of Revenue Recognition

Revenues recognized at a point in time $ 588.1 $ 331.2 $ 919.3

Revenues recognized over time 51.5 60.8 112.3

$ 639.6 $ 392.0 $ 1,031.6

Three months ended October 2, 2021

Three months ended April 1, 2023

Reportable Segments HVAC Detection and Measurement Total

Major product lines

Package and process cooling equipment and services $ 104.1 $ — $ 104.1

Package and process cooling equipment and services, and engineered air movement solutions $ 158.3 $ — $ 158.3

Boilers, comfort heating, and ventilation 93.3 — 93.3

1 unchanged sentence

equipment, and robotic systems — 65.9 65.9

Communication technologies, obstruction lighting, and bus fare collection systems — 46.3 46.3

Communication technologies, aids to navigation, and transportation systems — 82.3 82.3

$ 251.6 $ 148.2 $ 399.8

3 unchanged sentences

$ 251.6 $ 148.2 $ 399.8

Nine months ended October 2, 2021

Three months ended April 2, 2022

Reportable Segments HVAC Detection and Measurement Total

Major product lines

Package and process cooling equipment and services $ 317.3 $ — $ 317.3

Package and process cooling equipment and services, and engineered air movement solutions $ 116.8 $ — $ 116.8

Boilers, comfort heating, and ventilation 76.3 — 76.3

1 unchanged sentence

equipment, and robotic systems — 67.2 67.2

Communication technologies, obstruction lighting, and bus fare collection systems — 135.8 135.8

Communication technologies, aids to navigation, and transportation systems — 46.8 46.8

$ 193.1 $ 114.0 $ 307.1

8 unchanged sentences

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

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

Contract Balances October 1, 2022 December 31, 2021 Change

Our contract balances consisted of the following as of April 1, 2023 and December 31, 2022 :

Contract Balances April 1, 2023 December 31, 2022 Change

Contract Accounts Receivable (1)

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

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

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

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

T h e $ 7.4 increase in our net contract asset balance from December 31, 2022 to April 1, 2023 was due primarily to revenue recognized during the period, partially offset by cash payments received from customers during the period.

During the three months ended April 1, 2023, we recognized revenues of $ 25.8 related to our contract liabilities at December 31, 2022 .

Performance Obligations

As of April 1, 2023, the aggre gate amount allocat ed to remaining performance obligations was $ 227.0 .

We expect to recognize revenue on approximately 80 % and 91 % of rem aining performance obligations over the next 12 and 24 months, respectively, with the remaining recognized thereafter.

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

There have been no material changes to our operating and finance leases during the three months ended April 1, 2023.

(6) INFORMATION ON REPORTABLE SEGMENTS

3 unchanged sentences

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

In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Accounting Standards Codification ( “ Codification ” ).

Operating income or loss for each of our reportable segments is determined before considering, if applicable, 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.

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

Segment Income is determined before considering, if applicable, 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, transportation systems, communication technologies, and aids to navigation.

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

2 unchanged sentences

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

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

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Financial data for our reportable segments for the three months ended April 1, 2023 and April 2, 2022 are presented below:

Three months ended

2023 April 2,

HVAC reportable segment $ 251.6 $ 193.1

3 unchanged sentences

Detection and Measurement reportable segment 26.7 19.0

Total income for reportable segments 56.6 32.9 134.9 112.5

Total income for segments 74.4 39.6

Corporate expense 14.6 16.6

Acquisition-related and other costs (1)

Long-term incentive compensation expense 3.1 3.1

Impairment of goodwill and intangible assets — 24.3 — 24.3

Special charges, net — ( 0.1 ) 0.1 0.7

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

Amortization of intangible assets 6.3 9.3

Other operating income — ( 0.9 )

Consolidated operating income $ 49.8 $ 11.4

______________________________

(1) Includes certain acquisition-related costs incurred during the three months ended April 1, 2023 and April 2, 2022 of $ 0.6 and $ 0.1 , respectively, including additional “Cost of products sold” related to the step-up of inventory (to fair value) acquired in connection with an acquisition of $ 0.1 during the three months ended April 2, 2022.

(7) SPECIAL CHARGES, NET

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

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

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

Detection and Measurement reportable segment — — — 0.6

Total $ — $ ( 0.1 ) $ 0.1 $ 0.7

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

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

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

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

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

Nine months ended

2022 October 2,

There were no special charges for the three months ended April 1, 2023 and April 2, 2022.

No significant future charges are expected to be incurred under actions approved as of April 1, 2023.

The following is an analysis of our restructuring liabilities for the three months ended April 1, 2023 and April 2, 2022:

Three months ended

2023 April 2,

Balance at beginning of year $ — $ 0.3

4 unchanged sentences

(8) INVENTORIES, NET

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

Inventories are accounted for under the first-in, first-out method and are comprised of the following at April 1, 2023 and December 31, 2022:

2023 December 31,

4 unchanged sentences

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

As mentioned in Note 1, during the fourth quarter of 2021, we converted the inventory accounting for certain of our domestic businesses within our HVAC reportable segment from the LIFO method to the FIFO method.

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

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

As Computed under LIFO Effect of Change As Adjusted

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

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

Income tax provision ( 3.8 ) ( 0.4 ) ( 4.2 )

Income from continuing operations 12.8 1.1 13.9

Income from discontinued operations, net of tax 318.3 ( 1.9 ) 316.4

Net income $ 331.1 $ ( 0.8 ) $ 330.3

Basic income per share of common stock:

Income from continuing operations, net of tax $ 0.28 $ 0.03 $ 0.31

Income from discontinued operations, net of tax 7.02 ( 0.04 ) 6.98

Net income attributable to SPX common stockholders $ 7.30 $ ( 0.01 ) $ 7.29

Diluted income per share of common stock:

Income from continuing operations, net of tax $ 0.28 $ 0.02 $ 0.30

Income from discontinued operations, net of tax 6.82 ( 0.04 ) 6.78

Net income attributable to SPX common stockholders $ 7.10 $ ( 0.02 ) $ 7.08

Total comprehensive income $ 325.0 $ ( 0.8 ) $ 324.2

As Computed under LIFO Effect of Change As Adjusted

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

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

Income tax provision ( 11.4 ) ( 0.5 ) ( 11.9 )

Income from continuing operations 53.1 1.5 54.6

Income from discontinued operations, net of tax 366.3 ( 1.9 ) 364.4

Net income $ 419.4 $ ( 0.4 ) $ 419.0

Basic income per share of common stock:

Income from continuing operations, net of tax $ 1.17 $ 0.04 $ 1.21

Income from discontinued operations, net of tax 8.10 ( 0.05 ) 8.05

Net income attributable to SPX common stockholders $ 9.27 $ ( 0.01 ) $ 9.26

Diluted income per share of common stock:

Income from continuing operations, net of tax $ 1.14 $ 0.04 $ 1.18

Income from discontinued operations, net of tax 7.89 ( 0.05 ) 7.84

Net income attributable to SPX common stockholders $ 9.03 $ ( 0.01 ) $ 9.02

Total comprehensive income $ 415.4 $ ( 0.4 ) $ 415.0

(9) GOODWILL AND OTHER INTANGIBLE ASSETS

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

The changes in the carrying amount of goodwill for the three months ended April 1, 2023 were as follows:

2022 Goodwill

1 unchanged sentence

Combinations (1)

Impairments Foreign

Translation October 1,

Translation April 1,

HVAC reportable segment

10 unchanged sentences

___________________________

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

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

(1) Reflects an increase in ITL ’ s goodwill of $ 0.8 resulting from revisions to the valuation of certain assets and liabilities.

Other Intangibles, Net

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

October 1, 2022 December 31, 2021

Identifiable intangible assets at April 1, 2023 and December 31, 2022 comprised the following:

April 1, 2023 December 31, 2022

Value Accumulated

10 unchanged sentences

Total $ 491.2 $ ( 95.0 ) $ 396.2 $ 490.3 $ ( 88.7 ) $ 401.6

___________________________

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

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

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

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

At April 1, 2023, the net carrying value of intangible assets with determinable lives consisted of $ 92.7 in the HVAC reportable segment and $ 134.5 in the Detection and Measurement reportable segment.

At April 1, 2023, trademarks with indefinite lives consisted of $ 105.2 in the HVAC reportable segment and $ 63.8 in the Detection and Measurement reportable segment.

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

8 unchanged sentences

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

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

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

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

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

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

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

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

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

During the fourth quarter of 2022, we performed a quantitative analysis on the goodwill of our Cincinnati Fan reporting unit.

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 April 1, 2023, Cincinnati Fan’s goodwill totaled $ 54.8 .

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

3 unchanged sentences

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

10 Nine months ended

2022 October 2,

Three months ended

2023 April 2,

Balance at beginning of year $ 34.7 $ 34.8

2 unchanged sentences

Usage ( 3.1 ) ( 3.0 )

Currency translation adjustment ( 0.2 ) —

Balance at end of period 35.7 34.4

2 unchanged sentences

(11) EMPLOYEE BENEFIT PLANS

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

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

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

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

Participants in the SPX U.S.

Pension Plan (the “U.S.

Plan”) are eligible to elect a lump-sum payment option in lieu of a future pension benefit.

During the first half of 2022, $ 10.0 was paid to participants who elected lump-sum payments.

This triggered a plan settlement which resulted in a charge to “Other income (expense), net” of $ 2.3 during the quarter ended July 2, 2022.

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

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

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

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

Additional settlements by the U.S.

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

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

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

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

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

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

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

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

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

Domestic Pension Plans

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Three months ended

2023 April 2,

Service cost $ — $ —

1 unchanged sentence

Expected return on plan assets ( 2.2 ) ( 2.1 )

Settlement and actuarial losses (1)

Net periodic pension benefit (income) expense $ 3.3 $ ( 0.1 ) $ 7.5 $ ( 0.3 )

_________________

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

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

Net periodic pension benefit expense $ 1.1 $ 0.2

Foreign Pension Plans

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Three months ended

2023 April 2,

Service cost $ — $ —

3 unchanged sentences

Postretirement Plans

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Three months ended

2023 April 2,

Service cost $ — $ —

1 unchanged sentence

Amortization of unrecognized prior service credits ( 1.0 ) ( 1.1 )

Settlement loss, net (1)

Recognized net actuarial losses (1)

Net periodic postretirement benefit income $ ( 0.7 ) $ ( 0.5 )

_________________

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

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

(12) INDEBTEDNESS

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

2021 Borrowings Repayments Other October 1,

The following summarizes our debt activity (both current and non-current) for the three months ended April 1, 2023:

2022 Borrowings Repayments Other April 1,

Revolving loans (1)

$ — $ 20.0 $ — $ — $ 20.0

Term loan (2)

1 unchanged sentence

Trade receivables financing arrangement (3)

— 47.0 — — 47.0

Other indebtedness (4)

5 unchanged sentences

__________________________

(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.

(1) While not due for repayment until August 2027 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 equal to 0.625 % of the initial term loan balance of $ 245.0 , beginning in December 2023 and in each of the first three quarters of 2024, and 1.25 % during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027.

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

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

Balances are net of unamortized debt issuance costs of $ 0.7 at April 1, 2023 and December 31, 2022.

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

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

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

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

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

At April 1, 2023, we had $ 0.9 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $ 47.0 .

(4) Primarily includes balances under a purchase card program of $ 1.9 and $ 1.8 and finance lease obligations of $ 0.7 and $ 0.7 at April 1, 2023 and December 31, 2022, 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.

Senior Credit Facilities

On August 12, 2022, we entered into the Credit Agreement to, among other things, extend the term of the facilities under the Credit Agreement (with the aggregate of each facility comprising the “Senior Credit Facilities”) and provide for committed senior secured financing with an aggregate amount of $ 770.0 which consists of the following facilities at October 1, 2022 (each with a final maturity of August 12, 2027):

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

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

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

The Credit Agreement also:

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

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

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

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

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

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

Greater than or equal to 3.00 to 1.0

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

Between 2.00 to 1.0 and 3.00 to 1.0

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

Between 1.50 to 1.0 and 2.00 to 1.0

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

Less than 1.50 to 1.0

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Indebtedness under the Credit Agreement is guaranteed by:

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

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

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

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

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

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

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

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

If our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) greater than or equal to 2.75 to 1.00, the aggregate amount of such repurchases and dividend declarations cannot exceed (A) $ 100.0 in any fiscal year plus (B) to the extent not previously utilized for restricted junior payments or investments, an additional amount for all such repurchases and dividend declarations made after August 12, 2022 equal to the sum of (i) $ 100.0 , plus (ii) a positive amount equal to 50 % of cumulative Consolidated Net Income (defined in the Credit Agreement generally as consolidated net income subject to certain adjustments solely for the purposes of determining this basket) during the period from September 24, 2015 to the end of the most recent fiscal quarter preceding the date of such repurchase or dividend declaration for which financial statements have been (or were required to be) delivered (or, in case such Consolidated Net Income is a deficit, minus 100 % of such deficit), plus (iii) certain other amounts.

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

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

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

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

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

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

A detailed description of our senior credit facilities is included in our 2022 Annual Report on Form 10-K.

At April 1, 2023, we had $ 469.2 of available borrowing capacity under our revolving credit facilities, after giving effect to borrowings under the domestic revolving loan facility of $ 20.0 and $ 10.8 reserved for outstanding letters of credit.

In addition, at April 1, 2023, we had $ 10.7 of available issuance capacity under our foreign credit instrument facilities after giving effect to $ 14.3 reserved for outstanding letters of credit.

The weighted-average interest rate of outstanding borrowings under our senior credit agreement was approximately 6.4 % at April 1, 2023.

At April 1, 2023, we were in compliance with all covenants of our senior credit agreement.

(13) DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swaps

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

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

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

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

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

2020-04 and No.

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

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

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

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

We maintain interest rate swap agreements (“Swaps”) that have a remaining notional amount of $ 228.1 , cover the period through November 202 4, and effectively convert this portion of the borrowings under our senior credit facilities to a fixed rate of 1.077 %, plus the applicable margin.

We have designated and are accounting for our Swaps as cash flow hedges.

As of April 1, 2023 and December 31, 2022 , the unrealized gain, net of tax, recorded in accumulated other comprehensive income ( “ AOCI ”) was $ 9.1 and $ 11.0 , respectively.

In addition, the fair value of our Swaps was $ 12.2 (with $ 9.1 recorded as a current asset and $ 3.1 as a non-current asset) as of April 1, 2023 , and $ 14.7 (with $ 8.7 recorded as a current asset and $ 6.0 as a non-current asset) as of December 31, 2022 .

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

Currency Forward Contracts

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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 (“GBP”), and Euro.

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

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

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

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

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

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

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

Commodity Contracts

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 condensed consolidated statements of operations for the three and nine months ended October 2, 2021.

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.

We had FX forward contracts with an aggregate notional amount of $ 7.5 and $ 6.9 outstanding as of April 1, 2023 and December 31, 2022, respectively, with all of the $ 7.5 scheduled to mature within one year.

The fair value of our FX forward contracts was less than $ 0.1 at April 1, 2023 and December 31, 2022.

(14) STOCKHOLDERS' EQUITY AND LONG-TERM INCENTIVE COMPENSATION

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

Three months ended Nine months ended

2022 October 2,

2021 October 1,

2022 October 2,

Three months ended

2023 April 2,

Weighted-average number of common shares used in basic income per share 45.382 45.554

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Weighted-average number of common shares and dilutive securities used in diluted income per share 46.402 46.445

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

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

The weighted-average number of restricted stock units and stock options excluded from the computation of diluted income per share because the assumed proceeds for these instruments exceed the average market value of the underlying common stock for the related period were 0.173 and 0.534 , respectively, for the three months ended April 1, 2023, and 0.243 and 0.737 , respectively, for the three months ended April 2, 2022.

Long-Term Incentive Compensation

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Stock options and RSU’s vest ratably over the three-year period subsequent to the date of grant.

Effective May 10, 2022, we granted 0.023 RSU's to our non-employee directors, which vest in their entirety immediately prior to the annual meeting of stockholders in May 2023.

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

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

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

Repurchases of Common Stock

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

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

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

Non-employee directors receive annual long-term incentive awards at the time of our annual meeting of stockholders, with the 2023 meeting scheduled for May 9, 2023.

C ompensation expense within income from continuing operations related to long-term incentive awards totaled $ 3.1 for the three months ended April 1, 2023 and April 2, 2022.

The related tax benefit was $ 0.5 for the three months ended April 1, 2023 and April 2, 2022.

PSU’s and RSU’s

We use the Monte Carlo simulation model valuation technique to determine the fair value of our restricted stock units 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.

The following table summarizes the PSU and RSU activity from December 31, 2022 through April 1, 2023 :

Unvested PSU’s and RSU’s Weighted-Average Grant-Date Fair Value Per Share

Outstanding at December 31, 2022 0.530 $ 51.38

Granted 0.155 72.17

Vested ( 0.166 ) 51.86

Forfeited ( 0.001 ) 53.47

Outstanding at April 1, 2023 0.518 $ 57.47

As of April 1, 2023 , there was $ 18.3 of unrecognized compensation cost related to PSU’s and RSU’s.

We expect this cost to be recognized over a weighted-average period of 2.5 years.

Stock Options

On March 1, 2023, we granted 0.074 stock options, all of which were outstanding (but not exercisable) as of April 1, 2023 .

The exercise price per share of these options is $ 71.93 and the maximum contractual term of these options is 10 years.

The fair value per share of the stock options granted on March 1, 2023 was $ 31.20 .

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

Annual expected stock price volatility 37.15 %

Annual expected dividend yield — %

Risk-free interest rate 4.18 %

Expected life of stock option (in years) 6.0

Annual expected stock price volatility is based on a weighted average of SPX’s stock volatility 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.

The average risk-free interest rate is based on

the five-year and seven-year treasury constant maturity rates.

The expected option life is based on a three-year pro-rata vesting schedule and represents the period of time that awards are expected to be outstanding.

As of April 1, 2023 , there was $ 3.4 of unrecognized compensation cost related to stock options.

We expect this cost to be recognized over a weighted-average period of 2.7 years.

Accumulated Other Comprehensive Income

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

The changes in the components of accumulated other comprehensive income, net of tax, for the three months ended April 1, 2023 were as follows:

Adjustment Net Unrealized Gains

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__________________________

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

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

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

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

(1) Net of tax provision o f $ 3.1 and $ 3.7 as of April 1, 2023 and December 31, 2022, respectively.

(2) Net of tax provision of $ 2.4 and $ 2.7 as of April 1, 2023 and December 31, 2022, respectively.

The balances as of April 1, 2023 and December 31, 2022 include unamortized prior service credits.

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

Adjustment Net Unrealized Gains

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_________________________

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

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

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

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

Adjustment Net Unrealized

on Qualifying Cash

Flow Hedges (1)

Postretirement

Adjustment (2)

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

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

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

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

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

__________________________

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

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

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

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

Adjustment Net Unrealized

on Qualifying Cash

Flow Hedges (1)

Postretirement

Adjustment (2)

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

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

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

Current-period other comprehensive income (loss) ( 3.5 ) 2.2 ( 2.7 ) ( 4.0 )

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

__________________________

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

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

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

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

(1) Net of tax provision of $ 2.3 and $ 0.1 as of April 2, 2022 and December 31, 2021, respectively.

(2) Net of tax provision of $ 3.5 and $ 3.7 as of April 2, 2022 and December 31, 2021, respectively.

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

The following summarizes amounts reclassified from each component of accumulated other comprehensive income for the three months ended April 1, 2023 and April 2, 2022:

Amount Reclassified from AOCI

Three months ended

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

Consolidated Statements of Operations

(Gains) losses on qualifying cash flow hedges:

FX forward contracts $ ( 0.2 ) $ — Revenues

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

Swaps ( 0.7 ) 0.6 Interest expense

Pre-tax ( 0.9 ) 0.3

Income taxes 0.2 ( 0.1 )

$ ( 0.7 ) $ 0.2

Gains on pension and postretirement items:

Amortization of unrecognized prior service credits - Pre-tax $ ( 1.1 ) $ ( 1.2 ) Other income (expense), net

Income taxes 0.3 0.3

$ ( 0.8 ) $ ( 0.9 )

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

Amount Reclassified from AOCI

Nine months ended

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

April 1, 2023 April 2, 2022 Affected Line Item in the Condensed

Consolidated Statements of Operations

(Gains) losses on qualifying cash flow hedges:

FX forward contracts $ ( 0.2 ) $ — Revenues

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

Swaps $ ( 2.1 ) $ 0.5 Interest expense

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Gains on pension and postretirement items:

Amortization of unrecognized prior service credits - Pre-tax $ ( 3.3 ) $ ( 3.6 ) Other income (expense), net

Amortization of unrecognized prior service credits - Pre-tax $ ( 1.0 ) $ ( 1.1 ) Other income, net

Income taxes 0.3 0.2

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

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.

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

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

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

Our recorded liab ilities related to these matters totaled $ 38.9 and $ 39.5 at April 1, 2023 and December 31, 2022, respectively.

Of these amounts, $ 31.6 and $ 30.8 are included in “Other long-term liabilities” within our condensed consolidated balance sheets at April 1, 2023 and December 31, 2022 , respectively, with the remainder included in “Accrued expenses.” The liabilities we record for these matters are based on a number of assumptions, including historical claims and payment experience.

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

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

Our asbestos-related claims are with respect to products that we no longer manufacture or sell and 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 October 1, 2022 and December 31, 2021:

October 1, 2022 December 31, 2021

Insurance recovery assets (1)

$ 479.8 $ 526.2

Liabilities for claims (2)

__________________________

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

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

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

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

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

• Historical information by disease type and jurisdiction with regard to:

◦ Average number of claims settled with payment (versus dismissed without payment);

◦ 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 the asbestos-related claims for the nine months ended October 1, 2022 and October 2, 2021:

Nine months ended

October 1, 2022 October 2, 2021

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

Claims filed 2,249 2,044

Claims resolved ( 1,733 ) ( 1,797 )

Pending claims, end of period 10,581 10,029

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.

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

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

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

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

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

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

Asbestos Matters

As indicated in Note 1, we completed the Asbestos Portfolio Sale on November 1, 2022, which resulted in the divestiture of three wholly-owned subsidiaries that hold asbestos liabilities and certain assets, including related insurance assets.

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

During the three months ended April 2, 2022 , our payments for asbestos-related claims, net of respective insurance recoveri es of $ 7.4 , were $ 7.2 .

During the three months ended April 2, 2022 , there were no other changes in estimates associated with our assets and liabilities related to our asbestos product liability matters.

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.

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.

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

Of these claims, South African Rand 732.6 (or $ 41.0 ), which is inclusive of the amounts awarded in the adjudications referred to below, are currently proceeding through contractual di spute resolution processes and DBT is likely to initiate additional dispute resolution processes.

Of these claims, South African Rand 606.0 (or $ 33.5 ), which is inclusive of the amounts awarded in the adjudications referred to below, are currently proceeding through contractual dispute resolution processes and DBT is likely to initiate additional dispute resolution processes.

DBT is also pursuing several claims to force MHI to abide by its contractual obligations and provide DBT with certain benefits that MHI may have received from its customer on the projects.

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

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

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

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

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

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

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

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

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 condensed 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 is expected to occur in December 2022.

This ruling was subject to final and binding arbitration in this matter.

In March 2023, an arbitrator upheld the decision of the dispute adjudication panel.

As a result, the South African Rand 126.6 (or $ 7.0 ) was recorded as income during the quarter ended April 1, 2023, with such amount recorded within “Gain (loss) on disposition of discontinued operations, net of tax.”

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 condensed consolidated statements of operations.

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 condensed 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.

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

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

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

version largely appear to be direct in nature.

On September 21, 2022, an arbitration tribunal ruled that only South African Rand 349.6 (or $ 19.3 ) 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.

MHI subsequently referred the claims dismissed from the arbitration, with approximately South African Rand 400.2 (or $ 22.1 ) related to claims that are direct in nature, 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 condensed consolidated financial statements with respect to these claims.

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

DBT intends to vigorously defend itself against these claims.

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

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

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

MHI has made other claims against DBT totaling South African Rand 176.2 (or $ 9.9 ) 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 and allegations.

As such, no loss has been recorded in the condensed 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.

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

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

In March 2023, MHI submitted to DBT notices of intent to claim totaling South African Rand 1,664.0 (or $ 92.0 ) related to DBT’s filter and heater scopes of work, alleging that DBT provided defective product.

MHI has provided minimal support for these allegations and DBT believes it has numerous defenses against them.

Thus, we do not believe that DBT has a probable loss associated with these allegations and DBT intends to vigorously defend itself against them.

As such, no amounts have been recorded in the accompanying condensed consolidated financial statements with respect to these allegations.

We currently are unable to estimate the range of potential loss, if any, associated with these allegations due to the (i) lack of support provided by MHI;

(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;

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

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

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

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DBT denies liability for such allegations and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand 418.3 (or $ 23.1 ) that has been paid.

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

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 $ 18.3 ) within “ Assets of DBT and Heat Transfer ” on the condensed consolidated balance sheets as of October 1, 2022 and December 31, 2021.

The remaining bond of South Africa Rand 29.2 (or $ 1.6 ) issued to MHI as a performance guarantee could be exercised by MHI for an alleged breach of DBT's obligation.

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

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

We have reflected the remaining South African Rand 327.5 (or $ 18.1 and $ 19.1 as of April 1, 2023 and December 31, 2022, respectively ) within “Assets of DBT and Heat Transfer” on the accompanying condensed consolidated balance sheets as of April 1, 2023 and December 31, 2022.

All other bonds previously issued in favor of MHI have been returned or cancelled by the issuing banks.

In addition, SPX Technologies, Inc.

has guaranteed DBT’s performance on these projects to the prime contractors, including MHI.

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

Claim for Contingent Consideration Related to ULC Robotics (“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.

During the third quarter of 2021, we concluded that the operational and financial performance milestones noted above were not achieved and, thus, no amount is due to the seller.

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 linked to certain operating performance milestones totaling $ 15.0 .

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

Litigation Matters

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

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

We had liabilities for site investigation and/or remediation at 17 sites that we own or control, as of April 1, 2023 and December 31, 2022.

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

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

It is our policy to revise an estimate once the revision becomes probable and the amount of change can be reasonably estimated.

It is our policy to revise an estimate once it becomes probable and the amount of change can be reasonably estimated.

We generally do not discount our environmental accruals and do not reduce them by anticipated insurance recoveries.

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

In the case of contamination at offsite, third-party disposal sites, as of April 1, 2023 and December 31, 2022 , we have been notified that we are potentially responsible and have received other notices of potential liability pursuant to various environmental laws at 9 sites, at which the liability has not been settled, and all of which have been active in the past few years.

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

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We maintain third-party stop-loss insurance policies to cover certain liability costs in excess of predetermined retained amounts.

The insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against loss exposure.

This insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against loss exposures.

(16) INCOME AND OTHER TAXES

Uncertain Tax Benefits

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

As of April 1, 2023 , we had gross unrecognized tax benefi ts of $ 4.5 (net unrecognized tax benefits of $ 4.1 ).

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

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

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

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

As of April 1, 2023, gross accrued interest totaled $ 2.1 (net accrued interest of $ 1.8 ).

As of April 1, 2023, we had no accrual for penalties included in our unrecognized tax benefits.

Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $ 3.0 .

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Other Tax Matters

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

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

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

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

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

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

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

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

For the three months ended April 1, 2023, we recorded an income tax provision of $ 11.3 on $ 50.4 of pre-tax income from continuing operations, resulting in an effective rate of 22.4 %.

This compares to an income tax provision for the three months ended April 2, 2022 of $ 2.6 on $ 15.6 of pre-tax income from continuing operations, resulting in an effective rate of 16.7 %.

The most significant item impacting the income tax provision for the first quarter of 2023 and 2022 was $ 0.9 and $ 0.7 , respectively, of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the periods.

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

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

During the second quarter of 2021, the Internal Revenue Service (“IRS”) concluded its audit of our 2013, 2014, 2015, 2016 and 2017 federal income tax returns.

We believe contingencies related to the subsequent returns are adequately provided for.

Federal income tax returns are subject to examination for a period of three years after filing the return.

We are not currently under examination by the Internal Revenue Service and believe any contingencies in open years are adequately provided for.

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

The impact on such tax returns of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

We have various state income tax returns in the process of examination.

We regularly have various state income tax returns in the process of examination.

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

We have various foreign income tax returns under examination.

We regularly have various foreign income tax returns under examination.

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

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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 October 1, 2022 and December 31, 2021.

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

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

(17) FAIR VALUE

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

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

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

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

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

Also, at the time of sale, Balcke Dürr provided cash collateral of Euro 4.0 and the parent company of the buyer provided a guarantee of Euro 5.0 as a security for the above indemnifications (E u ro 0.0 and Euro 0.0 , respectively, at October 1, 2022).

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

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

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

Nine months ended

October 2, 2021

Guarantees and Bonds Liability (1)

Indemnification Assets (1)

Balance at beginning of year

Reduction/Amortization for the period (2)

Impact of changes in foreign currency rates ( 0.1 ) —

Balance at end of period $ — $ —

___________________________

(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.

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

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

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

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

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

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

Contingent Consideration for Sensors & Software and EC S Acquisitions — In connection with the acquisition of Sensors & Software, the sellers were eligible for additional cash consideration of up to $ 3.7 , with payment of such contingent consideration dependent upon the achievement of certain milestones.

Such contingent consideration totaled $ 1.3 , and was paid during the quarter ended April 2, 2022.

In connection with the acquisition of ECS, the seller was eligible for additional cash consideration of up to $ 15.4 , with payment of such contingent consideration dependent upon the achievement of certain milestones.

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

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

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

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

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

As relates to the ULC acquisition, and as indicated in Note 1, we concluded during the third quarter of 2021 that the operating and financial milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $ 24.3 , with the offset recorded to “Other operating (income) expense, net.”

During the first quarter of 2022, we concluded the probability of achieving the financial performance milestones had lessened due to a delay in the execution of certain large orders.

Thus, during the quarter ended April 2, 2022, we reduced the fair value/liability by $ 0.9 , with such amount recorded in “Other operating income.” The estimated fair value of such contingent consideration was $ 0.0 at April 1, 2023 and December 31, 2022.

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.

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

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

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

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

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

Refer to Note 9 for additional details.

Valuation Methods Used to Measure Fair Value on a Recurring Basis

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

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

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

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

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

As of April 1, 2023, there has been no significant impact to the fair value of our derivative liabilities due to our own credit risk, as the related instruments are collateralized under our senior credit facilities.

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

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

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

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

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

The value is updated annually, during the first quarter, based on the investee’s most recent audited financial statements.

During the three months ended April 1, 2023 and April 2, 2022, we recorded gains of $ 3.6 and $ 4.4 , respectively, to “ Other income, net ” to reflect an increase in the estimated fair value of the equity security.

As of April 1, 2023 and December 31, 2022 , the equity security had an estimated fair value of $ 39.4 and $ 35.8 , respectively.

Indebtedness and Other — The estimated fair value of our debt instruments as of April 1, 2023 and December 31, 2022 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments.

Se e Note 12 f or further details.

(18) SUBSEQUENT EVENT

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

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

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

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

(18) SUBSEQUENT EVENTS

On April 3, 2023, we completed the acquisition of T.

Morrison & Co.

( “TAMCO” ), a market leader in motorized and non-motorized dampers that control airflow in large-scale specialty applications in commercial, industrial, and institutional markets .

We purchased TAMCO for cash proceeds of approximately $ 125.0 , net of cash acquired of $ 0.8 .

The post-acquisition operating results of TAMCO will be reflected within our HVAC reportable segment.

On April 21, 2023 (the “Incremental Amendment Effective Date”), we entered into an Incremental Facility Activation Notice (the “Incremental Amendment”) with Bank of America, N.A., as administrative agent (the “Administrative Agent”), and the lenders party thereto, which amends the Amended and Restated Credit Agreement, dated as of August 12, 2022 (as amended, the “Credit Agreement”), among the Company, the lenders party thereto, Deutsche Bank AG, as foreign trade facility agent, and the Administrative Agent.

The Incremental Amendment provides for additional senior secured term loans in the aggregate amount of $ 300.0 (the “Incremental Term Loans”), which are available in up to three drawings (subject to customary conditions) from the Incremental Amendment Effective Date to October 18, 2023.

The proceeds of the Incremental Term Loans will be used to finance, in part, permitted acquisitions, to pay related fees, costs and expenses and for other lawful corporate purposes.

The Incremental Term Loans will mature on August 12, 2027.

We may voluntarily prepay the Incremental Term Loans, in whole or in part, without premium or penalty.

The interest rates applicable to the Incremental Term Loans are, at our option, equal to either (x) an alternate base rate (the highest of (a) the federal funds effective rate plus 0.50 %, (b) the prime rate of Bank of America, N.A., and (c) the one-month Term SOFR rate plus 1.00 %) or (y) the Term SOFR rate for the applicable interest period plus 0.10 %, plus, in each case, an applicable margin percentage, which varies based on the Company’s 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).

SPX 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 SOFR borrowings.

SPX will also pay a commitment fee to the incremental lenders on the daily unused amount of the commitments for the Incremental Term Loans, payable quarterly at a per annum rate which also varies based on the Company’s Consolidated Leverage Ratio.

The commitment fee rate and interest rate margins are as follows:

Consolidated Leverage Ratio Commitment Fee Term SOFR Loans

Less than 2.00 to 1.0

0.225 % 1.500 % 0.500 %

Greater than or equal to 2.00 to 1.0 but less than 3.00 to 1.0

0.250 % 1.625 % 0.625 %

Greater than or equal to 3.00 to 1.0

0.275 % 1.875 % 0.875 %

The Incremental Term Loans will be guaranteed by certain domestic material subsidiaries of the Company and secured by a first priority pledge and security interest in 100 % of the capital stock of our domestic subsidiaries or the domestic subsidiary guarantors and 65 % of the voting capital stock (and 100 % of the non-voting capital stock) of material first-tier foreign subsidiaries, all subject to certain exceptions and on a pari passu basis with the other credit facilities under the Credit Agreement.

On April 28, 2023, we, through SPX Electric Heat, Inc., a wholly owned subsidiary of SPX (“Merger Sub”), entered into an Agreement and Plan of Merger with ASPEQ Parent Holdings, Inc.

(“ASPEQ”), and Industrial Growth Partners V, L.P., as representative of the stockholders of ASPEQ, providing for the acquisition by SPX of ASPEQ for aggregate consideration of approximately $ 418.0 in cash (subject to closing date adjustments) pursuant to a merger of Merger Sub with and into ASPEQ, with ASPEQ being the surviving corporation of the merger (the “Merger”).

Consummation of the Merger is subject to various conditions and regulatory approvals.

The post-acquisition operating results of ASPEQ will be reflected within our HVAC reportable segment.

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-Q

Item 1. Financial Statements