10-K 1 a2223096z10-k.htm 10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)    

ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the fiscal year ended December 31, 2014, or

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the transition period from                     to                      .

Commission file number: 1-6948

SPX Corporation
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  38-1016240
(I.R.S. Employer Identification No.)

13320 Ballantyne Corporate Place
Charlotte, NC 28277
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: 704-752-4400

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
  Name of Each Exchange on Which Registered
Common Stock, Par Value $10.00   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

        Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

        Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

        Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company)
  Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

        The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 27, 2014 was $4,461,088,249. The determination of affiliate status for purposes of the foregoing calculation is not necessarily a conclusive determination for other purposes.



        The number of shares outstanding of the registrant's common stock as of February 13, 2015 was 40,983,795.



        Documents incorporated by reference: Portions of the Registrant's proxy statement for its Annual Meeting to be held on May 8, 2015 are incorporated by reference into Part III of this Annual Report on Form 10-K.

   



P A R T    I

ITEM 1. Business

(All currency and share amounts are in millions)


Forward-Looking Information

        Some of the statements in this document and any documents incorporated by reference, including any statements as to operational and financial projections, constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our businesses' or our industries' actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Such statements may address our plans, our strategies, our prospects, changes and trends in our business and the markets in which we operate under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") or in other sections of this document. In some cases, you can identify forward-looking statements by terminology such as "may," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "project," "potential" or "continue" or the negative of those terms or other comparable terminology. Particular risks facing us include economic, business and other risks stemming from our planned spin-off transaction, internal operations, legal and regulatory risks, costs of raw materials, pricing pressures, pension funding requirements, integration of acquisitions and changes in the economy. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors, and forward-looking statements should not be relied upon as a prediction of actual results. In addition, management's estimates of future operating results are based on our current complement of businesses, which is subject to change as management selects strategic markets.

        All the forward-looking statements are qualified in their entirety by reference to the factors discussed in this document under the heading "Risk Factors" and in any documents incorporated by reference that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements. We caution you that these risk factors may not be exhaustive. We operate in a continually changing business environment and frequently enter into new businesses and product lines. We cannot predict these new risk factors, and we cannot assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, you should not rely on forward-looking statements as a prediction of actual results. We undertake no obligation to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.


Business

        We were incorporated in Muskegon, Michigan in 1912 as the Piston Ring Company and adopted our current name in 1988. Since 1968, we have been incorporated under the laws of Delaware, and we have been listed on the New York Stock Exchange since 1972.

        Unless otherwise indicated, amounts provided in Part I pertain to continuing operations only (see Note 4 to our consolidated financial statements for information on discontinued operations).

        We are a global supplier of highly specialized, engineered solutions with operations in over 35 countries and sales in over 150 countries around the world. Many of our products and innovative solutions are playing a role in helping to meet global demand for power and energy and processed foods and beverages, particularly in emerging markets. Our total revenue in 2014 was $4,721.1, with approximately 27% from sales into emerging markets. Our key products include processing systems and components for the food and beverage industry, pumps, valves and filtration equipment used in oil and gas processing, power transformers used by utility companies, and cooling systems for power generation plants and HVAC applications.

        From an end market perspective, in 2014, 43% of our revenues were from sales into power and energy markets, 20% were from sales into food and beverage markets and 20% were from sales into industrial flow markets. Our product and technology offerings are concentrated in flow technology and energy infrastructure.

        Our Flow Technology reportable segment accounted for approximately 55% of our revenues in 2014 and serves the food and beverage, oil and gas, power generation and industrial flow markets. Within these markets, we are a leading provider of highly-engineered process equipment. Our core strengths include product breadth, global capabilities and the ability to create custom-engineered solutions for diverse flow processes. Over the past several years, we have strategically expanded our scale, customer relevance and global capabilities in these markets. We believe there are attractive organic and acquisition opportunities to continue to expand our Flow Technology reportable segment.

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        In addition to our Flow Technology operations, we are also a leading supplier of medium power transformers for the U.S. power transmission and distribution market. Our medium power transformers range from a base rating of 10 Mega Volt Ampere ("MVA") to over 100 MVA and are uniquely designed to meet the requirements of each customer and substation.

        We also have leading market positions in thermal heat transfer products for power generation plants. Our primary power generation offerings include cooling systems, large scale stationary and rotating heat exchangers and pollution control systems. We supply these technologies into many types of traditional and alternative power generation facilities. We are well-positioned to benefit from new or retrofit investments in natural gas, coal, nuclear, solar and geothermal power plants.

        We focus on a number of operating initiatives, including innovation and new product development, continuous improvement driven by lean methodologies, supply chain management, expansion in emerging markets, information technology infrastructure improvement, and organizational and talent development. These initiatives are designed to, among other things, capture synergies within our businesses to ultimately drive revenues, profit margin and cash flow growth. We believe our businesses are well-positioned for long-term growth based on our operating initiatives, the potential within the current markets served and the potential for expansion into additional markets.

        Our Board of Directors and executive management team are committed to creating shareholder value through continued operational improvement, generating profitable growth, narrowing our strategic focus around our Flow Technology end markets and disciplined execution of our capital allocation methodology. As a complement to this strategy, we also focus on environmental sustainability and conducting our business with a high level of ethics and integrity.

        On October 29, 2014, we announced that our Board of Directors had unanimously approved a plan for a tax-free spin-off of our Flow Technology reportable segment and our Hydraulic Technologies business, a business currently reported within Industrial Products and Services and Other. The spin-off would create a new stand-alone, publicly-traded company focused on providing highly engineered technologies and services to customers in the global power and energy, food and beverage, and industrial markets. We currently expect the transaction to be completed during the third quarter of 2015.

        However, there are no assurances as to when the planned spin-off will be completed, if at all, or if the spin-off will be completed in the form or within the one-time cost range currently contemplated.


Reportable Segments and Other Operating Segments

        We aggregate certain of our operating segments into our two reportable segments, Flow Technology and Thermal Equipment and Services, while our remaining operating segments, which do not meet the quantitative threshold criteria of the Segment Reporting Topic of the Financial Accounting Standards Board Codification (the "Codification"), have been combined within our "All Other" category, which we refer to as Industrial Products and Services and Other. Industrial Products and Services and Other is not considered a reportable segment.

        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 and distribution methods. In determining our segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification to operating income or loss of each segment before considering impairment and special charges, pension and postretirement expense, stock-based compensation and other indirect corporate expenses. This is consistent with the way our chief operating decision maker evaluates the results of each segment. For more information on the results of our reportable and other operating segments, including revenues by geographic area, see Note 5 to our consolidated financial statements.

Flow Technology Reportable Segment

        Our Flow Technology reportable segment had revenues of $2,596.1, $2,638.0 and $2,682.2 in 2014, 2013 and 2012, respectively, and backlog of $1,149.3 and $1,387.4 as of December 31, 2014 and 2013, respectively. Approximately 87% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015. The segment engineers, designs, manufactures and markets products and solutions used to process, blend, filter, dry, meter and transport fluids with a focus on original equipment installation, including turnkey systems, skidded systems and components, as well as comprehensive aftermarket components and support services. Primary component offerings include engineered pumps, valves, mixers, plate heat exchangers, and dehydration and filtration technologies. The segment primarily serves customers in food and beverage, power and energy and industrial end markets. Core brands include SPX Flow Technology, APV, ClydeUnion, Waukesha Cherry-Burrell, M&J Valves, Copes Vulcan, Lightnin, Anhydro, Gerstenberg Schröder, Seital, e&e, Bran&Luebbe, Johnson Pump, Plenty, Hankison, GD Engineering, Dollinger Filtration, Pneumatic Products, Delair, Deltech and Jemaco. Competitors in these diversified end markets include GEA Group AG, Flowserve, Alfa Laval AB, Sulzer, ITT Gould Pumps and IDEX Corporation. Channels to market consist of stocking distributors, manufacturers' representatives and direct

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sales. The segment continues to focus on innovation and new product development, optimizing its global footprint while taking advantage of cross-product integration opportunities and increasing its competitive position in global end markets. Flow Technology's solutions focus on key business drivers, such as product flexibility, process optimization, sustainability and safety.

Thermal Equipment and Services Reportable Segment

        Our Thermal Equipment and Services reportable segment had revenues of $1,329.9, $1,344.2 and $1,490.9 in 2014, 2013 and 2012, respectively, and backlog of $714.1 and $675.4 as of December 31, 2014 and 2013, respectively. Approximately 70% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015. Portions of this backlog are long-term in nature, with the related revenues expected to be recorded through 2015 and beyond. The backlog figures as of December 31, 2014 and 2013 exclude approximately $70.0 and $100.0, respectively, of estimated price increases related to cost inflation on our large power projects in South Africa. This reportable segment engineers, designs, manufactures, installs and services thermal heat transfer products. Primary offerings include dry, evaporative and hybrid cooling systems, rotating and stationary heat exchangers and pollution control systems for the power generation, HVAC and industrial markets, as well as boilers and heating and ventilation products for the residential and commercial markets. The primary distribution channels for the Thermal Equipment and Services reportable segment are direct to customers, independent manufacturing representatives, third-party distributors and retailers. The segment serves a global customer base, with a strong presence in North America, Europe and South Africa.

        Approximately 44% of the segment's 2014 revenues were from sales to the power generation market. The segment's primary power products and services are sold under the brand names of SPX Cooling Systems, Marley, Balcke-Duerr, Ceramic, Yuba, Ecolaire and Recold, among others, with the major competitors to these product and service lines being GEA Group AG, Hamon & Cie, EvapTech, Inc., Harbin Air Conditioning Co., Baltimore Aircoil Company, Evapco, Inc., Thermal Engineering International, Howden Group Ltd., Siemens AG and Alstom SA.

        The segment's boiler products include a complete line of gas and oil fired boilers for heating in residential and commercial applications, as well as ancillary equipment. The segment's primary boiler products competitors are Burnham Holdings, Inc. and Buderus.

        The segment's heating and ventilation product line includes (i) baseboard, wall unit and portable heaters, (ii) commercial cabinet and infrared heaters, (iii) thermostats and controls, (iv) air curtains and (v) circulating fans. The segment sells heating and ventilation products under the Berko, Qmark, Farenheat and Leading Edge brand names, with the principal competitors being TPI Corporation, Ouellet, King Electric, Systemair Mfg. LLC, Cadet Manufacturing Company and Dimplex North America Ltd. for heating products and TPI Corporation, Broan-NuTone LLC and Airmaster Fan Company for ventilation products.

        The segment's South African subsidiary has a Black Economic Empowerment shareholder, which holds a noncontrolling 25.1% interest in the subsidiary.

Industrial Products and Services and Other

        Industrial Products and Services and Other had revenues of $795.1, $791.1 and $721.5 in 2014, 2013 and 2012, respectively, and backlog of $335.9 and $286.1 as of December 31, 2014 and 2013, respectively. Approximately 90% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015. Approximately 48% of Industrial Products and Services and Other revenues in 2014 were from the sale of power transformers and related services into the U.S. transmission and distribution market. We are a leading provider of medium transformers (10 - 100 MVA) in the United States. We sell transformers under the Waukesha brand name. Typical customers for this product line are publicly and privately held utilities. Our competitors in this market include ABB Ltd., GE-Prolec, Siemens, Hyundai Power Transformers, Delta Star Inc., Philadelphia Transformer, SGB-SMIT Group, Virginia Transformer Corporation, Howard Industries, Inc., and WEG S.A.

        Additionally, Industrial Products and Services and Other comprises operating segments that design, manufacture and market industrial tools and hydraulic units, tower and obstruction lights and monitoring equipment, communications and signal monitoring systems, fare collection systems, and portable cable and pipe locators. The primary distribution channels for Industrial Products and Services and Other are direct to customers, independent manufacturing representatives and third-party distributors.

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Acquisitions

        We did not acquire any businesses in 2014. However, we regularly review and negotiate potential acquisitions in the ordinary course of business, some of which are or may be material. We plan to evaluate potential acquisitions in the future and we may consider acquisitions of businesses with more than $1,000.0 in annual revenues.


Divestitures

        We regularly review and negotiate potential divestitures in the ordinary course of business, some of which are or may be material. As a result of this continuous review, we determined that certain of our businesses would be better strategic fits with other companies or investors. We report businesses or asset groups as discontinued operations when the operations and cash flows of the business or asset group have been or are expected to be eliminated, when we do not expect to have any continuing involvement with the business or asset group after the disposal transaction, and when we have met these additional six criteria:

    Management commits to a plan to divest the business or asset group;

    The business or asset group is available for immediate sale;

    An active program to sell the business or asset group has been initiated;

    The sale of the business or asset group is probable within one year;

    The marketed sales value of the business or asset group is reasonable in relation to its current fair value; and

    It is unlikely that the plan to divest the business or asset group will be significantly altered or withdrawn.

        During the fourth quarter of 2014, our Board of Directors unanimously approved a plan for a tax-free spin-off of our Flow Technology reportable segment and our Hydraulic Technologies business, and the creation of a new stand-alone, publicly-traded company focused on providing highly engineered technologies and services to customers in the global power and energy, food and beverage, and industrial markets. In connection with the planned spin-off transaction, we determined that we would no longer pursue the sale of our Flash Technologies business, a business that was previously reported in discontinued operations. Accordingly, we have reclassified the results of operations, assets and liabilities, and cash flows of this business to continuing operations for all periods presented. This business is included within Industrial Products and Services and Other.

        The following businesses, which have been sold or for which operations have been terminated, met the requirements described above and therefore have been reported as discontinued operations for all periods presented:

Business
  Quarter
Discontinued
  Quarter of Sale
or Termination
of Operations
 

Fenn LLC

    Q3 2013     Q3 2014  

SPX Precision Components

    Q3 2013     Q2 2014  

Thermal Product Solutions

    Q3 2013     Q1 2014  

Broadcast Antenna System business

    Q2 2013     Q2 2013  

Crystal Growing business

    Q1 2013     Q1 2013  

TPS Tianyu Equipment Co., Ltd. 

    Q4 2012     Q4 2012  

Weil-McLain (Shandong) Cast-Iron-Boiler Co., Ltd. 

    Q4 2012     Q4 2012  

SPX Service Solutions

    Q1 2012     Q4 2012  


Joint Ventures

        As of December 31, 2013, we had a joint venture, EGS Electrical Group, LLC and Subsidiaries ("EGS"), with Emerson Electric Co., in which we held a 44.5% interest. EGS operates primarily in the United States, Brazil, Canada and France and is engaged in the manufacture of electrical fittings, hazardous location lighting and power conditioning products. We accounted for our investment using the equity method, on a three-month lag basis, and we typically received our share of the joint venture's earnings in cash dividends paid quarterly. On January 7, 2014, we completed the sale of our 44.5% interest in EGS to Emerson Electric Co. for cash proceeds of $574.1. As a result of the sale, we recorded a gain of $491.2 to "Other income (expense), net" and no equity earnings related to this investment during 2014.

        We have a joint venture with the Shanghai Electric Group Co., Ltd. ("Shanghai Electric"), in which we hold a 45% interest. Shanghai Electric controls and operates the joint venture, which supplies dry cooling and moisture separator reheater products primarily to the power sector in China. We account for this investment using the equity method. See Note 4 to our consolidated financial statements for additional details.

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International Operations

        We are a multinational corporation with operations in over 35 countries. Sales outside the United States were $2,487.2, $2,560.0 and $2,663.8 in 2014, 2013 and 2012, respectively.

        See Note 5 to our consolidated financial statements for more information on our international operations.


Research and Development

        We are actively engaged in research and development programs designed to improve existing products and manufacturing methods and to develop new products to better serve our current and future customers. These efforts encompass certain of our products with divisional engineering teams coordinating their resources. We place particular emphasis on the development of new products that are compatible with, and build upon, our manufacturing and marketing capabilities.

        We expensed $51.1, $47.3 and $49.0 in 2014, 2013 and 2012, respectively, of research activities relating to the development and improvement of our products.


Patents/Trademarks

        We own approximately 370 domestic and 250 foreign patents, including approximately 20 patents that were issued in 2014, covering a variety of our products and manufacturing methods. We also own a number of registered trademarks. Although in the aggregate our patents and trademarks are of considerable importance in the operation of our business, we do not consider any single patent or trademark to be of such importance that its absence would adversely affect our ability to conduct business as presently constituted. We are both a licensor and licensee of patents. For more information, please refer to "Risk Factors."


Outsourcing and Raw Materials

        We manufacture many of the components used in our products; however, our strategy includes outsourcing certain components and sub-assemblies to other companies where strategically and economically beneficial. In instances where we depend on third-party suppliers for outsourced products or components, we are subject to the risk of customer dissatisfaction with the quality or performance of the products we sell due to supplier failure. In addition, business difficulties experienced by a third-party supplier can lead to the interruption of our ability to obtain the outsourced product and ultimately to our inability to supply products to our customers. We believe that we generally will be able to continue to obtain adequate supplies of key products or appropriate substitutes at reasonable costs.

        We are subject to increases in the prices of many of our key raw materials, including petroleum-based products, steel and copper. In recent years, we have generally been able to offset increases in raw material costs. Occasionally, we are subject to long-term supplier contracts, which may increase our exposure to pricing fluctuations. We use forward contracts to manage our exposure on forecasted purchases of commodity raw materials ("commodity contracts"). See Note 13 to our consolidated financial statements for further information on commodity contracts.

        Due to our diverse products and services, as well as the wide geographic dispersion of our production facilities, we use numerous sources for the raw materials needed in our operations. We are not significantly dependent on any one or a limited number of suppliers, and we have been able to obtain suitable quantities of raw materials at competitive prices.


Competition

        Our competitive position cannot be determined accurately in the aggregate or by reportable or operating segment since we and our competitors do not offer all the same product lines or serve all the same markets. In addition, specific reliable comparative figures are not available for many of our competitors. In most product groups, competition comes from numerous concerns, both large and small. The principal methods of competition are service, product performance, technical innovation and price. These methods vary with the type of product sold. We believe we compete effectively on the basis of each of these factors as they apply to the various products and services offered. See "Reportable Segments and Other Operating Segments" above for a discussion of our competitors.


Environmental Matters

        See "MD&A — Critical Accounting Policies and Use of Estimates — Contingent Liabilities," "Risk Factors" and Note 14 to our consolidated financial statements for information regarding environmental matters.

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Employment

        At December 31, 2014, we had over 14,000 employees. Seven domestic collective bargaining agreements covered approximately 1,000 employees. We also had various collective labor arrangements as of that date covering certain non-U.S. employee groups. While we generally have experienced satisfactory labor relations, we are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes.


Executive Officers

        See Part III, Item 10 of this report for information about our executive officers.


Other Matters

        No customer or group of customers that, to our knowledge, are under common control accounted for more than 10% of our consolidated revenues for any period presented.

        Our businesses maintain sufficient levels of working capital to support customer requirements, particularly inventory. We believe our businesses' sales and payment terms are generally similar to those of our competitors.

        Many of our businesses closely follow changes in the industries and end markets they serve. In addition, certain businesses have seasonal fluctuations. Demand for certain products in our Flow Technology and Thermal Equipment and Services reportable segments is correlated to contract timing on large construction contracts and, in our Thermal Equipment and Services reportable segment, is also driven by seasonal weather patterns, both of which factors may cause significant fluctuations from period to period. Historically, our businesses generally tend to be stronger in the second half of the year.

        Our website address is www.spx.com. Information on our website is not incorporated by reference herein. We file reports with the U.S Securities and Exchange Commission ("SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and certain amendments to these reports. Copies of these reports are available free of charge on our website as soon as reasonably practicable after we file the reports with the SEC. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Additionally, you may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

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ITEM 1A. Risk Factors

(All currency and share amounts are in millions)

        You should consider the risks described below and elsewhere in our documents filed with the SEC before investing in any of our securities. We may amend, supplement or add to the risk factors described below from time to time in future reports filed with the SEC.

We face risks related to our planned spin-off of our flow business.

        We have announced our intention to spin-off our Flow Technology reportable segment and our Hydraulic Technologies business, comprising approximately $2,800.0 of our company's total revenues for 2014. Unanticipated developments, including possible delays in obtaining required approvals, uncertainty of the financial markets, and challenges relating to the structure of the transaction or resulting companies, could delay or prevent the planned transaction, or cause it to occur on less favorable terms or conditions than projected. In addition, in connection with the spin-off, we and the new stand-alone company that will result from the spin-off will need to incur new indebtedness to refinance our existing credit facilities. We and the new stand-alone company may be unable to obtain such indebtedness or any indebtedness that we and the new stand-alone company obtain may contain terms that are materially less favorable than the terms of our existing credit facilities. Even if the transaction is completed as and on the timetable currently contemplated, we may not realize some or all projected benefits, or expenses relating to the planned transaction may be significantly higher than projected.

        Additionally, the planned transaction requires significant time and attention, which could distract management and other employee attention from the day-to-day operation of our business. Following completion of the transaction, there can be no guarantee the combined value of the common stock of the two publicly-traded companies will equal or exceed the value of our stock had the transaction not occurred.

The planned spin-off of our flow business could result in substantial tax liability to us and our stockholders.

        Among the conditions to completing the spin-off will be our receipt of opinions of tax counsel satisfactory to us as to the tax-free treatment of the spin-off and certain related transactions. However, if the factual assumptions or representations upon which the opinions are based are inaccurate or incomplete in any material respect, we will not be able to rely on the opinions. Furthermore, the opinions will not be binding on the Internal Revenue Service ("IRS") or the courts. Accordingly, the IRS or the courts may challenge the conclusions set forth in the opinions and any such challenge could prevail. If, notwithstanding receipt of the opinions, the spin-off or a related transaction is determined to be taxable, we could be subject to a substantial tax liability. In addition, if the spin-off is determined to be taxable, each holder of our common stock who receives shares of the new stand-alone company would generally be treated as receiving a taxable distribution of property in an amount equal to the fair market value of the shares received.

        Even if the spin-off otherwise qualifies as a tax-free transaction, the distribution could be taxable to us (but not to our stockholders) in certain circumstances if future significant acquisitions of our stock or the stock of the new stand-alone company are deemed to be part of a plan or series of related transactions that includes the spin-off. In this event, the resulting tax liability would be substantial. In connection with the spin-off, we expect to enter into a tax matters agreement with the new stand-alone company, under which it will agree (i) not to enter into any transaction without our consent that could cause any portion of the spin-off to be taxable to us, and (ii) to indemnify us for any tax liabilities resulting from such a transaction. This obligation and potential tax liability may discourage, delay or prevent a change of control of us or of the new stand-alone company. In addition, we may have to restructure various aspects of the transaction in response to tax considerations, which could subject us to significant additional costs.

Difficulties presented by international economic, political, legal, accounting and business factors could negatively affect our business.

        We are an increasingly global company. In 2014, over 50% of our revenues were generated outside the United States. We have placed a particular emphasis on expanding our presence in emerging markets. As part of our strategy, we manage businesses with manufacturing facilities worldwide. Our reliance on non-U.S. revenues and non-U.S. manufacturing bases exposes us to a number of risks, including:

    Significant competition could come from local or long-term participants in non-U.S. markets who may have significantly greater market knowledge and substantially greater resources than we do;

    Local customers may have a preference for locally-produced products;

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    Failure to comply with U.S. or non-U.S. laws regulating trade, such as the U.S. Foreign Corrupt Practices Act, and other anti-corruption laws, could result in adverse consequences, including fines, criminal sanctions, or loss of access to markets;

    Credit risk or financial condition of local customers and distributors could affect our ability to market our products or collect receivables;

    Regulatory or political systems or barriers may make it difficult or impossible to enter or remain in new markets. In addition, these barriers may impact our existing businesses, including making it more difficult for them to grow;

    Local political, economic and social conditions, including the possibility of hyperinflationary conditions, political instability, nationalization of private enterprises, or unexpected changes relating to currency could adversely impact our operations;

    Customs and tariffs may make it difficult or impossible for us to move our products or assets across borders in a cost-effective manner;

    Transportation and shipping expenses add cost to our products;

    Complications related to shipping, including delays due to weather, labor action, or customs, may impact our profit margins or lead to lost business;

    Government embargoes or foreign trade restrictions such as anti-dumping duties, as well as the imposition of trade sanctions by the United States or the European Union against a class of products imported from or sold and exported to, or the loss of "normal trade relations" status with, countries in which we conduct business, could significantly increase our cost of products imported into the United States or Europe or reduce our sales and harm our business;

    Environmental and other laws and regulations could increase our costs or limit our ability to run our business;

    Our ability to obtain supplies from foreign vendors and ship products internationally may be impaired during times of crisis or otherwise;

    Local, regional or worldwide hostilities could impact our operations; and

    Distance, language and cultural differences may make it more difficult to manage our business and employees and to effectively market our products and services.

        Any of the above factors or other factors affecting social and economic activity in China, South Africa and other emerging markets or affecting the movement of people and products into and from these countries to our major markets, including North America and Europe, could have a significant negative effect on our operations.

Many of the markets in which we operate are cyclical or are subject to industry events, and our results have been and could be affected as a result.

        Many of the markets in which we operate are subject to general economic cycles or industry events. In addition, certain of our businesses are subject to market-specific cycles, including, but not limited to:

    The oil and gas, chemical, mining and petrochemical markets;

    Food and beverage markets; and

    The electric power and infrastructure markets.

        In addition, contract timing on large construction projects, including food and beverage systems, projects in the oil and gas industries, and cooling systems and towers, may cause significant fluctuations in revenues and profits from period to period.

        The businesses of many of our customers, particularly oil and gas companies, chemical companies and general industrial companies, are to varying degrees cyclical and have experienced, and may continue to experience, periodic downturns. Cyclical changes and specific industry events could also affect sales of products in our other businesses. Downturns in the business cycles of our different operations may occur at the same time, which could exacerbate any adverse effects on our business. See "MD&A — Results of Reportable Segments and Other Operating Segments." In addition, certain of our businesses have seasonal fluctuations. Historically, some of our key businesses generally tend to be stronger in the second half of the year.

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Cost overruns, inflation, delays and other risks could significantly impact our results, particularly with respect to long-term fixed-price contracts.

        A portion of our revenues and earnings is generated through long-term fixed-price contracts, particularly in our Flow Technology and Thermal Equipment and Services reportable segments. We recognize revenues from certain of these contracts using the percentage-of-completion method of accounting whereby revenues and expenses, and thereby profit, in a given period are determined based on our estimates as to the project status and the costs remaining to complete a particular project.

        Estimates of total revenues and cost at completion are subject to many variables, including the length of time to complete a contract. In addition, contract delays may negatively impact these estimates and our revenues and earnings results for affected periods.

        To the extent that we underestimate the remaining cost to complete a project, we may overstate the revenues and profit in a particular period. Further, certain of these contracts provide for penalties or liquidated damages for failure to timely perform our obligations under the contract, or require that we, at our expense, correct and remedy to the satisfaction of the other party certain defects. Because some of our long-term contracts are at a fixed price, we face the risk that cost overruns or inflation may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on our projects.

        Our large power projects in South Africa are an example of these types of long-term-contract-related risks. These projects, which have already experienced significant delays from their initial target completion dates, involve a complex set of contractual relationships among the end customer, the prime contractors, and the various subcontractors and suppliers. Although we believe that our current estimates of costs relating to these projects are reasonable, we cannot assure you that additional costs will not arise as these projects are completed.

Our business depends on capital investment and maintenance expenditures by our customers.

        Demand for most of our products and services depends on the level of new capital investment and planned maintenance expenditures by our customers. The level of capital expenditures by our customers fluctuates based on planned expansions, new builds, and repairs, commodity prices, general economic conditions, availability of credit, and expectations of future market behavior. Any of these factors, whether individually or in the aggregate, could have a material adverse effect on our customers and, in turn, our business, financial condition, results of operations and cash flows.

Our customers could be impacted by commodity availability and prices.

        A number of factors outside our control, including fluctuating commodity prices, impact the demand for our products. Increased commodity prices may increase our customers' cost of doing business, thus causing them to delay or cancel large capital projects.

        On the other hand, declining commodity prices may cause mines, oil refineries, oil and gas extraction fields and other customers to delay or cancel projects relating to the production of such commodities. For example, recent declines in oil prices have led to reduced revenues in the upstream portion of our oil and gas business. Reduced demand for our products and services could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs. This reduced demand may also erode average selling prices in the relevant market.

The price and availability of raw materials may adversely affect our business.

        We are exposed to a variety of risks relating to the price and availability of raw materials. In recent years, we have faced volatility in the prices of many of our key raw materials, including petroleum-based products, steel and copper. Increases in the prices of raw materials or shortages or allocations of materials may have a material adverse effect on our financial position, results of operations or cash flows, as we may not be able to pass cost increases on to our customers, or our sales may be reduced. We are subject to long-term supplier contracts that may increase our exposure to pricing fluctuations.

Credit and counterparty risks could harm our business.

        The financial condition of our customers and distributors could affect our ability to market our products or collect receivables.

        Our customers may suffer financial difficulties that make them unable to pay for a project when completed, or they may decide not or be unable to pay us, either as a matter of corporate decision-making or in response to changes in local laws and

9


regulations. We cannot assure you that expenses or losses for uncollectible amounts will not have a material adverse effect on our revenues, earnings and cash flows.

        In addition, financial difficulties faced by our customers may lead to cancellation or delay of orders.

Failure to protect or unauthorized use of our intellectual property may harm our business.

        Despite our efforts to protect our proprietary rights, unauthorized parties or competitors may copy or otherwise obtain and use our products or technology. The steps we have taken may not prevent unauthorized use of our technology or knowledge, particularly in foreign countries where the laws may not protect our proprietary rights to the same extent as in the United States. Costs incurred to defend our rights may be material.

If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.

        We are increasingly dependent on information technology ("IT") networks and systems, including the Internet, to process, transmit and store electronic information. In particular, we depend on such IT infrastructure for electronic communications among our locations around the world and between our personnel and suppliers and customers, and we rely on the systems and services of a variety of vendors to meet our data processing and communication needs. Despite our implementation of security measures, cybersecurity threats, such as malicious software, phishing attacks, computer viruses and attempts to gain authorized access, cannot be completely mitigated. Security breaches of our, our customers' and our vendors' IT infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information, including our intellectual property, trade secrets, customer information or other confidential business information. If we are unable to prevent, detect or adequately respond to such breaches, our operations could be disrupted, our competitiveness could be adversely affected or we may suffer financial damage or loss because of lost or misappropriated information. Such incidents also could require significant management attention and resources and increased costs.

Currency conversion risk could have a material impact on our reported results of business operations.

        Our operating results are translated into U.S. dollars for reporting purposes. The strengthening or weakening of the U.S. dollar against other currencies in which we conduct business could result in unfavorable translation effects as the results of transactions in foreign countries are translated into U.S. dollars. Increased strength of the U.S. dollar will increase the effective price of our products sold in U.S. dollars into other countries, which may have a material adverse effect on sales or require us to lower our prices, and also decrease our reported revenues or margins related to sales conducted in foreign currencies to the extent we are unable or determine not to increase local currency prices. Likewise, decreased strength of the U.S. dollar could have a material adverse effect on the cost of materials and products purchased overseas.

Worldwide economic conditions could negatively impact our businesses.

        Many of our customers historically have tended to delay large capital projects, including expensive maintenance and upgrades, during economic downturns. Poor macroeconomic conditions could negatively impact our businesses by adversely affecting, among other things, our:

    Revenues;

    Margins;

    Profits;

    Cash flows;

    Customers' orders, including order cancellation activity or delays on existing orders;

    Customers' ability to access credit;

    Customers' ability to pay amounts due to us; and

    Suppliers' and distributors' ability to perform and the availability and costs of materials and subcontracted services.

        Our projections for 2015 assume a generally stable economy. If actual economic conditions are inconsistent with this assumption, our performance could underperform our expectations.

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We are subject to laws, regulations and potential liability relating to claims, complaints and proceedings, including those relating to environmental and other matters.

        We are subject to various laws, ordinances, regulations and other requirements of government authorities in the United States and other nations. With respect to acquisitions, divestitures and continuing operations, we may acquire or retain liabilities of which we are not aware, or which are of a different character or magnitude than expected. Additionally, changes in laws, ordinances, regulations or other governmental policies may significantly increase our expenses and liabilities.

        We face environmental exposures including, for example, those relating to discharges from and materials handled as part of our operations, the remediation of soil and groundwater contaminated by petroleum products or hazardous substances or wastes, and the health and safety of our employees. We may be liable for the costs of investigation, removal or remediation of hazardous substances or petroleum products on, under, or in our current or formerly owned or leased properties, or from third-party disposal facilities that we may have used, without regard to whether we knew of, or caused, the presence of the contaminants. The presence of, or failure to properly remediate, these substances may have adverse effects, including, for example, substantial investigative or remedial obligations and limitations on the ability to sell or rent affected property or to borrow funds using affected property as collateral. New or existing environmental matters or changes in environmental laws or policies could lead to material costs for environmental compliance or cleanup. There can be no assurance that these liabilities and costs will not have a material adverse effect on our financial position, results of operations or cash flows.

        Numerous claims, complaints and proceedings arising in the ordinary course of business, including those relating to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims), environmental matters, and risk management matters (e.g., product and general liability, automobile, and workers' compensation claims), have been filed or are pending against us and certain of our subsidiaries. From time to time, we face actions by governmental authorities, both in and outside the United States. Additionally, we may become subject to significant claims of which we are currently unaware or the claims of which we are aware may result in our incurring a significantly greater liability than we anticipate. Our insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against potential loss exposures.

        We devote significant time and expense to defend against the various claims, complaints and proceedings brought against us, and we cannot assure you that the expenses or distractions from operating our businesses arising from these defenses will not increase materially.

        We cannot assure you that our accruals and right to indemnity and insurance will be sufficient, that recoveries from insurance or indemnification claims will be available or that any of our current or future claims or other matters will not have a material adverse effect on our financial position, results of operations or cash flows.

        See "MD&A — Critical Accounting Policies and Use of Estimates — Contingent Liabilities" and Note 14 to our consolidated financial statements for further discussion.

Governmental laws and regulations could negatively affect our business.

        Changes in laws and regulations to which we are or may become subject could have a significant negative impact on our business. In addition, we could face material costs and risks if it is determined that we have failed to comply with relevant law and regulation. Failure to comply with U.S. or non-U.S. laws regulating trade, such as the U.S. Foreign Corrupt Practices Act, and other anti-corruption laws, could result in adverse consequences, including fines, criminal sanctions, or loss of access to markets.

        In addition, costs associated with regulatory compliance can be difficult to predict. If we underestimate the time or costs required to comply with our legal and regulatory obligations, our actual costs may significantly exceed our projections, which could impact our results of operations.

Changes in tax laws and regulations or other factors could cause our income tax rate to increase, potentially reducing our net income and adversely affecting our cash flows.

        As a global manufacturing company, we are subject to taxation in various jurisdictions around the world. In preparing our financial statements, we calculate our effective income tax rate based on current tax laws and regulations and the estimated taxable income within each of these jurisdictions. Our effective income tax rate, however, may be higher due to numerous factors, including changes in tax laws or regulations. An effective income tax rate significantly higher than our expectations could have an adverse effect on our business, results of operations and liquidity.

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        Officials in some of the jurisdictions in which we do business have proposed, or announced that they are reviewing, tax changes that could potentially increase taxes, and other revenue-raising laws and regulations, including those that may be enacted as a result of the OECD Base Erosion and Profit Splitting project. Any such changes in tax laws or regulations could impose new restrictions, costs or prohibitions on existing practices as well as reduce our net income and adversely affect our cash flows.

The loss of key personnel and an inability to attract and retain qualified employees could have a material adverse effect on our operations.

        We are dependent on the continued services of our leadership team. The loss of these personnel without adequate replacement could have a material adverse effect on our operations. Additionally, we need qualified managers and skilled employees with technical and manufacturing industry experience in many locations in order to operate our business successfully. From time to time, there may be a shortage of skilled labor, which may make it more difficult and expensive for us to attract and retain qualified employees. If we were unable to attract and retain sufficient numbers of qualified individuals or our costs to do so were to increase significantly, our operations could be materially adversely affected.

Our indebtedness may affect our business and may restrict our operating flexibility.

        At December 31, 2014, we had $1,369.7 in total indebtedness. On that same date, we had $313.2 of available borrowing capacity under our revolving credit facilities, after giving effect to borrowings under the domestic revolving loan facility of $133.0 and $53.8 reserved for outstanding letters of credit, and $70.0 of available borrowing capacity under our trade receivables financing arrangement after giving effect to outstanding borrowings of $10.0. In addition, at December 31, 2014, we had $304.7 of available issuance capacity under our foreign credit instrument facilities after giving effect to $695.3 reserved for outstanding letters of credit. At December 31, 2014, our cash and equivalents balance was $427.6. See MD&A and Note 12 to our consolidated financial statements for further discussion. We may incur additional indebtedness in the future, including indebtedness incurred to finance, or assumed in connection with, acquisitions. We may renegotiate or refinance our senior credit facilities, senior notes or other debt facilities, or enter into additional agreements that have different or more stringent terms. The level of our indebtedness could:

    Impact our ability and the ability of the new stand-alone company that will result from the planned spin-off to obtain new, or refinance existing, indebtedness, as needed in connection with the spin-off, on favorable terms or at all;

    Limit our ability to obtain, or obtain on favorable terms, additional debt financing for working capital, capital expenditures or acquisitions;

    Limit our flexibility in reacting to competitive and other changes in the industry and economic conditions;

    Limit our ability to pay dividends on our common stock;

    Coupled with a substantial decrease in net operating cash flows due to economic developments or adverse developments in our business, make it difficult to meet debt service requirements; and

    Expose us to interest rate fluctuations to the extent existing borrowings are, and any new borrowings may be, at variable rates of interest, which could result in higher interest expense and interest payments in the event of increases in interest rates.

        Our ability to make scheduled payments of principal or pay interest on, or to refinance, our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which may be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. In addition, we cannot assure you that future borrowings or equity financing will be available for the payment or refinancing of our indebtedness. If we are unable to service our indebtedness, whether in the ordinary course of business or upon an acceleration of such indebtedness, we may pursue one or more alternative strategies, such as restructuring or refinancing our indebtedness, selling assets, reducing or delaying capital expenditures, revising implementation of or delaying strategic plans or seeking additional equity capital. Any of these actions could have a material adverse effect on our business, financial condition, results of operations and stock price. In addition, we cannot assure that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements, or that these actions would be permitted under the terms of our various debt agreements.

        Numerous banks in many countries are syndicate members in our credit facility. Failure of one or more of our larger lenders, or several of our smaller lenders, could significantly reduce availability of our credit, which could harm our liquidity.

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We may not be able to finance future needs or adapt our business plan to react to changes in economic or business conditions because of restrictions placed on us by our senior credit facilities and any existing or future instruments governing our other indebtedness.

        Our senior credit facilities, the indenture governing our senior notes and agreements governing our other indebtedness contain, or future or revised instruments may contain, various restrictions and covenants that limit our ability to make distributions or other payments to our investors and creditors unless certain financial tests or other criteria are satisfied. We also must comply with certain specified financial ratios and tests. Our subsidiaries may also be subject to restrictions on their ability to make distributions to us. In addition, our senior credit facilities, indenture governing our senior notes and agreements governing our other indebtedness contain or may contain additional affirmative and negative covenants. Material existing restrictions are described more fully in the MD&A and Note 12 to our consolidated financial statements. Each of these restrictions could affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities, such as acquisitions.

        If we do not comply with the covenants and restrictions contained in our senior credit facilities, indenture governing our senior notes and agreements governing our other indebtedness, we could default under those agreements, and the debt, together with accrued interest, could be declared due and payable. If we default under our senior credit facilities, the lenders could cause all our outstanding debt obligations under our senior credit facilities to become due and payable or require us to repay the indebtedness under these facilities. If our debt is accelerated, we may not be able to repay or refinance our debt. In addition, any default under our senior credit facilities, indenture governing our senior notes or agreements governing our other indebtedness could lead to an acceleration of debt under other debt instruments that contain cross-acceleration or cross-default provisions. If the indebtedness under our senior credit facilities is accelerated, we may not have sufficient assets to repay amounts due under our senior credit facilities, senior notes or other debt securities then outstanding. Our ability to comply with these provisions of our senior credit facilities, indenture governing our senior notes and agreements governing our other indebtedness will be affected by changes in the economic or business conditions or other events beyond our control. Complying with our covenants may also cause us to take actions that are not favorable to us and may make it more difficult for us to successfully execute our business strategy and compete, including against companies that are not subject to such restrictions.

We operate in highly competitive markets. Our failure to compete effectively could harm our business.

        We sell our products in highly competitive markets, which could result in pressure on our profit margins and limit our ability to maintain or increase the market share of our products. We compete on a number of fronts, including on the basis of product offerings, technical capabilities, quality, service and pricing. We have a number of competitors with substantial technological and financial resources, brand recognition and established relationships with global service providers. Some of our competitors have low cost structures, support from local governments, or both. In addition, new competitors may enter the markets in which we participate. Competitors may be able to offer lower prices, additional products or services or a more attractive mix of products or services, or services or other incentives that we cannot or will not match. These competitors may be in a stronger position to respond quickly to new or emerging technologies and may be able to undertake more extensive marketing campaigns, and make more attractive offers to potential customers, employees and strategic partners. In addition, competitive environments in slow-growth markets, to which some of our businesses have exposure, have been inherently more influenced by pricing and domestic and global economic conditions. To remain competitive, we must invest in manufacturing, marketing, customer service and support and our distribution networks. No assurances can be made that we will have sufficient resources to continue to make the investment required to maintain or increase our market share or that our investments will be successful. If we do not compete successfully, our business, financial condition, results of operations and cash flows could be materially adversely affected.

Our strategy to outsource various elements of the products and services we sell subjects us to the business risks of our suppliers and subcontractors, which could have a material adverse impact on our operations.

        In areas where we depend on third-party suppliers and subcontractors for outsourced products, components or services, we are subject to the risk of customer dissatisfaction with the quality or performance of the products or services we sell due to supplier or subcontractor failure. In addition, business difficulties experienced by a third-party supplier or subcontractor can lead to the interruption of our ability to obtain outsourced products or services and ultimately our inability to supply products or services to our customers. Third-party supplier and subcontractor business interruptions can include, but are not limited to, work stoppages, union negotiations and other labor disputes. Current economic conditions could also impact the ability of suppliers and subcontractors to access credit and, thus, impair their ability to provide us quality products or services in a timely manner, or at all.

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We may not achieve the expected cost savings and other benefits of our acquisitions.

        We strive for and expect to achieve cost savings in connection with our acquisitions, including: (i) manufacturing process and supply chain rationalization, (ii) streamlining redundant administrative overhead and support activities, and (iii) restructuring and repositioning sales and marketing organizations to eliminate redundancies. Cost savings expectations are estimates that are inherently difficult to predict and are necessarily speculative in nature, and we cannot assure you that we will achieve expected, or any, cost savings. In addition, we cannot assure you that unforeseen factors will not offset the estimated cost savings or other benefits from our acquisitions. As a result, anticipated benefits could be delayed, differ significantly from our estimates and the other information contained in this report, or not be realized.

Our failure to successfully complete acquisitions could negatively affect us.

        We may not be able to consummate desired acquisitions, which could materially impact our growth rate, results of operations, future cash flows and stock price. Our ability to achieve our goals depends upon, among other things, our ability to identify and successfully acquire companies, businesses and product lines, to effectively integrate them and to achieve cost savings. We may also be unable to raise additional funds necessary to consummate these acquisitions. In addition, decreases in our stock price may adversely affect our ability to consummate acquisitions. Competition for acquisitions in our business areas may be significant and result in higher prices for businesses, including businesses that we may target, which may also affect our acquisition rate or benefits achieved from our acquisitions.

Our failure to successfully integrate acquisitions could have a negative effect on our operations; our acquisitions could cause financial difficulties.

        Our acquisitions involve a number of risks and present financial, managerial and operational challenges, including:

    Adverse effects on our reported operating results due to charges to earnings, including impairment charges associated with goodwill and other intangibles;

    Diversion of management attention from core business operations;

    Integration of technology, operations, personnel and financial and other systems;

    Increased expenses;

    Increased foreign operations, often with unique issues relating to corporate culture, compliance with legal and regulatory requirements and other challenges;

    Assumption of known and unknown liabilities and exposure to litigation;

    Increased levels of debt or dilution to existing shareholders; and

    Potential disputes with the sellers of acquired businesses, technology, services or products.

        In addition, internal controls over financial reporting of acquired companies may not be compliant with required standards. Issues may exist that could rise to the level of significant deficiencies or, in some cases, material weaknesses, particularly with respect to foreign companies or non-public U.S. companies.

        Our integration activities may place substantial demands on our management, operational resources and financial and internal control systems. Customer dissatisfaction or performance problems with an acquired business, technology, service or product could also have a material adverse effect on our reputation and business.

Dispositions or our failure to successfully complete dispositions could negatively affect us.

        Our dispositions involve a number of risks and present financial, managerial and operational challenges, including diversion of management attention from running our core businesses, increased expense associated with the dispositions, potential disputes with the customers or suppliers of the disposed businesses, potential disputes with the acquirers of the disposed businesses and a potential dilutive effect on our earnings per share.

        If dispositions are not completed in a timely manner, there may be a negative effect on our cash flows and/or our ability to execute our strategy. See "Business," "MD&A — Results of Discontinued Operations," and Note 4 to our consolidated financial statements for the status of our divestitures.

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Increases in the number of shares of our outstanding common stock could adversely affect our common stock price or dilute our earnings per share.

        Sales of a substantial number of shares of common stock into the public market, or the perception that these sales could occur, could have a material adverse effect on our stock price. As of December 31, 2014, we had the ability to issue up to an additional 2.3 shares as restricted stock shares, restricted stock units, or stock options under our 2002 Stock Compensation Plan, as amended in 2006, 2011 and 2012, and our 2006 Non-Employee Directors' Stock Incentive Plan. Additionally, we may issue a significant number of additional shares, in connection with acquisitions or otherwise. We also may issue a significant number of additional shares, either through an existing shelf registration statement or through other mechanisms. Additional shares issued would have a dilutive effect on our earnings per share.

If the fair value of any of our reporting units is insufficient to recover the carrying value of the goodwill and other intangibles of the respective reporting unit, a material non-cash charge to earnings could result.

        At December 31, 2014, we had goodwill and other intangible assets, net, of $2,286.4. We conduct annual impairment testing to determine if we will be able to recover all or a portion of the carrying value of goodwill and indefinite-lived intangibles. In addition, we review goodwill and indefinite-lived intangible assets for impairment more frequently if impairment indicators arise. If the fair value is insufficient to recover the carrying value of our goodwill and indefinite-lived intangibles, we may be required to record a material non-cash charge to earnings.

        The fair values of our reporting units generally are based on discounted cash flow projections that are believed to be reasonable under current and forecasted circumstances, the results of which form the basis for making judgments about carrying values of the reported net assets of our reporting units. Other considerations are also incorporated, including comparable price multiples. Many of our businesses closely follow changes in the industries and end markets that they serve. Accordingly, we consider estimates and judgments that affect the future cash flow projections, including principal methods of competition such as volume, price, service, product performance and technical innovations and estimates associated with cost reduction initiatives, capacity utilization, and assumptions for inflation and foreign currency changes. We monitor impairment indicators across all of our businesses. Significant changes in market conditions and estimates or judgments used to determine expected future cash flows that indicate a reduction in carrying value may give, and have given, rise to impairments in the period that the change becomes known.

We are subject to work stoppages, union negotiations, labor disputes and other matters associated with our labor force, which may adversely impact our operations and cause us to incur incremental costs.

        At December 31, 2014, we had over 14,000 employees. Seven domestic collective bargaining agreements covered approximately 1,000 employees. We also had various collective labor arrangements as of that date covering certain non-U.S. employee groups. We are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes. Further, we may be subject to work stoppages, which are beyond our control, at our suppliers or customers.

Our technology is important to our success, and failure to develop new products may result in a significant competitive disadvantage.

        We believe the development of our intellectual property rights is critical to the success of our business. In order to maintain our market positions and margins, we need to continually develop and introduce high quality, technologically advanced and cost-effective products on a timely basis, in many cases in multiple jurisdictions around the world. The failure to do so could result in a significant competitive disadvantage.

Cost reduction actions may affect our business.

        Cost reduction actions often result in charges against earnings. These charges can vary significantly from period to period and, as a result, we may experience fluctuations in our reported net income and earnings per share due to the timing of restructuring actions.

Our current and planned products may contain defects or errors that are detected only after delivery to customers. If that occurs, our reputation may be harmed and we may face additional costs.

        We cannot assure you that our product development, manufacturing and integration testing will be adequate to detect all defects, errors, failures and quality issues that could impact customer satisfaction or result in claims against us with regard to our products. As a result, we may have, and from time to time have had, to replace certain components and/or provide

15


remediation in response to the discovery of defects in products that are shipped. The occurrence of any defects, errors, failures or quality issues could result in cancellation of orders, product returns, diversion of our resources, legal actions by our customers or our customers' end users and other losses to us or to any of our customers or end users, and could also result in the loss of or delay in market acceptance of our products and loss of sales, which would harm our business and adversely affect our revenues and profitability.

Changes in key estimates and assumptions related to our defined benefit pension and postretirement plans, such as discount rates, assumed long-term return on assets, assumed long-term trends of future cost, and accounting and legislative changes, as well as actual investment returns on our pension plan assets and other actuarial factors, could affect our results of operations and cash flows.

        We have defined benefit pension and postretirement plans, including both qualified and non-qualified plans, which cover a portion of our salaried and hourly employees and retirees including a portion of our employees and retirees in foreign countries. As of December 31, 2014, these plans were underfunded by $332.7. The determination of funding requirements and pension expense or income associated with these plans involves significant judgment, particularly with respect to discount rates, long-term trends of future costs and other actuarial assumptions. If our assumptions change significantly due to changes in economic, legislative and/or demographic experience or circumstances, our pension and other benefit plans' expense, funded status and our required cash contributions to such plans could be negatively impacted. In addition, returns on plan assets could have a material impact on our pension plans' expense, funded status and our required contributions to the plans. Changes in regulations or law could also significantly impact our obligations. For example, See "MD&A — Critical Accounting Policies and Use of Estimates" for the impact that changes in certain assumptions used in the calculation of our costs and obligations associated with these plans could have on our results of operations and financial position.

Provisions in our corporate documents and Delaware law may delay or prevent a change in control of our company, and accordingly, we may not consummate a transaction that our shareholders consider favorable.

        Provisions of our Certificate of Incorporation and By-laws may inhibit changes in control of our company not approved by our Board. These provisions include, for example: a staggered board of directors; a prohibition on shareholder action by written consent; a requirement that special shareholder meetings be called only by our Chairman, President or Board; advance notice requirements for shareholder proposals and nominations; limitations on shareholders' ability to amend, alter or repeal the By-laws; enhanced voting requirements for certain business combinations involving substantial shareholders; the authority of our Board to issue, without shareholder approval, preferred stock with terms determined in its discretion; and limitations on shareholders' ability to remove directors. In addition, we are afforded the protections of Section 203 of the Delaware General Corporation Law, which could have similar effects. In general, Section 203 prohibits us from engaging in a "business combination" with an "interested shareholder" (each as defined in Section 203) for at least three years after the time the person became an interested shareholder unless certain conditions are met. These protective provisions could result in our not consummating a transaction that our shareholders consider favorable or discourage entities from attempting to acquire us, potentially at a significant premium to our then-existing stock price.

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ITEM 1B. Unresolved Staff Comments

        None.


ITEM 2. Properties

        The following is a summary of our principal properties related to continuing operations as of December 31, 2014:

 
   
   
  Approximate
Square Footage
 
 
   
  No. of
Facilities
 
 
  Location   Owned   Leased  
 
   
   
  (in millions)
 

Flow Technology reportable segment

  12 U.S. states and 22 foreign countries     70     3.7     1.8  

Thermal Equipment and Services reportable segment

  14 U.S. states and 6 foreign countries     33     3.1     2.4  

Industrial Products and Services and Other

  7 U.S. states and 4 foreign countries     18     1.2     0.5  

Total

        121     8.0     4.7  

        In addition to manufacturing plants, we own our corporate office in Charlotte, NC, and lease our Asia Pacific center in Shanghai, China, our European shared service center in Manchester, United Kingdom and various sales, service and other locations throughout the world. We consider these properties, as well as the related machinery and equipment, to be well maintained and suitable and adequate for their intended purposes.


ITEM 3. Legal Proceedings

        We are subject to legal proceedings and claims that arise in the normal course of business. In our opinion, these matters are either without merit or of a kind that should not have a material effect individually or in the aggregate on our financial position, results of operations or cash flows; however, we cannot assure you that these proceedings or claims will not have a material effect on our financial position, results of operations or cash flows.

        See "Risk Factors," "MD&A — Critical Accounting Policies and Estimates — Contingent Liabilities," and Note 14 to our consolidated financial statements for further discussion of legal proceedings.


ITEM 4. Mine Safety Disclosures

        Not applicable.

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P A R T    I I

ITEM 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        Our common stock is traded on the New York Stock Exchange under the symbol "SPW."

        The number of shareholders of record of our common stock as of February 13, 2015 was 3,733.

        Set forth below are the high and low sales prices for our common stock as reported on the New York Stock Exchange composite transaction reporting system for each quarterly period during the years 2014 and 2013, together with dividend information.

 
  High   Low   Dividends
Declared Per Share
 

2014:

                   

4th Quarter

  $ 103.27   $ 77.30   $ 0.375  

3rd Quarter

    111.47     95.03     0.375  

2nd Quarter

    109.93     94.25     0.375  

1st Quarter

    109.89     93.16     0.375  

 

 
  High   Low   Dividends
Declared Per Share
 

2013:

                   

4th Quarter

  $ 100.24   $ 80.98   $ 0.25  

3rd Quarter

    85.47     71.62     0.25  

2nd Quarter

    80.87     67.19     0.25  

1st Quarter

    85.82     69.27     0.25  

        The actual amount of each quarterly dividend, as well as each declaration date, record date and payment date is subject to the discretion of the Board of Directors, and the target dividend level may be adjusted at the discretion of the Board of Directors. The factors the Board of Directors consider in determining the actual amount of each quarterly dividend include our financial performance and ongoing capital needs, our ability to declare and pay dividends, and other factors deemed relevant.


Issuer Purchases of Equity Securities

        The following table summarizes the repurchases of common stock during the three months ended December 31, 2014:

Period
  Total Number
of Shares
Purchased
  Average
Price
Per Share
  Total Number of
Shares Purchased as
Part of a Publicly
Announced Plan
or Program(1)
  Maximum Approximate
Dollar Value of Shares
That May Yet be Purchased
Under the Plan or Program(1)
 

9/28/14-10/31/14

    700,656 (2) $ 89.85     700,155        

11/1/14-11/30/14

    123,327 (2)   94.24     123,204        

12/1/14-12/31/14

    893 (2)   86.14            

Total

    824,876           823,359        

(1)
On December 18, 2013, we entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate the repurchase of up to $500.0 million of shares of our common stock on or before December 31, 2014, in accordance with a share repurchase program authorized by our Board of Directors. During October and November of 2014, we purchased 700,155 and 123,204 shares under the trading plan, respectively, which completed the repurchases authorized under this trading plan.

(2)
Includes the surrender to us of 501, 123 and 893 shares of common stock in October, November and December of 2014, respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock units.

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Company Performance

        This graph shows a five year comparison of cumulative total returns for SPX, the S&P 500 Index and the S&P Composite 1500 Industrials Index. The graph assumes an initial investment of $100 on December 31, 2009 and the reinvestment of dividends.

GRAPHIC

19



ITEM 6. Selected Financial Data

 
  As of and for the year ended December 31,  
 
  2014   2013   2012   2011   2010  
 
  (In millions, except per share amounts)
 

Summary of Operations

                               

Revenues(1)(2)

  $ 4,721.1   $ 4,773.3   $ 4,894.6   $ 4,332.7   $ 3,870.3  

Operating income (loss)(2)(3)(4)

    201.9     345.1     (123.9 )   254.9     337.0  

Other income (expense), net(5)(6)

    484.6     (11.3 )   14.0     (53.6 )   (19.6 )

Interest expense, net

    (61.2 )   (104.4 )   (108.1 )   (91.4 )   (81.6 )

Loss on early extinguishment of debt(7)

    (32.5 )               (25.6 )

Equity earnings in joint ventures(5)

    1.4     42.2     38.6     28.4     30.2  

Income (loss) from continuing operations before income taxes

    594.2     271.6     (179.4 )   138.3     240.4  

Income tax (provision) benefit(8)

    (214.1 )   (60.3 )   14.2     5.5     (50.1 )

Income (loss) from continuing operations

    380.1     211.3     (165.2 )   143.8     190.3  

Income from discontinued operations, net of tax(6)(9)

    8.3     1.3     348.4     32.4     34.7  

Net income

    388.4     212.6     183.2     176.2     225.0  

Less: Net income (loss) attributable to noncontrolling interests

    (9.5 )   2.4     2.8     5.0     (2.8 )

Net income attributable to SPX Corporation common shareholders

  $ 397.9   $ 210.2   $ 180.4   $ 171.2   $ 227.8  

Basic income (loss) per share of common stock:

                               

Income (loss) from continuing operations

  $ 9.19   $ 4.61   $ (3.36 ) $ 2.75   $ 3.88  

Income from discontinued operations

    0.19     0.02     6.97     0.64     0.70  

Net income per share

  $ 9.38   $ 4.63   $ 3.61   $ 3.39   $ 4.58  

Diluted income (loss) per share of common stock:

                               

Income (loss) from continuing operations

  $ 9.05   $ 4.55   $ (3.36 ) $ 2.72   $ 3.84  

Income from discontinued operations

    0.20     0.02     6.97     0.64     0.68  

Net income per share

  $ 9.25   $ 4.57   $ 3.61   $ 3.36   $ 4.52  

Dividends declared per share

  $ 1.50   $ 1.00   $ 1.00   $ 1.00   $ 1.00  

Other financial data:

                               

Total assets

  $ 5,902.2   $ 6,856.2   $ 7,130.1   $ 7,391.8   $ 5,993.3  

Total debt

    1,369.7     1,675.6     1,692.0     2,001.1     1,197.6  

Other long-term obligations          

    1,313.4     1,419.8     1,461.8     1,265.5     1,045.6  

SPX shareholders' equity

    1,817.9     2,158.0     2,224.2     2,184.2     2,043.9  

Noncontrolling interests

    3.2     14.0     11.3     10.0     6.3  

Capital expenditures

    61.1     55.1     81.8     145.4     69.6  

Depreciation and amortization

    109.2     115.1     107.8     83.1     76.7  

(1)
On December 22, 2011, we completed the acquisition of Clyde Union (Holdings) S.a.r.l. ("Clyde Union") within our Flow Technology reportable segment. Revenues for Clyde Union for the period from January 1, 2011 to the date of acquisition and for 2010, neither of which are included above, totaled $434.2 and $403.4, respectively.

(2)
During 2014, we made revisions to expected revenues and costs on our large power projects in South Africa, due primarily to overall project delays and subcontractor challenges, which resulted in a reduction of revenue and operating income of $33.3. See Note 5 to our consolidated financial statements for additional details.

(3)
During 2014, 2013, 2012, 2011 and 2010, we recognized income (expense) related to changes in the fair value of plan assets, actuarial gains (losses) and settlement gains (losses) of $(101.5), $0.8, $(149.9), $(38.6) and $1.4, respectively, associated with our pension and postretirement benefit plans.

(4)
During 2014, we recorded impairment charges of $11.7 and $8.4 related to the trademarks of certain businesses within our Flow Technology and Thermal Equipment and Services reportable segments, respectively. In addition, during 2014, we recorded an impairment charge of $18.0 related to our Cooling Equipment and Services ("Cooling") reporting unit's investment in the Shanghai Electric — SPX Engineering & Technologies Co., Ltd. joint venture ("Shanghai Electric JV").

20



During 2013, we recorded impairment charges of $6.7 related to the trademarks of certain businesses within our Flow Technology reportable segment.


During 2012, we recorded impairment charges of $281.4 associated with the goodwill ($270.4) and other long-term assets ($11.0) of our Cooling reporting unit. In addition, we recorded impairment charges of $4.5 related to trademarks for two other businesses within our Thermal Equipment and Services reportable segment.


During 2011, we recorded impairment charges of $28.3, $20.8 of which related to the impairment of goodwill and $7.5 of which related to the impairment of indefinite-lived intangible assets of our SPX Heat Transfer reporting unit within our Thermal Equipment and Services reportable segment.


See Note 8 to our consolidated financial statements for further discussion of impairment charges associated with goodwill and other long-term assets.

(5)
During 2014, we completed the sale of our 44.5% interest in EGS to Emerson Electric Co. for cash proceeds of $574.1, which resulted in a pre-tax gain of $491.2. Accordingly, we recognized no equity earnings from this joint venture in 2014. Our equity earnings from this investment totaled $41.9, $39.0, $28.7 and $28.8 in 2013, 2012, 2011 and 2010, respectively.

(6)
During 2014, 2013, 2012, 2011 and 2010, we recognized gains (losses) of $(2.4), $0.5, $(0.2), $(37.0) and $(17.3), respectively, associated with foreign currency forward contracts ("FX forward contracts") and currency forward embedded derivatives ("FX embedded derivatives"). The 2011 amount includes a charge of $34.6 related to our hedging a significant portion of the purchase price of the Clyde Union acquisition.


During 2012, we recorded a pre-tax gain of $20.5 associated with the deconsolidation of our dry cooling business in China (see Note 4 to our consolidated financial statements for additional details).


During 2011, we recorded a charge of $19.4 associated with amounts that are deemed uncollectible from an insolvent insurer for certain risk management matters. Of the $19.4 charge, $18.2 was recorded to "Other income (expense), net" and $1.2 to "Gain (loss) on disposition of discontinued operations, net of tax."

(7)
During the first quarter of 2014, we completed the redemption of all of our 7.625% senior notes due in December 2014 for a total redemption price of $530.6. As a result of the redemption, we recorded a charge of $32.5 associated with the loss on early extinguishment of debt, which related to premiums paid to redeem the senior notes of $30.6, the write-off of unamortized deferred financing fees of $1.0, and other costs associated with the extinguishment of the senior notes of $0.9.


During 2010, the charge of $25.6 was associated with the loss on early extinguishment of the then-existing interest rate protection agreements and term loan.

(8)
During 2014, our income tax provision was impacted by the U.S. income taxes provided in connection with the $491.2 gain on the sale of our interest in EGS and by the following income tax charges: (i) $19.6 related to net increases in valuation allowances recorded against certain foreign deferred income tax assets, including $5.1 for which the related tax benefits are no longer expected to be realized due to legal entity reorganization actions that are required in connection with the planned spin-off transaction previously discussed, (ii) $18.6 related to the repatriation of certain earnings of our non-U.S. subsidiaries and (iii) $6.0 of foreign income taxes related to certain reorganization actions undertaken to facilitate the planned spin-off transaction. The impact of these items was partially offset by the following income tax benefits: (i) $28.6 related to various audit settlements, statute expirations and other adjustments to liabilities for uncertain tax positions, with the most notable being the closure of our U.S. tax examination for the years 2008 through 2011, and (ii) $6.4 of tax benefits related to a loss on an investment in a foreign subsidiary.


During 2013, our income tax provision was favorably impacted by the following benefits: (i) $9.5 related to net reductions in valuation allowances recorded against certain foreign deferred income tax assets; (ii) $6.5 related to various audit settlements and statute expirations; and (iii) $4.1 associated with the Research and Experimentation Credit generated in 2012.


During 2012, our income tax provision was impacted by an income tax benefit of $26.3 associated with the $281.4 impairment charge recorded for our Cooling reporting unit, as the majority of the goodwill for the Cooling reporting unit has no basis for income tax purposes. Additionally, the 2012 income tax provision was negatively impacted by (i) taxes provided of $15.4 on foreign dividends and undistributed earnings that were no longer considered to be indefinitely reinvested; (ii) incremental tax expense of $6.1 associated with the deconsolidation of our dry cooling business in China, as the goodwill allocated to the transaction was not deductible for income tax purposes; and (iii) valuation allowances that were recorded against deferred income tax assets during the year of $5.4. The unfavorable impact of these items was offset

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    partially by income tax benefits of $22.3 associated primarily with audit closures, settlements, statute expirations, and other changes in the accrual for uncertain tax positions, with the most notable being the closure of our German tax examination for the years 2005 through 2009.


During 2011, we adopted an alternative method of allocating certain expenses between foreign and domestic sources for federal income tax purposes. As a result of this election, we determined that it was more likely than not that we would be able to utilize our existing foreign tax credits within the remaining carryforward period. Accordingly, during 2011, we released the valuation allowance on our foreign tax credit carryforwards, resulting in an income tax benefit of $38.5. In addition, during 2011, we recorded income tax benefits of $2.5 associated with the conclusion of a Canadian appeals process and $7.7 of tax credits related to the expansion of our power transformer plant in Waukesha, WI. These tax benefits were offset partially by a $6.9 provision for federal income taxes in connection with our plan to repatriate a portion of the earnings of a foreign subsidiary.


During 2010, we recorded an income tax benefit of $18.2 in connection with the completion of the examinations of our 2006 to 2007 federal income tax returns and a tax benefit of $11.1 related to a reduction in liabilities for uncertain tax positions associated primarily with various foreign and domestic statute expirations and the settlement of state examinations. These benefits were offset partially by a domestic charge of $3.6 associated with the repatriation of foreign earnings.

(9)
During 2014, 2013, 2012, 2011 and 2010, we recognized income (expense) related to changes in the fair value of plan assets and actuarial gains (losses), net of tax, of $(2.6), $1.7, $(1.6), $(8.6) and $(0.3), respectively, in "Income (loss) from discontinued operations, net of tax" associated with our pension and postretirement benefit plans.


During 2014, we sold our Thermal Product Solutions, SPX Precision Components, and Fenn LLC businesses, resulting in an aggregate gain of $14.4.


During 2012, we sold our Service Solutions business to Robert Bosch GmbH, resulting in a net gain of $313.4. In addition, we allocated $8.0 of interest expense to discontinued operations during 2012 related to term loan amounts that were required to be repaid in connection with the sale of Service Solutions.


See Note 4 to our consolidated financial statements for additional details regarding our discontinued operations.

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ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations

(All currency and share amounts are in millions)

        The following should be read in conjunction with our consolidated financial statements and the related notes. Unless otherwise indicated, amounts provided in Item 7 pertain to continuing operations only (see Note 4 to our consolidated financial statements for information on discontinued operations).

Executive Overview

        In 2014, we continued to execute our commitments to improving operational performance, returning capital to shareholders and narrowing our strategic focus around our Flow end markets.

        Summarized below is the progress we made in each of these areas during 2014.

    Operational Performance

        Revenues for 2014 were 1.1% lower than 2013, with the most significant fluctuations related to a decline in sales associated with our large power projects in South Africa, power and energy pumps, and fare collection systems, partially offset by increases in sales of cooling equipment, power transformers and heating and ventilation products. Despite the decline in revenue, aggregate income and the related profit margin for our operating segments increased to $522.1 and 11.1%, respectively, in 2014, compared to $510.1 and 10.7%, respectively, in 2013. Much of the improvement in profitability for our operating segments was the result of cost savings associated with restructuring initiatives implemented within our Flow Technology and Thermal Equipment and Services reportable segments during the second half of 2013 and the first half of 2014, as well as improved operational execution and favorable sales mix within the power and energy, and food and beverage, businesses of our Flow Technology reportable segment. Operating results for 2014 were impacted negatively by a reduction in revenue and income of $33.3 associated with revisions to expected revenues and costs related to our large power projects in South Africa, due primarily to overall project delays and subcontractor challenges. Operating cash flows from continuing operations totaled $81.7 in 2014, compared to $111.6 in 2013. The operating cash flows for 2014 included $235.0 of income tax payments associated with the 2014 sales of our interest in the EGS Electrical Group LLC and Subsidiaries ("EGS") joint venture and our Thermal Product Solutions ("TPS"), SPX Precision Components ("Precision Components") and Fenn LLC ("Fenn") businesses (cash inflows from these dispositions have been included in "Cash flows from investing activities"), while operating cash flows for 2013 included a discretionary pension contribution of $250.0 to the SPX U.S. Pension Plan.

    Capital Allocation

        Consistent with our disciplined capital allocation methodology, we made the following key capital allocations during 2014:

    $530.6 to repurchase senior notes (see below for additional details);

    $488.8 to repurchase SPX common stock (see below for additional details);

    $61.1 to capital expenditures;

    $60.3 to dividend payments, reflecting a dividend increase implemented in 2014 (from $1.00 per share to $1.50 per share annually); and

    $25.5 to restructuring actions, primarily in our Flow Technology and Thermal Equipment and Services reportable segments.

        We remain in a strong financial position, with $427.6 of cash and equivalents and $1,369.7 of total debt at the end of 2014. This compares to cash and equivalents and total debt at the end of 2013 of $691.8 and $1,675.6, respectively.

    Divestitures

    Sale of EGS Joint Venture Interest — On January 7, 2014, we completed the sale of our 44.5% interest in the EGS joint venture to Emerson Electric Co. for cash proceeds of $574.1. As a result of the sale, we recorded a gain in 2014 of $491.2 to "Other income (expense), net." See Note 9 to our consolidated financial statements for additional details.

    Sales of TPS, Precision Components and Fenn Businesses — We sold these businesses during 2014 for aggregate cash proceeds of $108.6, resulting in an aggregate gain, net of taxes, of $14.4, which was recorded to "Gain (loss) on disposition of discontinued operations, net of tax." See Note 4 to our consolidated financial statements for additional details.

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        Additional details on the matters mentioned above and various other matters are discussed below.

        Redemption of Senior Notes — On February 11, 2014, we completed the redemption of all our 7.625% senior notes due in December 2014 for a total redemption price of $530.6. As a result of the redemption, we recorded a charge of $32.5 to "Loss on early extinguishment of debt" during 2014, which consisted of premiums paid of $30.6, the write-off of unamortized deferred financing fees of $1.0, and other costs incurred to redeem the notes of $0.9. See Note 12 to our consolidated financial statements for additional details.

        Share Repurchases — We repurchased a total of 4.852 shares of our common stock for $488.8 during 2014, which completed the repurchases authorized under the Rule 10b5-1 trading plan entered into on December 18, 2013. See Note 15 to our consolidated financial statements for additional details.

        Pension Plan Matters

    Lump-Sum Payment Action for the SPX U.S. Pension Plan — During a designated election period in the first quarter of 2014, we offered approximately 7,100 eligible former employees a voluntary lump-sum payment option in lieu of a future pension benefit under the SPX U.S. Pension Plan (the "U.S. Plan"). Approximately 38%, or $165.2, of the projected liability of the U.S. Plan was settled as a result of the lump-sum payments made to those who accepted the offer. These payments resulted in a settlement loss of $4.6, which has been reflected in net periodic pension benefit expense for 2014. In addition, we recorded an actuarial loss of $14.8 in the first quarter of 2014 resulting from the remeasurement of the assets and obligations of the U.S. Plan, which was required in connection with the lump-sum payment action.

    Partial Annuitization of the SPX U.K. Pension Plan — On December 17, 2014, we executed an agreement to transfer obligations for monthly pension payments to retirees under the SPX U.K. Pension Plan (the "U.K. Plan") to Just Retirement Limited. The U.K. Plan paid Just Retirement Limited 79.2 British Pounds ("GBP") ($123.3 equivalent) to irrevocably assume pension obligations totaling approximately GBP 68.0 ($105.8 equivalent). The partial annuitization of the U.K. Plan resulted in a settlement loss of $15.0, which has been included in net periodic pension benefit expense for 2014.

    We recognize changes in the fair value of plan assets and actuarial gains and losses into earnings in the fourth quarter of each year, unless earlier remeasurement is required, as a component of net periodic benefit expense. In connection with this accounting policy, we recognized a charge to net periodic benefit expense during the fourth quarter of 2014 of $71.9. Such charge resulted from reductions in discount rates and changes to our mortality rate assumptions, partially offset by better than expected returns on our plans' assets.

        See Note 10 to our consolidated financial statements for additional details on the above matters.

    Impairment Charges — During 2014, we recorded impairment charges of $38.1 related to the following:

    $11.7 and $8.4 related to trademarks of certain businesses within our Flow Technology and Thermal and Equipment and Services reportable segments, respectively; and

    $18.0 related to our Cooling reporting unit's investment in the Shanghai Electric JV.

        See Note 8 to our consolidated financial statements for additional details on the above charges.

        Planned Spin-Off Transaction

        On October 29, 2014, we announced that our Board of Directors had unanimously approved a plan for a tax-free spin-off of our Flow Technology reportable segment and our Hydraulic Technologies business, a business currently reported within Industrial Products and Services and Other. The spin-off would create a new stand-alone, publicly-traded company focused on providing highly engineered technologies and services to customers in the global power and energy, food and beverage, and industrial markets. We currently expect the transaction to be completed during the third quarter of 2015.

        One-time costs, net of income taxes, associated with this planned transaction are expected to be in the range of $60.0 to $80.0, inclusive of income taxes on the repatriation of foreign earnings. We incurred the following costs in 2014 related to the above planned transaction:

    Professional services and related transaction support costs of $3.5 (included in "Selling, general and administrative" expense);

    Fees and related transaction costs of $5.0 to obtain the consents required of the holders of our 6.875% senior notes to amend certain provisions to the indenture governing such senior notes, allowing these senior notes to become

24


    obligations of the new stand-alone, publicly-traded company mentioned above if, and when, the spin-off transaction is completed (included in "Other income (expense), net");

    U.S. income and foreign withholding taxes of $18.6 as a result of our election in the fourth quarter of 2014 to repatriate certain earnings of our non-U.S. subsidiaries;

    Foreign income taxes of $6.0 related to certain legal entity reorganization actions undertaken to facilitate the planned spin-off transaction; and

    Foreign income taxes provided of $5.1 associated with valuation allowances that have been recorded against deferred income tax assets, as the related tax benefits are no longer expected to be realized due to the legal entity reorganization actions noted above.

        In connection with the planned spin-off transaction, we determined that we would no longer pursue the sale of our Flash Technologies business, a business previously reported in discontinued operations. Accordingly, we have reclassified the results of operations, assets and liabilities, and cash flows of this business to continuing operations for all periods presented. This business is included within Industrial Products and Services and Other.

        Income Taxes — During 2014, our income tax provision was impacted primarily by U.S. income taxes provided in connection with the $491.2 gain on the sale of our interest in EGS, as well as discrete income tax charges of $9.2. These charges were composed primarily of (i) the $29.7 of aggregate tax charges noted above and (ii) $14.5 related to additional net increases in valuation allowances recorded against certain foreign deferred income tax assets. These charges were partially offset by tax benefits of (i) $28.6 related to various audit settlements, statute expirations and other adjustments to liabilities for uncertain tax positions, and (ii) $6.4 related to a loss on an investment in a foreign subsidiary.


Results of Continuing Operations

        Seasonality and Competition — Many of our businesses closely follow changes in the industries and end markets they serve. In addition, certain businesses have seasonal fluctuations. Demand in the oil and gas aftermarket is typically stronger in the second half of the year. Our heating and ventilation products businesses tend to be stronger during the third and fourth quarters, as customer buying habits are driven largely by seasonal weather patterns. Demand for cooling towers, food and beverage systems and related services is highly correlated to timing on large construction contracts, which may cause significant fluctuations in our financial performance from period to period. In aggregate, our businesses generally tend to be stronger in the second half of the year.

        Although our businesses operate in highly competitive markets, our competitive position cannot be determined accurately in the aggregate or by segment since our competitors do not offer all the same product lines or serve all the same markets. In addition, specific reliable comparative figures are not available for many of our competitors. In most product groups, competition comes from numerous concerns, both large and small. The principal methods of competition are service, product performance, technical innovation and price. These methods vary with the type of product sold. We believe we compete effectively on the basis of each of these factors. See "Business — Reportable Segments and Other Operating Segments" for a discussion of our competitors.

        Non-GAAP Measures — Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations and acquisitions. We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented, as, when read in conjunction with our revenues, it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors we use in internal evaluations of the overall performance of our business. This metric, however, is not a measure of financial performance under accounting principles generally accepted in the United States ("GAAP"), should not be considered a substitute for net revenue growth (decline) as determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies.

25


        The following table provides selected financial information for the years ended December 31, 2014, 2013 and 2012, including the reconciliation of organic revenue decline to net revenue decline:

 
  Year ended December 31,    
   
 
 
  2014 vs.
2013%
  2013 vs.
2012%
 
 
  2014   2013   2012  

Revenues

  $ 4,721.1   $ 4,773.3   $ 4,894.6     (1.1 )   (2.5 )

Gross profit

    1,363.6     1,381.0     1,340.4     (1.3 )   3.0  

% of revenues

    28.9 %   28.9 %   27.4 %            

Selling, general and administrative expense

    1,068.7     963.9     1,120.9     10.9     (14.0 )

% of revenues

    22.6 %   20.2 %   22.9 %            

Intangible amortization

    31.8     33.0     34.1     (3.6 )   (3.2 )

Impairment of goodwill and other long-term assets

    38.1     6.7     285.9     *     *  

Special charges, net

    23.1     32.3     23.4     (28.5 )   38.0  

Other income (expense), net

    484.6     (11.3 )   14.0     *     *  

Interest expense, net

    (61.2 )   (104.4 )   (108.1 )   (41.4 )   (3.4 )

Loss on early extinguishment of debt

    (32.5 )           *     *  

Equity earnings in joint ventures

    1.4     42.2     38.6     (96.7 )   9.3  

Income (loss) from continuing operations before income taxes

    594.2     271.6     (179.4 )   118.8     *  

Income tax (provision) benefit

    (214.1 )   (60.3 )   14.2     255.1     *  

Income (loss) from continuing operations

    380.1     211.3     (165.2 )   79.9     *  

Components of consolidated revenue decline:

                               

Organic decline

                      (0.4 )   (1.8 )

Foreign currency

                      (0.7 )   (0.8 )

Acquisition

                          0.1  

Net revenue decline

                      (1.1 )   (2.5 )

*
Not meaningful for comparison purposes.

        Revenues — For 2014, the decrease in revenues, compared to 2013, was due to the strengthening of the U.S. dollar during the period and, to a lesser extent, a decrease in organic revenue. The decrease in organic revenue was attributable primarily to a decrease within our Flow Technology reportable segment, with such decrease generally offset by an increase within our Thermal Equipment and Services reportable segment (see "Results of Reportable Segments and Other Operating Segments" for additional details).

        For 2013, the decrease in revenues, compared to 2012, was due to a decline in organic revenues and, to a lesser extent, the impact of a stronger U.S. dollar (primarily versus the South African Rand). The decline in organic revenues was attributable primarily to declines within our Thermal Equipment and Services reportable segment and, to a lesser extent, our Flow Technology reportable segment, partially offset by an increase in sales within Industrial Products and Services and Other (see "Results of Reportable Segments and Other Operating Segments" for additional details).

        Gross Profit — The decrease in gross profit, compared to 2013, was primarily due to a decline in revenues. In addition, gross profit and gross profit as a percentage of revenues in 2014 were negatively impacted by (i) revisions to expected revenues and costs on our large power projects in South Africa, which resulted in a reduction of gross profit during 2014 of $33.3 (see Note 5 to our consolidated financial statements for additional details), (ii) lower sales of fare collection systems and (iii) an increased mix of lower margin power transformer sales. These decreases in gross profit and gross profit as a percentage of revenues generally were offset by improved operating execution and favorable sales mix within our Flow Technology reportable segment, as well as cost reductions associated with restructuring initiatives within our Flow Technology and Thermal Equipment and Services reportable segments.

        The increase in gross profit and gross profit as a percentage of revenue during 2013, compared to 2012, was primarily the result of improved operating performance within certain European and U.S. locations of our Flow Technology reportable segment, which offset the impact of lower organic revenue for the segment, as well as project execution challenges experienced by the segment's food and beverage business. In addition, gross profit and gross profit as a percentage of revenues were impacted favorably in 2013 by organic revenue growth across all of the businesses within Industrial Products and Services and Other and improved operating execution within our power transformer business.

        Selling, General and Administrative ("SG&A") Expense — For 2014, the increase in SG&A expense, compared to 2013, was due primarily to an increase in (i) pension and postretirement expense of $126.2 (an overall increase in pension and

26


postretirement expense of $131.5, with $5.3 included in "Cost of products sold") and, to a lesser extent, (ii) incentive compensation expense of $18.1 and (iii) stock-based compensation of $5.5. These increases were partially offset by the impacts of (i) cost reductions from restructuring actions completed in 2013 and 2014 within our Flow Technology and Thermal Equipment and Services reportable segments and (ii) foreign currency translation.

        The increase in pension and postretirement expense reflects an increase in actuarial losses recognized in SG&A of $99.2 (from a gain of $1.0 recognized in 2013 to a loss of $98.2 recognized in 2014), resulting primarily from reductions in discount rates and changes in mortality rate assumptions utilized to measure our pension and postretirement obligations, as well as settlement losses associated with the lump-sum payment action for the U.S. Plan during the first quarter of 2014 and the transfer of the obligations for monthly pension payments to retirees under the U.K. Plan to an insurance company during the fourth quarter of 2014. Increases in pension and postretirement expense were partially offset by favorable plan asset returns, compared to expected rates of return, during 2014.

        For 2013, the decrease in SG&A expense, compared to 2012, was due primarily to a decrease in (i) pension and postretirement expense of $166.6 (an overall decrease in pension and postretirement expense of $175.7, with $9.1 included in "Cost of products sold") and (ii) stock-based compensation of $6.0. The decrease in pension and postretirement expense reflects a decrease in actuarial losses recognized in SG&A of $143.4 (from a loss of $142.4 recognized in 2012 to a gain of $1.0 recognized in 2013) and a reduction in expense resulting from a $250.0 discretionary contribution to our domestic qualified pension plan in April of 2013. These decreases in SG&A were offset partially by an increase in incentive compensation in 2013 of $14.7.

        Intangible Amortization — For 2014, the decrease in intangible amortization, compared to 2013, was due primarily to the impact of foreign currency translation.

        For 2013, the decrease in intangible amortization, compared to 2012, was due primarily to certain intangible assets becoming fully amortized during 2012.

        Impairment of Goodwill and Other Long-Term Assets — During 2014, we recorded impairment charges of $11.7 and $8.4 related to the trademarks of certain businesses within our Flow Technology and Thermal Equipment and Services reportable segments, respectively. In addition, during 2014, we recorded an impairment charge of $18.0 related to our Cooling reporting unit's investment in the Shanghai Electric JV.

        During 2013, we recorded impairment charges of $6.7 related to the trademarks of certain businesses within our Flow Technology reportable segment.

        During 2012, we recorded impairment charges of $281.4 associated with the goodwill ($270.4) and other long-term assets ($11.0) of our Cooling reporting unit. In addition, we recorded impairment charges of $4.5 related to trademarks for two businesses within our Thermal Equipment and Services reportable segment.

        See Note 8 to our consolidated financial statements for further discussion of impairment charges.

        Special Charges, Net — Special charges, net, related primarily to restructuring initiatives to consolidate manufacturing, distribution, sales and administrative facilities, reduce workforce, and rationalize certain product lines, as well as related asset impairment charges. See Note 6 to our consolidated financial statements for the details of actions taken in 2014, 2013 and 2012. The components of special charges, net, were as follows:

 
  Year ended
December 31,
 
 
  2014   2013   2012  

Employee termination costs

  $ 19.8   $ 29.2   $ 22.6  

Facility consolidation costs

    0.9     1.0     2.4  

Other cash costs (recoveries), net

    0.9     0.1     (4.4 )

Non-cash asset write-downs

    1.5     2.0     2.8  

Total

  $ 23.1   $ 32.3   $ 23.4  

        Other Income (Expense), Net — Other income, net, for 2014 was composed primarily of the gain on sale of our interest in EGS of $491.2 and, to a much lesser extent, investment-related earnings of $9.0 and gains on FX embedded derivatives of $5.4, partially offset by (i) losses on FX forward contracts of $7.8, (ii) a charge of $5.0 to obtain the consents required of the holders of our 6.875% senior notes to amend certain provisions to the indenture governing such senior notes, with such consent obtained in connection with the planned spin-off transaction previously discussed, and (iii) foreign currency transaction losses of $4.7.

27


        Other expense, net, for 2013 was composed primarily of foreign currency transaction losses of $16.1 and losses on FX forward contracts of $0.1, partially offset by gains on FX embedded derivatives of $0.6 and investment-related earnings of $4.2.

        Other income, net, for 2012 was composed primarily of a gain of $20.5 associated with the deconsolidation of our dry cooling products business in China, investment-related earnings of $9.9, and gains on FX forward contracts of $0.2, partially offset by foreign currency transaction losses of $12.2 and losses on FX embedded derivatives of $0.4.

        Interest Expense, Net — Interest expense, net, includes both interest expense and interest income. The decrease in interest expense, net, during 2014, compared to 2013, was primarily a result of the redemption of all our 7.625% senior notes during the first quarter of 2014 and, to a lesser extent, lower average interest rates and fees related to our senior credit facilities. (See "MD&A — Liquidity and Financial Condition" and Note 12 to our consolidated financial statements for further details pertaining to our 2014 debt activity.)

        The decrease in interest expense, net, during 2013, compared to 2012, was primarily the result of a decrease in the average outstanding borrowings on our revolving credit facilities and trade receivables financing arrangement from $162.0 during 2012 to $8.8 during 2013. Interest expense in 2013 included a charge of $1.0 associated with the write-off of deferred financing costs as a result of the amendment of our senior credit facilities.

        Loss on Early Extinguishment of Debt — As previously noted, in the first quarter of 2014, we completed the redemption of all our 7.625% senior notes due in December 2014 for a total redemption price of $530.6. As a result of the redemption, we recorded a charge of $32.5 during 2014, which consisted of the premiums paid of $30.6, the write-off of unamortized deferred financing fees of $1.0, and other costs incurred to redeem the notes of $0.9.

        Equity Earnings in Joint Ventures — Prior to 2014, our equity earnings in joint ventures were attributable primarily to our investment in EGS. As previously noted, we completed the sale of our investment interest in EGS in January 2014. Accordingly, we recognized no equity earnings from this joint venture during 2014. Our equity earnings from this investment totaled $41.9 and $39.0 during 2013 and 2012, respectively. See Note 9 to our consolidated financial statements for additional information regarding our investment in EGS.

        Income Taxes — During 2014, we recorded an income tax provision of $214.1 on $594.2 of pre-tax income from continuing operations, resulting in an effective tax rate of 36.0%. The effective tax rate for 2014 was impacted by the U.S. income taxes provided in connection with the $491.2 gain on the sale of our interest in EGS and by the following income tax charges: (i) $19.6 related to net increases in valuation allowances recorded against certain foreign deferred income tax assets, including $5.1 for which the related tax benefits are no longer expected to be realized due to legal entity reorganization actions required in connection with the planned spin-off transaction previously discussed, (ii) $18.6 related to the repatriation of certain earnings of our non-U.S. subsidiaries and (iii) $6.0 of foreign income taxes related to certain reorganization actions undertaken to facilitate the planned spin-off transaction. The impact of these items was partially offset by the following income tax benefits: (i) $28.6 of tax benefits related to various audit settlements, statute expirations and other adjustments to liabilities for uncertain tax positions, with the most notable being the closure of our U.S. tax examination for the years 2008 through 2011, and (ii) $6.4 of tax benefits related to a loss on an investment in a foreign subsidiary.

        During 2013, we recorded an income tax provision of $60.3 on $271.6 of pre-tax income from continuing operations, resulting in an effective tax rate of 22.2%. The effective tax rate for 2013 was impacted favorably by income tax benefits of (i) $9.5 associated with net reductions in valuation allowances recorded against certain foreign deferred income tax assets, (ii) $6.5 recorded in connection with various audit settlements and statute expirations during the period, and (iii) $4.1 related to the Research and Experimentation Credit generated in 2012.

        During 2012, we recorded an income tax benefit of $14.2 on a pre-tax loss from continuing operations of $179.4, resulting in an effective tax rate of 7.9%. The effective tax rate for 2012 was impacted by (i) an income tax benefit of $26.3 associated with the $281.4 impairment charge recorded for our Cooling reporting unit's goodwill and other long-term assets, as the majority of the goodwill for the Cooling reporting unit has no basis for income tax purposes, (ii) taxes provided of $15.4 on foreign dividends and undistributed earnings that were no longer considered to be indefinitely reinvested, (iii) incremental tax expense of $6.1 associated with the deconsolidation of our dry cooling business in China, as the goodwill allocated to the transaction was not deductible for income tax purposes, and (iv) valuation allowances that were recorded against deferred income tax assets during the year of $5.4. These income tax charges were offset partially by income tax benefits of $22.3 associated with audit closures, settlements, statute expirations, and other changes in the accrual for uncertain tax positions, with the most notable being the closure of our German tax examination for the years 2005 through 2009.

28



Results of Discontinued Operations

        For 2014, 2013 and 2012, income from discontinued operations and the related income taxes are shown below:

 
  Year ended December 31,  
 
  2014   2013   2012  

Income from discontinued operations

  $ 22.1   $ 3.6   $ 612.7  

Income tax provision

    (13.8 )   (2.3 )   (264.3 )

Income from discontinued operations, net

  $ 8.3   $ 1.3   $ 348.4  

        For 2014, 2013 and 2012, results of operations from our businesses reported as discontinued operations were as follows:

 
  Year ended December 31,  
 
  2014   2013   2012  

Revenues

  $ 27.7   $ 148.9   $ 1,030.6  

Pre-tax income (loss)

    (6.1 )   7.0     57.1  

Discontinued Operations

        As part of our operating strategy, we regularly review and negotiate potential divestitures, some of which are or may be material.

        We report businesses or asset groups as discontinued operations when, among other things, we terminate the operations of the business or asset group, commit to a plan to divest the business or asset group or actively begin marketing the business or asset group, and the sale of the business or asset group is deemed probable within the next twelve months.

        In connection with the planned spin-off transaction previously discussed, we determined that we would no longer pursue the sale of our Flash Technologies business, a business that was previously reported in discontinued operations. Accordingly, we have reclassified the results of operations, assets and liabilities, and cash flows of this business to continuing operations for all periods presented. This business is included within Industrial Products and Services and Other.

        The following businesses, which have been sold or for which operations have been terminated, met the above requirements and therefore have been reported as discontinued operations for all periods presented:

Business
  Quarter
Discontinued
  Quarter of Sale
or Termination
of Operations
 

Fenn LLC ("Fenn")

    Q3 2013     Q3 2014  

SPX Precision Components ("Precision Components")

    Q3 2013     Q2 2014  

Thermal Product Solutions ("TPS")

    Q3 2013     Q1 2014  

Broadcast Antenna System business ("Dielectric")

    Q2 2013     Q2 2013  

Crystal Growing business ("Kayex")

    Q1 2013     Q1 2013  

TPS Tianyu Equipment Co., Ltd. ("Tianyu")

    Q4 2012     Q4 2012  

Weil-McLain (Shandong) Cast-Iron-Boiler Co., Ltd. ("Weil-McLain Shandong")

    Q4 2012     Q4 2012  

SPX Service Solutions ("Service Solutions")

    Q1 2012     Q4 2012  

        Fenn — Sold for cash consideration of $3.5 during 2014, resulting in a loss, net of taxes, of $0.4.

        Precision Components — Sold for cash consideration of $62.6 during 2014 (inclusive of cash paid of $0.4 associated with the working capital settlement), resulting in a loss, net of taxes, of $6.9.

        TPS — Sold for cash consideration of $42.5 during 2014, resulting in a gain, net of taxes, of $21.7.

        Dielectric — We sold assets of the business during 2013 for cash consideration of $4.7, resulting in a gain of less than $0.1.

        Kayex — We closed the business during 2013. We recorded a gain, net of taxes, of $1.3 during 2013 associated primarily with a gain on the sale of a perpetual license related to certain of the business's intangible assets, which was partially offset by a loss related to severance costs and asset impairment charges. Proceeds from the sale of the perpetual license totaled $6.9.

        Tianyu — Sold for cash consideration of one Chinese Yuan ("CNY") (exclusive of cash transferred with the business of $1.1), resulting in a loss, net of taxes, of $1.8 during 2012.

29


        Weil-McLain Shandong — Sold for cash consideration of $2.7 (exclusive of cash transferred with the business of $3.1), resulting in a gain, net of taxes, of $2.2 during 2012. During 2013, we received $1.1 associated with the working capital settlement and reduced the net gain by $0.4. During 2014, we decreased the net gain by $1.1 as a result of revisions to income tax liabilities related to the sale.

        Service Solutions — Sold to Robert Bosch GmbH for cash consideration of $1,134.9, resulting in a gain, net of taxes, of $313.4 during 2012. During 2013, we received $0.8 associated with the working capital settlement and reduced the net gain by $0.3, associated primarily with the working capital settlement and revisions to income tax and other liabilities related to the sale. During 2014, we increased the net gain by $2.1, primarily as a result of revisions to income tax liabilities related to the sale.

        In addition to the businesses discussed above, we recognized net losses of $2.1, $4.6 and $0.4 during 2014, 2013 and 2012, respectively, resulting from adjustments to gains/losses on dispositions of businesses discontinued prior to 2012.

        The final sales price for certain of the divested businesses is subject to adjustment based on working capital existing at the respective closing dates. The working capital figures are subject to agreement with the buyers or, if we cannot come to agreement with the buyers, an arbitration or other dispute-resolution process. Final agreement of the working capital figures with the buyers for certain of these transactions has yet to occur. In addition, changes in estimates associated with liabilities retained in connection with a business divestiture (e.g., income taxes) may occur. It is possible that the sales price and resulting gains/losses on these and other previous divestitures may be materially adjusted in subsequent periods.


Results of Reportable Segments and Other Operating Segments

        The following information should be read in conjunction with our consolidated financial statements and related notes. These results exclude the operating results of discontinued operations for all periods presented. See Note 5 to our consolidated financial statements for a description of each of our reportable segments and other operating segments.

        Non-GAAP Measures — Throughout the following discussion of reportable and other operating segments, we use "organic revenue" growth (decline) to facilitate explanation of the operating performance of our segments. Organic revenue growth (decline) is a non-GAAP financial measure, and is not a substitute for net revenue growth (decline). Refer to the explanation of this measure and purpose of use by management under "Results of Continuing Operations — Non-GAAP Measures."

Flow Technology Reportable Segment

 
  Year ended December 31,    
   
 
 
  2014 vs.
2013%
  2013 vs.
2012%
 
 
  2014   2013   2012  

Revenues

  $ 2,596.1   $ 2,638.0   $ 2,682.2     (1.6 )   (1.6 )

Income

    361.9     308.3     285.1     17.4     8.1  

% of revenues

    13.9 %   11.7 %   10.6 %            

Components of revenue decline:

                               

Organic decline

                      (1.3 )   (1.5 )

Foreign currency

                      (0.3 )   (0.2 )

Acquisition

                          0.1  

Net revenue decline

                      (1.6 )   (1.6 )

        Revenues — For 2014, the decrease in revenues, compared to 2013, was due to a decline in organic revenue and, to a lesser extent, the strengthening of the U.S. dollar during the period. The decline in organic revenue was due primarily to lower sales of power and energy pumps, partially offset by increased sales of food and beverage systems.

        For 2013, the decrease in revenues, compared to 2012, was due primarily to an organic revenue decline and, to a lesser extent, the strengthening of the U.S. dollar during the period. The decline in organic revenue was due primarily to lower sales of food and beverage systems projects in Asia Pacific and lower sales of Clyde Union's original equipment oil and gas pumps. These declines were offset partially by an increase in sales of valves, closures and other components into oil and gas markets, primarily in North America and Europe, as well as increased food and beverage systems revenues in Europe.

        Income — For 2014, income and margin increased, compared to 2013, primarily due to (i) improved operating execution and favorable sales mix associated primarily with the segment's power and energy and food and beverage businesses and (ii) cost reductions associated with restructuring initiatives at various locations in Europe and the United States.

        For 2013, income and margin increased, compared to 2012, due to improved operating execution at a number of businesses within the segment, cost reductions associated with restructuring initiatives implemented at Clyde Union, and the

30


increased sales of oil and gas components at our European and U.S. facilities, which more than offset the impact of the organic revenue decline described above, as well as execution challenges on certain large food and beverage systems projects experienced in 2013. In addition, in 2012, income and margin were diluted by $8.1 associated with the excess fair value (over historical cost) of inventory acquired in the Clyde Union transaction and subsequently sold in the first half of 2012.

        Backlog — The segment had backlog of $1,149.3 and $1,387.4 as of December 31, 2014 and 2013, respectively. Approximately 87% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015.

Thermal Equipment and Services Reportable Segment

 
  Year Ended December 31,    
   
 
 
  2014 vs.
2013%
  2013 vs.
2012%
 
 
  2014   2013   2012  

Revenues

  $ 1,329.9   $ 1,344.2   $ 1,490.9     (1.1 )   (9.8 )

Income

    52.4     81.9     106.7     (36.0 )   (23.2 )

% of revenues

    3.9 %   6.1 %   7.2 %            

Components of revenue decline:

                               

Organic growth (decline)

                      0.9     (7.4 )

Foreign currency

                      (2.0 )   (2.4 )

Net revenue decline

                      (1.1 )   (9.8 )

        Revenues — For 2014, the decrease in revenues, compared to 2013, was due to the impact of a stronger U.S. dollar during the period (versus primarily the South African Rand and Euro), partially offset by an increase in organic revenue. The organic revenue growth was the result of increases in sales of cooling equipment in the U.S. and Asia Pacific, as well as heating and ventilation products in the U.S., partially offset by the expected decrease in revenues associated with the large power projects in South Africa.

        For 2013, the decrease in revenues, compared to 2012, was due to an organic revenue decline and, to a lesser extent, the impact of a stronger U.S. dollar (primarily versus the South African Rand). The organic revenue decline was due primarily to a decrease in power generation equipment and service sales in North America and Europe, and the expected winding down of our large power projects in South Africa.

        Income — For 2014, income and margin decreased, compared to 2013, primarily due to the reduction in income on the large power projects in South Africa of approximately $50.0. The decline in income for these projects resulted from the expected decrease in revenues noted above and revisions to expected revenues and costs on the projects, due to overall project delays and subcontractor challenges, which resulted in a reduction of income during 2014 of $33.3 (see Note 5 to our consolidated financial statements for additional details). This decline in income and margin was offset partially by the impact of cost reductions associated with restructuring initiatives and improved profitability associated with the segment's heating and ventilation products primarily related to the organic revenue growth described above.

        For 2013, income and margin decreased, compared to 2012, primarily due to the organic revenue decline described above, offset partially by improved execution and cost reductions associated with restructuring actions initiated in the first half of 2013.

        Backlog — The segment had backlog of $714.1 and $675.4 as of December 31, 2014 and 2013, respectively. Approximately 70% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015. Portions of this backlog are long-term in nature, with the related revenues expected to be recorded through 2015 and beyond. The backlog figures as of December 31, 2014 and 2013 exclude approximately $70.0 and $100.0, respectively, of estimated price increases related to cost inflation on our large power projects in South Africa.

31


Industrial Products and Services and Other

 
  Year Ended December 31,    
   
 
 
  2014 vs.
2013%
  2013 vs.
2012%
 
 
  2014   2013   2012  

Revenues

  $ 795.1   $ 791.1   $ 721.5     0.5     9.6  

Income

    107.8     119.9     99.3     (10.1 )   20.7  

% of revenues

    13.6 %   15.2 %   13.8 %            

Components of revenue growth:

                               

Organic growth

                      0.1     9.6  

Foreign currency

                      0.4      

Net revenue growth

                      0.5     9.6  

        Revenues — For 2014, the increase in revenues, compared to 2013, was due to the strengthening of the U.S. dollar during the period and, to a lesser extent, an increase in organic revenue. The increase in organic revenue was due primarily to an increase in power transformer volume, partially offset by lower sales of fare collection systems and tower and obstruction lights and monitoring equipment.

        For 2013, the increase in revenues, compared to 2012, was due primarily to an increase in organic revenue related to increased sales for most of the businesses within the group, with the most significant contributors being power transformers and fare collection systems.

        Income — For 2014, income and margin decreased, compared to 2013, primarily due to a decline in fare collection systems sales and profit. Margins were also impacted by the increased mix of lower margin power transformer sales.

        For 2013, the increase in income and margin, compared to 2012, was due primarily to leverage on increased sales volumes and improved operating execution at our power transformer business.

        Backlog — The segment had backlog of $335.9 and $286.1 as of December 31, 2014 and 2013, respectively. Approximately 90% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015.

Corporate Expense and Other Expense (Income)

 
  Year Ended December 31,    
   
 
 
  2014 vs.
2013%
  2013 vs.
2012%
 
 
  2014   2013   2012  

Total consolidated revenues

  $ 4,721.1   $ 4,773.3   $ 4,894.6     (1.1 )   (2.5 )

Corporate expense

    106.8     110.8     108.8     (3.6 )   1.8  

% of revenues

    2.3 %   2.3 %   2.2 %            

Pension and postretirement expense (income)

    113.8     (17.7 )   158.0     *     *  

Stock-based compensation expense

    38.4     32.9     38.9     16.7     (15.4 )

*
Not meaningful for comparison purposes.

        Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, NC corporate headquarters and our Asia Pacific center in Shanghai, China. Corporate expense for 2013 included costs of $7.7 associated with earnings on participant deferred compensation balances, while such earnings were included in "Other income (expense), net" during 2014. The impact of this decline on 2014 corporate expense was offset partially by an increase in incentive compensation expense.

        Corporate expense increased during 2013, compared to 2012, due primarily to an increase in the incentive compensation expense.

        Pension and Postretirement Expense (Income) — Pension and postretirement expense (income) represents our consolidated expense (income), which we do not allocate for segment reporting purposes. We recognize changes in the fair value of plan assets and actuarial gains and losses in earnings during the fourth quarter of each year, unless earlier remeasurement is required, as a component of net periodic benefit expense. The remaining components of pension and postretirement expense (income), primarily service and interest costs and expected return on plan assets, are recorded on a quarterly basis.

32


        Pension and postretirement expense for 2014 included changes in the fair value of plan assets and actuarial losses of $71.9 that resulted primarily from reductions in discount rates and changes in mortality rate assumptions utilized to measure our pension and postretirement obligations, partially offset by favorable plan asset returns, compared to expected returns during 2014. Pension and postretirement expense also included net losses of $29.6 associated with charges of (i) $19.4 for the lump-sum payment action related to the U.S. Plan during the first quarter of 2014 and (ii) $15.0 related to the premium paid in order to transfer monthly payments to retirees under the U.K. Plan to an insurance company during the fourth quarter of 2014, partially offset by a reduction of $4.8 to the estimated settlement loss that was recorded during the fourth quarter of 2013 in connection with the transfer of the pension obligation for the retirees of the U.S. Plan to an insurance company.

        Pension and postretirement income for 2013 included changes in the fair value of plan assets and actuarial gains of $0.8 that resulted primarily from an increase in discount rates during the year, partially offset by the premium paid in order to transfer the monthly payments to retirees under the U.S. Plan to an insurance company. In addition, pension and postretirement income for 2013 was impacted favorably by a discretionary contribution of $250.0 to the U.S. Plan during April 2013.

        Pension and postretirement expense for 2012 included changes in the fair value of plan assets and actuarial losses of $149.9, associated primarily with a decrease in discount rates during the year.

        See Note 10 to our consolidated financial statements for further details on our pension and postretirement plans.

        Stock-based Compensation Expense — Stock-based compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes. The increase in stock-based compensation expense for 2014, compared to 2013, was primarily the result of an increase in the fair value of the 2014 restricted stock share and restricted stock unit awards, as the weighted-average fair value of the 2014 awards was approximately 41% higher than the 2013 awards.

        The decrease in stock-based compensation expense for 2013, compared to 2012, was due primarily to a reduction in stock-based compensation associated with our executive officer group, as well as an increase in forfeitures during 2013.


Liquidity and Financial Condition

        Listed below are the cash flows from (used in) operating, investing and financing activities, and discontinued operations, as well as the net change in cash and equivalents for the years ended December 31, 2014, 2013 and 2012.

 
  Years Ended December 31,  
 
  2014   2013   2012  

Continuing operations:

                   

Cash flows from operating activities

  $ 81.7   $ 111.6   $ 68.0  

Cash flows from (used in) investing activities

    519.8     (48.2 )   (95.3 )

Cash flows used in financing activities

    (902.8 )   (335.4 )   (669.6 )

Cash flows from (used in) discontinued operations

    102.3     (4.8 )   1,127.8  

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

    (65.2 )   (15.5 )   2.2  

Net change in cash and equivalents

  $ (264.2 ) $ (292.3 ) $ 433.1  

2014 Compared to 2013

        Operating Activities — Cash flows from operating activities during 2014 included income tax payments, net of refunds, of $314.8 (compared to $50.3 in 2013), including $235.0 related to the sales of our interest in EGS and the TPS, Precision Components and Fenn businesses. Cash flows from operating activities during 2013 included a $250.0 discretionary contribution to the U.S. Plan.

        Investing Activities — The increase in cash flows from investing activities during 2014, compared to 2013, was due primarily to proceeds from the sale of our interest in EGS of $574.1.

        Financing Activities — During 2014, net cash used in financing activities of $902.8 was due primarily to the redemption of all our 7.625% senior notes due in December 2014 for $530.6, repurchases of our common stock of $488.8, and dividends paid of $60.3, partially offset by net borrowings on other debt facilities of $191.0. During 2013, net cash used in financing activities of $335.4 was due primarily to repurchases of our common stock of $260.2, dividends paid of $34.7, and net repayments of debt of $20.8.

33


        Discontinued Operations — Cash flows from discontinued operations during 2014 included aggregate cash proceeds related to the sales of the TPS, Precision Components and Fenn businesses of $108.6, as well as operating and other investing cash flows related primarily to these businesses, while cash flows used in discontinued operations during 2013 related primarily to cash flows used in the operations of the previously mentioned businesses as well as those of Kayex and Dielectric, partially offset by the aggregate cash proceeds of $11.6 associated with the sale of assets related to Kayex and Dielectric.

        Change in Cash and Equivalents due to Changes in Foreign Currency Exchange Rates — The decrease in cash and equivalents due to foreign currency exchange rates for 2014 of $65.2 reflects primarily a reduction in U.S. dollar equivalent balances of our Euro-denominated cash and equivalents as a result of the strengthening of the U.S. dollar against the Euro during the period, while the related decrease for 2013 of $15.5 reflects primarily a reduction in U.S. dollar equivalent balances of our South African Rand-denominated cash and equivalents as a result of the strengthening of the U.S. dollar against the South African Rand during the period.

2013 Compared to 2012

        Operating Activities — Cash flows from operating activities during 2013 included $319.2 of defined benefit pension and postretirement contributions and direct benefit payments, $250.0 of which was a discretionary pension contribution, compared to $64.6 during 2012. Excluding the impact of these contributions, operating cash flows improved significantly on a year-over-year basis due to favorable working capital trends at many of our businesses. For example, Clyde Union's operating cash flows during 2013 totaled approximately $64.0 compared to cash used in operations during 2012 of approximately $100.0, with such cash outflows required in order to fund the business's initial working capital needs.

        Investing Activities — The decrease in cash used in investing activities during 2013, compared to 2012, was due primarily to (i) the acquisition of Seital S.r.l. during 2012 for $28.0 (there were no business acquisitions in 2013) and (ii) a reduction in capital expenditures (2013 — $55.1 and 2012 — $81.8).

        Financing Activities — During 2013, net cash used in financing activities of $335.4 was due primarily to repurchases of our common stock of $260.2, dividends paid of $34.7, and net repayments of debt of $20.8. During 2012, net cash used in financing activities of $669.6 was due primarily to net repayments of debt of $365.5, repurchases of our common stock of $245.6, and dividends paid of $63.6. The net repayments of debt, including repayments against our term loans of $325.0, and repurchases of common stock, resulted primarily from the proceeds that were received in connection with the sale of our Service Solutions business in December 2012.

        Discontinued Operations — Cash flows used in discontinued operations during 2013 related primarily to Kayex, Dielectric, TPS, Precision Components and Fenn, while cash flows from discontinued operations during 2012 related primarily to Service Solutions and the businesses mentioned above. The 2012 figure includes proceeds of $1,134.9 received in connection with the sale of our Service Solutions business in December 2012.

        Change in Cash and Equivalents due to Changes in Foreign Currency Exchange Rates — The decrease in cash and equivalents due to foreign currency exchange rates for 2013 of $15.5 reflects primarily a reduction in U.S. dollar equivalent balances of our South African Rand-denominated cash and equivalents as a result of the strengthening of the U.S. dollar against the South African Rand during the period. Changes in foreign currency exchange rates resulted only in a $2.2 increase in cash and equivalents during 2012.

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Borrowings

        The following summarizes our debt activity (both current and non-current) for the year ended December 31, 2014:

 
  December 31,
2013
  Borrowings   Repayments   Other(4)   December 31,
2014
 

Domestic revolving loan facility

  $   $ 472.0   $ (339.0 ) $   $ 133.0  

Term loan

    475.0     100.0             575.0  

6.875% senior notes, due in August 2017

    600.0                 600.0  

7.625% senior notes(1)

    500.0         (500.0 )        

Trade receivables financing arrangement(2)

        91.0     (81.0 )       10.0  

Other indebtedness(3)

    100.6     12.7     (64.7 )   3.1     51.7  

Total debt

    1,675.6   $ 675.7   $ (984.7 ) $ 3.1     1,369.7  

Less: short-term debt

    26.9                       181.1  

Less: current maturities of long-term debt

    558.7                       30.8  

Total long-term debt

  $ 1,090.0                     $ 1,157.8  

(1)
As noted below, we completed the redemption of all the 7.625% senior notes during the first quarter of 2014.

(2)
Under this arrangement, we can borrow, on a continuous basis, up to $80.0, as available. At December 31, 2014, we had $70.0 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $10.0.

(3)
Primarily included capital lease obligations of $13.6 and $73.0 and balances under purchase card programs of $32.1 and $25.4 at December 31, 2014 and 2013, respectively. During 2014, we purchased our corporate headquarters facility for cash consideration of $60.8, resulting in the extinguishment of the related capital lease obligation.

(4)
"Other" primarily included debt assumed and foreign currency translation on any debt instruments denominated in currencies other than the U.S. dollar.

Senior Credit Facilities

        Our senior credit facilities provide for committed senior secured financing in an aggregate amount of $2,075.0, consisting of the following (each with a final maturity of December 23, 2018):

    A term loan facility of $575.0;

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

    A global revolving credit facility, available for loans in U.S. Dollars, Euros, GBP and other currencies, in an aggregate principal amount up to the equivalent of $200.0;

    A participation foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $800.0; and

    A bilateral foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $200.0.

        The term loan of $575.0 (which includes $100.0 drawn under the facility in the second quarter of 2014) is repayable in quarterly installments of 5.0% annually, beginning with our second fiscal quarter of 2015, with the remaining balance repayable in full on December 23, 2018.

        At December 31, 2014, we had $53.8 and $695.3, respectively, of outstanding letters of credit under our revolving credit and our foreign credit instrument facilities of our senior credit agreement. In addition, we had $5.7 of letters of credit outstanding under separate arrangements in China and India.

        We also may seek additional commitments, without the consent from the existing lenders, to add an incremental term loan facility and/or increase the commitments in respect of the domestic revolving credit facility, the global revolving credit facility, the participation foreign credit instrument facility and/or the bilateral foreign credit instrument facility by up to an aggregate principal amount not to exceed (x) $1,000.0 or (y) such greater amount that would not cause our Consolidated Senior Secured Leverage Ratio to exceed 2.75 to 1.00.

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        We are the borrower under all the facilities, and certain of our foreign subsidiaries are borrowers under the foreign credit instrument facilities (and we may in the future designate other subsidiaries to be borrowers under the revolving credit facilities and the foreign credit instrument facilities).

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

        The letters of credit under the domestic revolving credit facility are stand-by letters of credit requested by any borrower on behalf of itself or any of its subsidiaries or certain joint ventures. The foreign credit instrument facility is used to issue credit instruments, including bank undertakings to support primarily commercial contract performance. We borrow and repay amounts under our revolving credit facilities on a regular basis during the year. During 2014, the average daily amount outstanding under these facilities was approximately $63.6.

        The interest rates applicable to loans under our senior credit facilities are, at our option, equal to either (i) an alternate base rate (the higher of (a) the federal funds effective rate plus 0.5%, (b) the prime rate of Bank of America, N.A., and (c) the one-month LIBOR plus 1.0%) or (ii) a reserve-adjusted LIBOR (as defined in the senior credit facilities) for dollars (Eurodollar) plus, in each case, an applicable margin percentage, which varies based on our Consolidated Leverage Ratio (as 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 cash and cash equivalents in excess of $50.0) at the date of determination to consolidated adjusted EBITDA for the four fiscal quarters ended on such date). We may elect interest periods of one, two, three or six months for Eurodollar borrowings. The per annum fees charged and the interest rate margins applicable to Eurodollar and alternate base rate loans are as follows:

Consolidated Leverage Ratio
  Domestic
Revolving
Commitment
Fee
  Global
Revolving
Commitment
Fee
  Letter of
Credit Fee
  Foreign
Credit
Commitment
Fee and
Bilateral
Foreign
Credit Fee
  Foreign
Credit
Instrument
Fee and
Bilateral
Foreign
Credit Fee
  LIBOR
Loans
  ABR
Loans
 

Greater than or equal to 3.00 to 1.00

    0.35 %   0.35 %   2.00 %   0.35 %   1.25 %   2.00 %   1.00 %

Between 2.00 to 1.00 and 3.00 to 1.00

    0.30 %   0.30 %   1.75 %   0.30 %   1.00 %   1.75 %   0.75 %

Between 1.50 to 1.00 and 2.00 to 1.00

    0.275 %   0.275 %   1.50 %   0.275 %   0.875 %   1.50 %   0.50 %

Between 1.00 to 1.00 and 1.50 to 1.00

    0.25 %   0.25 %   1.375 %   0.25 %   0.80 %   1.375 %   0.375 %

Less than 1.00 to 1.00

    0.225 %   0.225 %   1.25 %   0.225 %   0.75 %   1.25 %   0.25 %

        The weighted-average interest rate of outstanding borrowings under our senior credit facilities was approximately 1.6% at December 31, 2014.

        Bilateral foreign credit fees and commitments are as specified above, unless otherwise agreed with the bilateral foreign issuing lender. We also pay fronting fees on the outstanding amounts of letters of credit and foreign credit instruments (in the participation facility) at the rates of 0.125% per annum and 0.25% per annum, respectively.

        Our senior credit facilities require 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). Mandatory prepayments will be applied to repay, first, any amounts outstanding under the term loans and any other incremental term loans that we may have outstanding in the future, in the manner and order selected by us, and second, after the term loans and any such incremental term loans have been repaid in full, amounts (or cash collateralize letters of credit) outstanding under the global revolving credit facility and the domestic revolving credit facility (without reducing the commitments thereunder). No prepayment is required generally to the extent the net proceeds are reinvested in permitted acquisitions, permitted investments or assets to be used in our business within 360 days of the receipt of such proceeds.

        We may voluntarily prepay loans under our senior credit facilities, in whole or in part, without premium or penalty. Any voluntary prepayment of loans will be subject to reimbursement of the lenders' breakage costs in the case of a prepayment of Eurodollar rate borrowings other than on the last day of the relevant interest period.

        Indebtedness under our senior credit facilities is guaranteed by:

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

    SPX Corporation with respect to the obligations of our foreign borrower subsidiaries under the global revolving credit facility, the participation foreign credit instrument facility and the bilateral participation foreign credit instrument facility.

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        Indebtedness under our senior credit facilities is secured by a first priority pledge and security interest in 100% of the capital stock of our domestic subsidiaries (with certain exceptions) held by us or our domestic subsidiary guarantors and 65% of the capital stock of our material first-tier foreign subsidiaries (with certain exceptions). If our corporate credit rating is less than "Ba2" (or not rated) by Moody's and less than "BB" (or not rated) by S&P, then we and our domestic subsidiary guarantors are required to grant security interests, mortgages and other liens on substantially all of our assets. If our 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 our senior credit facilities will be unsecured.

        Our senior credit facilities require that we maintain:

    A Consolidated Interest Coverage Ratio (as defined in the credit agreement generally as the ratio of consolidated adjusted EBITDA for the four fiscal quarters ended on such date to consolidated cash interest expense for such period) as of the last day of any fiscal quarter of at least 3.50 to 1.00; and

    A Consolidated Leverage Ratio as of the last day of any fiscal quarter of not more than 3.25 to 1.00 (or 3.50 to 1.00 for the four fiscal quarters after certain permitted acquisitions).

        Our senior credit facilities also contain covenants that, among other things, restrict our ability to incur additional indebtedness, grant liens, make investments, loans, guarantees or advances, make restricted junior payments, including dividends, redemptions of capital stock and voluntary prepayments or repurchase of certain other indebtedness, engage in mergers, acquisitions or sales of assets, enter into sale and leaseback transactions or engage in certain transactions with affiliates and otherwise restrict certain corporate activities. We do not expect these covenants to restrict our liquidity, financial condition or access to capital resources in the foreseeable future. Our senior credit facilities also contain customary representations, warranties, affirmative covenants, and events of default.

        We are permitted under our senior credit facilities to repurchase our capital stock and pay cash dividends in an unlimited amount if our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) less than 2.50 to 1.00. If our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) greater than or equal to 2.50 to 1.00, the aggregate amount of such repurchases and dividend declarations cannot exceed (A) $100.0 in any fiscal year plus (B) an additional amount for all such repurchases and dividend declarations made after December 23, 2013 equal to the sum of (i) $300.0 and (ii) a positive amount equal to 50% of cumulative Consolidated Net Income (as defined in the credit agreement generally as consolidated net income subject to certain adjustments solely for the purposes of determining this basket) during the period from July 1, 2011 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).

        At December 31, 2014, we were in compliance with all covenant provisions of our senior credit facilities. While the impact of continued market volatility cannot be predicted, we do not expect an impact on our ability to comply with the covenant provisions of our senior credit facilities in the near or long term.

Senior Notes

        In August 2010, we issued, in a private placement, $600.0 aggregate principal amount of 6.875% senior unsecured notes that mature in August 2017. The interest payment dates for these notes are March 1 and September 1 of each year. The notes are redeemable, in whole or in part, at any time prior to maturity at a price equal to 100% of the principal amount thereof plus an applicable premium, plus accrued and unpaid interest. If we experience certain types of change of control transactions, we must offer to repurchase the notes at 101% of the aggregate principal amount of the notes repurchased, plus accrued and unpaid interest. These notes are unsecured and rank equally with all our existing and future unsubordinated unsecured senior indebtedness, but are effectively junior to our senior credit facilities. The indenture governing these notes contains covenants that, among other things, limit our ability to incur liens, enter into sale and leaseback transactions and consummate some mergers. During the third quarter of 2011, these senior notes became freely tradable. Payment of the principal, premium, if any, and interest on these notes is guaranteed on a senior unsecured basis by our domestic subsidiaries. The likelihood of having to make payments under the guarantee is considered remote. At December 31, 2014, we were in compliance with all covenants of our 6.875% senior notes. As indicated in Note 4 to our consolidated financial statements, our Board of Directors approved a plan for a tax-free spin-off of our Flow Technology reportable segment and our Hydraulic Technologies business and the creation of a new stand-alone, publicly-traded company. In connection with the planned spin-off transaction, we obtained, in December 2014, consents from the holders of our 6.875% senior notes allowing these senior notes to become obligations of the new stand-alone, publicly traded company if, and when, the spin-off transaction is completed.

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        In December 2007, we issued, in a private placement, $500.0 aggregate principal amount of 7.625% senior unsecured notes that were to mature in December 2014. On February 11, 2014, we completed the redemption of all the 7.625% senior notes for a total redemption price of $530.6. As a result of the redemption, we recorded a charge of $32.5 to "Loss on early extinguishment of debt" during 2014, which related to premiums paid to redeem the senior notes of $30.6, the write-off of unamortized deferred financing fees of $1.0, and other costs associated with the extinguishment of the senior notes of $0.9.

Other Borrowings and Financing Activities

        Certain of our businesses purchase goods and services under purchase card programs allowing for payment beyond their normal payment terms. As of December 31, 2014 and 2013, the participating businesses had $32.1 and $25.4, respectively, outstanding under these arrangements. As these arrangements extend the payment of our businesses' payables beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

        We are party to a trade receivables financing agreement, whereby we can borrow, on a continuous basis, up to $80.0. Availability of funds may fluctuate over time given changes in eligible receivable balances, but will not exceed the $80.0 program limit. The facility contains representations, warranties, covenants and indemnities customary for facilities of this type. The facility does not contain any covenants that we view as materially constraining to the activities of our business.

Availability

        At December 31, 2014, we had $313.2 of available borrowing capacity under our revolving credit facilities after giving effect to borrowings under the domestic revolving loan facility of $133.0 and $53.8 reserved for outstanding letters of credit, and $70.0 of available borrowing capacity under our trade receivables financing arrangement after giving effect to outstanding borrowings of $10.0 under this arrangement. In addition, at December 31, 2014, we had $304.7 of available issuance capacity under our foreign trade facilities after giving effect to $695.3 reserved for outstanding letters of credit.

        Additionally, we have a shelf registration statement for 8.3 shares of common stock that may be issued for acquisitions. In addition, other financing instruments may be used from time to time, including, but not limited to, private placement instruments, operating leases, capital leases and securitizations. We expect that we will continue to access these markets as appropriate to maintain liquidity and to provide sources of funds for general corporate purposes, acquisitions or to refinance existing debt.

        At December 31, 2014, we had approximately $1,543.0 of undistributed foreign earnings, including approximately $1,265.0 for which no U.S. federal or state income taxes have been provided. If these earnings were distributed, we would be subject to U.S. income taxes (subject to a reduction for foreign tax credits) and withholding taxes payable to the various foreign countries.

Financial Instruments

        We measure our financial assets and liabilities on a recurring basis, and nonfinancial assets and liabilities on a non-recurring basis, at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that we believe market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2) or significant unobservable inputs (Level 3).

        Our derivative financial assets and liabilities include FX forward contracts, FX embedded derivatives and forward contracts that manage the exposure on forecasted purchases of commodity raw materials ("commodity contracts") that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. Based on our continued ability to enter into forward contracts, we consider the markets for our fair value instruments active.

        As of December 31, 2014, there was 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 was no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties' credit risk.

        We primarily use the income approach, which uses valuation techniques to convert future amounts to a single present amount. Assets and liabilities measured at fair value on a recurring basis are further discussed below.

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Currency Forward Contracts

        We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency exchange rates. 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 Euro, South African Rand, CNY and GBP.

        From time to time, we enter into FX forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries. In addition, some of our contracts contain FX embedded derivatives, because the currency of exchange is not "clearly and closely" related to the functional currency of either party to the transaction. Certain of our FX forward contracts are designated as cash flow hedges. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives' fair value are not included in current earnings, but are included in accumulated other comprehensive income ("AOCI"). These changes in fair value are reclassified into earnings as a component of revenues or cost of products sold, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable, the cumulative change in the derivatives' fair value is recorded as a component of "Other income (expense), net" in the period in which the transaction is no longer considered probable of occurring. To the extent a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded in earnings in the period in which it occurs.

        We had FX forward contracts with an aggregate notional amount of $298.0 and $191.3 outstanding as of December 31, 2014 and 2013, respectively, with substantially all such contracts scheduled to mature in 2015. We also had FX embedded derivatives with an aggregate notional amount of $246.0 and $145.8 at December 31, 2014 and 2013, respectively, with scheduled maturities of $151.7, $84.0 and $10.3 in 2015, 2016 and years thereafter, respectively. The unrealized losses, net of taxes, recorded in AOCI related to FX forward contracts were $0.3 and $1.0 as of December 31, 2014 and 2013, respectively. We anticipate reclassifying $0.2 of the unrealized loss as of December 31, 2014 to income over the next 12 months, with the remaining $0.1 in 2016. The net gain (loss) recorded in "Other income (expense), net" related to FX forward contracts and FX embedded derivatives totaled $(2.4) in 2014, $0.5 in 2013 and $(0.2) in 2012.

        The fair values of our FX forward contracts and FX embedded derivatives as of December 31, 2014 and 2013 were as follows:

 
  December 31, 2014   December 31, 2013  
 
  Current
Assets
  Noncurrent
Assets
  Current
Liabilities
  Long-Term
Liabilities
  Current
Assets
  Noncurrent
Assets
  Current
Liabilities
  Long-Term
Liabilities
 

FX forward contracts

  $   $   $ (4.5 ) $ (0.1 ) $ 0.9   $   $ (0.3 ) $  

FX embedded derivatives

    5.1     1.2     (4.7 )   (0.9 )   0.7         (6.5 )   (2.1 )

Commodity Contracts

        From time to time, we enter into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials. At December 31, 2014 and 2013, the outstanding notional amount of commodity contracts was 4.2 and 3.4 pounds of copper, respectively. We designate and account for these contracts as cash flow hedges and, to the extent these commodity contracts are effective in offsetting the variability of the forecasted purchases, the change in fair value is included in AOCI. We reclassify AOCI associated with our commodity contracts to cost of products sold when the forecasted transaction impacts earnings. As of December 31, 2014 and 2013, the fair value of these contracts was $1.4 (current liabilities) and $0.4 (current assets), respectively. The unrealized gain (loss), net of taxes, recorded in AOCI was $(1.0) and $0.2 as of December 31, 2014 and 2013, respectively. We anticipate reclassifying the unrealized loss as of December 31, 2014 to income over the next 12 months.

Investments in Equity Securities

        During 2014, we sold all our previously owned available-for-sale securities, which included equity investments traded in active international markets. These securities were measured at fair value using closing stock prices from active markets and were classified within Level 1 of the valuation hierarchy. These assets had a fair value of $3.0 at December 31, 2013, and were sold for cash proceeds of $6.7 in 2014.

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        We elected to account for certain other investments in equity securities not readily marketable under the fair value option. At December 31, 2014 and 2013, these assets had a fair value of $7.4 and $1.4, respectively, estimated using valuation models, including the Monte-Carlo simulation model.

        The table below presents a reconciliation of our investment in equity securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2014 and 2013, including net unrealized gains (losses) recorded to "Other income (expense), net."

 
  Reconciliation of Equity
Securities using
Significant Unobservable
Inputs (Level 3)
 

Balance at December 31, 2012

  $ 7.5  

Cash consideration received and other

    (5.2 )

Unrealized losses recorded to earnings

    (0.9 )

Balance at December 31, 2013

    1.4  

Unrealized gains recorded to earnings

    6.0  

Balance at December 31, 2014

  $ 7.4  

Other Fair Value Financial Assets and Liabilities

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

        The fair value of our debt instruments (excluding capital leases), based on borrowing rates available to us at December 31, 2014 for similar debt was $1,421.4, compared to our carrying value of $1,356.1.

Concentrations of Credit Risk

        Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, and foreign currency forward and commodity contracts. These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions throughout the world. We periodically evaluate the credit standing of these financial institutions.

        We maintain cash levels in bank accounts that, at times, may exceed federally-insured limits. We have not experienced significant, and believe we are not exposed to significant risk of, loss in these accounts.

        We have credit loss exposure in the event of nonperformance by counterparties to the above financial instruments, but have no other off-balance-sheet credit risk of accounting loss. We anticipate, however, that counterparties will be able to fully satisfy their obligations under the contracts. We do not obtain collateral or other security to support financial instruments subject to credit risk, but we do monitor the credit standing of counterparties.

        Concentrations of credit risk arising from trade accounts receivable are due to selling to customers in a particular industry. Credit risks are mitigated by performing ongoing credit evaluations of our customers' financial conditions and obtaining collateral, advance payments, or other security when appropriate. No one customer, or group of customers that to our knowledge are under common control, accounted for more than 10% of our revenues for any period presented.

Cash and Other Commitments

        Our senior credit facilities are payable in full on December 23, 2018. Our term loan is repayable in quarterly installments of 5.0% annually, beginning with our second fiscal quarter of 2015, with the remaining balance repayable in full on December 23, 2018.

        We use operating leases to finance certain equipment, vehicles and properties. At December 31, 2014, we had $128.9 of future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year.

        In 2003, our Board of Directors approved the implementation of a quarterly dividend program. The actual amount of each quarterly dividend, as well as each declaration date, record date and payment date is subject to the discretion of the Board of Directors, and the target dividend level may be adjusted at the discretion of the Board of Directors. The factors that the Board of Directors consider in determining the actual amount of each quarterly dividend include our financial performance and ongoing

40


capital needs, our ability to declare and pay dividends, and any other factors deemed relevant. During 2014, we declared and paid dividends of $63.2 and $59.8 (excluding dividends paid to noncontrolling interests), respectively, while in 2013 we declared and paid dividends of $45.5 and $34.7, respectively. On February 12, 2014, we implemented a dividend increase effective with the first quarterly dividend payment of 2014. Our annual dividend is now $1.50 per share (previously $1.00 per share), payable quarterly.

        Capital expenditures for 2014 totaled $61.1, compared to $55.1 and $81.8 in 2013 and 2012, respectively. Capital expenditures in 2014 related primarily to upgrades to manufacturing facilities, including replacement of equipment, and in information technology. We expect 2015 capital expenditures to approximate $90.0, with a significant portion related to upgrades of manufacturing facilities and information technology. While the impact of continued market volatility cannot be predicted, we believe we have sufficient operating flexibility, cash reserves and funding sources to maintain adequate amounts of liquidity and to meet our future operating cash needs and internal growth opportunities.

        In 2014, we made contributions and direct benefit payments of $37.9 to our defined benefit pension and postretirement benefit plans, net of subsidies, which included $2.9 of contributions related to businesses that have been classified as discontinued operations. We expect to make $28.7 of minimum required funding contributions and direct benefit payments in 2015, including $2.0 of contributions that relate to businesses that have been classified as discontinued operations. Our pension plans have not experienced any liquidity difficulties or counterparty defaults due to the volatility in the credit markets. Our pension funds experienced a positive return on assets of approximately 10.0% in 2014. See Note 10 to our consolidated financial statements for further disclosure of expected future contributions and benefit payments.

        On a net basis, both from continuing and discontinued operations, we paid $314.8, $50.3 and $59.3 of income taxes for 2014, 2013 and 2012, respectively. In 2014, we made payments of $324.8 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $10.0. The amount of income taxes that we pay annually is dependent on various factors, including the timing of certain deductions. Deductions and the amount of income taxes can and do vary from year to year.

        As of December 31, 2014, except as discussed in Note 14 to our consolidated financial statements and in the contractual obligations table below, we did not have any material guarantees, off-balance sheet arrangements or purchase commitments other than the following: (i) $53.8 of certain standby letters of credit outstanding, all of which reduce the available borrowing capacity on our domestic revolving credit facility; (ii) $695.3 of letters of credit outstanding, all of which reduce the available borrowing capacity on our foreign trade facilities; (iii) $5.7 of letters of credit outstanding under separate arrangements in China and India; and (iv) approximately $150.6 of surety bonds. In addition, $52.5 of our standby letters of credit relate to self-insurance or environmental matters.

        Our Certificate of Incorporation provides that we indemnify our officers and directors to the fullest extent permitted by the Delaware General Corporation Law for any personal liability in connection with their employment or service with us, subject to limited exceptions. While we maintain insurance for this type of liability, the liability could exceed the amount of the insurance coverage.

        We continually review each of our businesses in order to determine their long-term strategic fit. These reviews could result in selected acquisitions to expand an existing business or result in the disposition of an existing business. Additionally, we have stated that we may consider a larger acquisition in the future, with more than $1,000.0 in revenues, if certain criteria are met. In addition, you should read "Risk Factors," "Results for Reportable Segments and Other Operating Segments" included in this MD&A, and "Business" for an understanding of the risks, uncertainties and trends facing our businesses.

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Contractual Obligations

        The following is a summary of our primary contractual obligations as of December 31, 2014:

 
  Total   Due
Within
1 Year
  Due in
1-3 Years
  Due in
3-5 Years
  Due After
5 Years
 

Short-term debt obligations

  $ 181.1   $ 181.1   $   $   $  

Long-term debt obligations

    1,188.6     30.8     659.7     494.5     3.6  

Pension and postretirement benefit plan contributions and payments(1)

    497.2     28.7     108.1     46.5     313.9  

Purchase and other contractual obligations(2)

    434.5     379.3     55.2          

Future minimum operating lease payments(3)

    128.9     36.5     41.6     21.1     29.7  

Interest payments

    150.4     52.2     88.7     8.8     0.7  

Total contractual cash obligations(4)

  $ 2,580.7   $ 708.6   $ 953.3   $ 570.9   $ 347.9  

(1)
Estimated minimum required pension funding and pension and postretirement benefit payments are based on actuarial estimates using current assumptions for, among other things, discount rates, expected long-term rates of return on plan assets (where applicable), rate of compensation increases, and health care cost trend rates. The expected pension contributions for the U.S. plans in 2015 and thereafter reflect the minimum required contributions under the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of 2008. These contributions do not reflect potential voluntary contributions, or additional contributions that may be required in connection with acquisitions, dispositions or related plan mergers. See Note 10 to our consolidated financial statements for additional information on expected future contributions and benefit payments.

(2)
Represents contractual commitments to purchase goods and services at specified dates.

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

(4)
Contingent obligations, such as environmental accruals and those relating to uncertain tax positions generally do not have specific payment dates and accordingly have been excluded from the above table. We believe that within the next 12 months it is reasonably possible that we could pay approximately $10.0 to $15.0 relating to uncertain tax positions, which includes an estimate for interest and penalties. In addition, the above table does not include potential payments under our derivative financial instruments.


Critical Accounting Policies and Use of Estimates

        The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. The accounting policies that we believe are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties, are listed below. This section should be read in conjunction with Notes 1 and 2 to our consolidated financial statements, which include a detailed discussion of these and other accounting policies.

Long-Term Contract Accounting

        Certain of our businesses, primarily within the Flow Technology and Thermal Equipment and Services reportable segments, recognize revenues and profits from long-term construction/installation contracts under the percentage-of-completion method of accounting. The percentage-of-completion method requires estimates of future revenues and costs over the full term of product delivery. We measure the percentage-of-completion principally by the contract costs incurred to date as a percentage of the estimated total costs for that contract at completion. In 2014, 2013 and 2012, we recognized $1,206.4, $1,343.8 and $1,594.7 of revenues under the percentage-of-completion method, respectively.

        We record any provision for estimated losses on uncompleted long-term contracts in the period in which the losses are determined. In the case of customer change orders for uncompleted long-term contracts, we include estimated recoveries for work performed in forecasting ultimate profitability on these contracts. Due to uncertainties inherent in the estimation process, it is reasonably possible that completion costs, including those arising from contract penalty provisions and final contract settlements, will be revised during the duration of a contract. These revisions to costs and income are recognized in the period in which the revisions are determined.

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        Our estimation process for determining revenues and costs for contracts accounted for under the percentage-of-completion method is based upon (i) our historical experience, (ii) the professional judgment and knowledge of our engineers, project managers, and operations and financial professionals, and (iii) an assessment of the key underlying factors (see below) that impact the revenues and costs of our long-term contracts. Each long-term contract is unique, but typically similar enough to other contracts that we can effectively leverage our experience. As our long-term contracts generally range from nine to eighteen months in duration, we typically reassess the estimated revenues and costs of these contracts on a quarterly basis, but may reassess more often as situations warrant. We record changes in estimates of revenues and costs when identified using the cumulative catch-up method prescribed under the Revenue Recognition Topic of the Codification.

        We believe the underlying factors used to estimate our costs to complete and percentage-of-completion are sufficiently reliable to provide a reasonable estimate of revenue and profit; however, due to the length of time over which revenue streams are generated and costs are incurred, along with the judgment required in developing the underlying factors, the variability of revenue and cost can be significant. Factors that may affect revenue and costs relating to long-term contracts include, but are not limited to, the following:

    Sales Price Incentives and Sales Price Escalation Clauses — Sales price incentives and sales price escalations that are reasonably assured and reasonably estimable are recorded over the performance period of the contract. Otherwise, these amounts are recorded when awarded.

    Cost Recovery for Product Design Changes and Claims — On occasion, design specifications may change during the course of the contract. Any additional costs arising from these changes may be supported by change orders, or we may submit a claim to the customer. Change orders are accounted for as described above. See below for our accounting policies related to claims.

    Material Availability and Costs — Our estimates of material costs generally are based on existing supplier relationships, adequate availability of materials, prevailing market prices for materials, and, in some cases, long-term supplier contracts. Changes in our supplier relationships, delays in obtaining materials, or changes in material prices can have a significant impact on our cost and profitability estimates.

    Use of Subcontractors — Our arrangements with subcontractors are generally based on fixed prices; however, our estimates of the cost and profitability can be impacted by subcontractor delays, customer claims arising from subcontractor performance issues, or a subcontractor's inability to fulfill its obligations.

    Labor Costs and Anticipated Productivity Levels — Where applicable, we include the impact of labor improvements in our estimation of costs, such as in cases where we expect a favorable learning curve over the duration of the contract. In these cases, if the improvements do not materialize, costs and profitability could be adversely impacted. Additionally, to the extent we are more or less productive than originally anticipated, estimated costs and profitability may also be impacted.

    Effect of Foreign Currency Fluctuations — Fluctuations between currencies in which our long-term contracts are denominated and the currencies under which contract costs are incurred can have an impact on profitability. When the impact on profitability is potentially significant, we may (but generally do not) enter into FX forward contracts or prepay certain vendors for raw materials to manage the potential exposure. See Note 13 to our consolidated financial statements for additional details on our FX forward contracts.

        Costs and estimated earnings in excess of billings on uncompleted contracts arise when revenues have been recorded but the amounts have not been billed under the terms of the contracts. These amounts are recoverable from customers upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of the contract.

        We periodically make claims against customers, suppliers and subcontractors associated with alleged non-performance and other disputes over contractual terms. Claims related to long-term contracts are recognized as additional revenues or as a reduction of costs only after we have determined that collection is probable and the amount is reasonably estimable. Claims made by us may involve negotiation and, in certain cases, litigation or other dispute-resolution processes. In the event we incur litigation or other dispute-resolution costs in connection with claims, these costs are expensed as incurred, although we may seek to recover these costs. Claims against us are recognized when a loss is considered probable and amounts are reasonably estimable.

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Impairment of Goodwill and Indefinite-Lived Intangible Assets

        Goodwill and indefinite-lived intangible assets are not amortized, but instead are subject to annual impairment testing. We monitor the results of each of our reporting units as a means of identifying trends and/or matters that may impact their financial results and, thus, be an indicator of a potential impairment. The trends and/or matters that we specifically monitor for each of our reporting units are as follows:

    Significant variances in financial performance (e.g., revenues, earnings and cash flows) in relation to expectations and historical performance;

    Significant changes in end markets or other economic factors;

    Significant changes or planned changes in our use of a reporting unit's assets; and

    Significant changes in customer relationships and competitive conditions.

        The identification and measurement of goodwill impairment involves the estimation of the fair value of reporting units. We consider a number of factors, including the input of an independent appraisal firm, in conducting the impairment testing of our reporting units. We perform our impairment testing by comparing the estimated fair value of the reporting unit to the carrying value of the reported net assets, with such testing occurring during the fourth quarter of each year in conjunction with our annual financial planning process (or more frequently if impairment indicators arise), based primarily on events and circumstances existing as of the end of the third quarter. Fair value is generally based on the income approach using a calculation of discounted cash flows, based on the most recent financial projections for the reporting units. The revenue growth rates included in the financial projections are our best estimates based on current and forecasted market conditions, and the profit margin assumptions are projected by each reporting unit based on current cost structure and, when applicable, anticipated net cost reductions.

        The calculation of fair value for our reporting units incorporates many assumptions including future growth rates, profit margin and discount factors. Changes in economic and operating conditions impacting these assumptions could result in impairment charges in future periods.

        Based on our annual goodwill impairment testing in 2014 and 2013, we determined that the estimated fair value of each of our reporting units exceeded the carrying value of their respective net assets by at least 10% at the end of each year.

        We perform our annual trademarks impairment testing during the fourth quarter, or on a more frequent basis if there are indications of potential impairment. The fair values of our trademarks are determined by applying estimated royalty rates to projected revenues, with the resulting cash flows discounted at a rate of return that reflects current market conditions. During 2014, we recorded impairment charges of $11.7 and $8.4 related to the trademarks of certain businesses within our Flow Technology and Thermal Equipment and Services reportable segments, respectively. In addition, during 2014, we recorded an impairment charge of $18.0 related to our Cooling reporting unit's investment in the Shanghai Electric JV. Other changes in the gross values of trademarks and other identifiable intangible assets related primarily to foreign currency translation.

        During 2013, we recorded impairment charges of $6.7 related to the trademarks of certain businesses within our Flow Technology reportable segment.

        In connection with our annual goodwill impairment testing in 2012, our analysis indicated that the estimated fair value of our Cooling reporting unit was below the carrying value of its net assets. As a result, we estimated the implied fair value of Cooling's goodwill, which resulted in an impairment charge related to such goodwill of $270.4. The impairment charge of $270.4 was composed of (i) a $125.8 difference between the estimated fair value of Cooling compared to the carrying value of its net assets and (ii) an allocation to certain tangible and intangible assets of $144.6 for the estimated increases in fair value for these assets solely for purposes of applying the impairment provisions of the Intangible — Goodwill and Other Topic of the Codification.

        In addition to the goodwill impairment charge of $270.4, we recorded an impairment charge of $11.0 in 2012 related to certain long-term assets of our Cooling reporting unit. Lastly, we recorded impairment charges of $4.5 in 2012 related to trademarks for two other businesses within our Thermal Equipment and Services reportable segment.

        See Note 8 to our consolidated financial statements for additional details.

Employee Benefit Plans

        Defined benefit plans cover a portion of our salaried and hourly paid employees, including certain employees in foreign countries. Additionally, domestic postretirement plans provide health and life insurance benefits for certain retirees and their

44


dependents. We recognize changes in the fair value of plan assets and actuarial gains and losses into earnings during the fourth quarter of each year, unless earlier remeasurement is required, as a component of net periodic benefit expense. The remaining components of pension/postretirement expense, primarily service and interest costs and expected return on plan assets, are recorded on a quarterly basis. See Note 10 to our consolidated financial statements for further discussion of our pension and postretirement benefits.

        Our pension plans have not experienced any significant impact on liquidity or counterparty exposure due to the volatility in the credit markets.

        The costs and obligations associated with these plans are determined based on actuarial valuations. The critical assumptions used in determining these related expenses and obligations are discount rates and healthcare cost projections. These critical assumptions are calculated based on company data and appropriate market indicators, and are evaluated at least annually by us in consultation with outside actuaries. Other assumptions involving demographic factors such as retirement patterns, mortality, turnover and the rate of increase in compensation levels are evaluated periodically and are updated to reflect our experience and expectations for the future. While management believes that the assumptions used are appropriate, actual results may differ.

        The discount rate enables us to state expected future cash flows at a present value on the measurement date. This rate is the yield on high-quality fixed income investments at the measurement date. A lower discount rate increases the present value of benefit obligations and increases pension expense. Including the effects of recognizing actuarial gains and losses into earnings as described above, a 50 basis point decrease in the discount rate for our domestic plans would have increased our 2014 pension expense by approximately $45.0, and a 50 basis point increase in the discount rate would have decreased our 2014 pension expense by approximately $42.0.

        The trend in healthcare costs is difficult to estimate, and it can significantly impact our postretirement liabilities and costs. The 2014 healthcare cost trend rate for 2015, which is the weighted-average annual projected rate of increase in the per capita cost of covered benefits, is 6.79%. This rate is assumed to decrease to 5.0% by 2024 and then remain at that level. Including the effects of recognizing actuarial gains and losses into earnings as described above, a 100 basis point increase in the healthcare cost trend rate would have increased our 2014 postretirement expense by approximately $6.9, and a 100 basis point decrease in the healthcare cost trend rate would have decreased our 2014 postretirement expense by approximately $6.1.

        See Note 10 to our consolidated financial statements for further information on our pension and postretirement benefit plans.

Income Taxes

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

        Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, federal or foreign statutory tax audits or estimates and judgments used.

        Realization of deferred tax assets involves estimates regarding (1) the timing and amount of the reversal of taxable temporary differences, (2) expected future taxable income, and (3) the impact of tax planning strategies. We believe that it is more likely than not that we will not realize the benefit of certain deferred tax assets and, accordingly, have established a valuation allowance against them. In assessing the need for a valuation allowance, we consider all available positive and negative evidence, including past operating results, projections of future taxable income and the feasibility of and potential changes to ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs. Although realization is not assured for the remaining deferred tax assets, we believe it is more likely than not that the remaining deferred tax assets will be realized through future taxable earnings or alternative tax strategies. However, deferred tax assets could be reduced in the near term if our estimates of taxable income are significantly reduced or tax strategies are no longer viable.

        The amount of income tax that we pay annually is dependent on various factors, including the timing of certain deductions and ongoing audits by federal, state and foreign tax authorities, which may result in proposed adjustments. We perform reviews of our income tax positions on a quarterly basis and accrue for potential uncertain tax positions. Accruals for these uncertain tax positions are recorded based on an expectation as to the timing of when the matter will be resolved. As events change or

45


resolutions occur, these accruals are adjusted, such as in the case of audit settlements with taxing authorities. We believe we have adequately provided for any reasonably foreseeable outcome related to these matters.

        Our future results may include favorable or unfavorable adjustments to our estimated tax liabilities due to closure of income tax examinations, statute expirations, new regulatory or judicial pronouncements, changes in tax laws, changes in projected levels of taxable income, future tax planning strategies, or other relevant events. See Note 11 to our consolidated financial statements for additional details regarding our uncertain tax positions.

Contingent Liabilities

        Numerous claims, complaints and proceedings arising in the ordinary course of business, including those relating to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims), environmental matters, and risk management matters (e.g., product and general liability, automobile, and workers' compensation claims), have been filed or are pending against us and certain of our subsidiaries. Additionally, we may become subject to significant claims of which we are currently unaware, or the claims of which we are aware may result in us incurring a significantly greater liability than we anticipate. This may also be true in connection with past or future acquisitions. While we maintain property, cargo, auto, product, general liability, environmental, and directors' and officers' liability insurance and have acquired rights under similar policies in connection with acquisitions that we believe cover a portion of these claims, this insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against potential loss exposures. 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. We believe, however, that our accruals related to these items are sufficient and that these items and our rights to available insurance and indemnity will be resolved without material effect, individually or in the aggregate, on our financial position, results of operations and cash flows. These accruals, which are determined in accordance with the Contingencies Topic of the Codification, totaled $619.6 (including $575.4 for risk management matters) and $610.1 (including $565.0 for risk management matters) at December 31, 2014 and 2013, respectively. It is reasonably possible that our ultimate liability for these items could exceed the amount of the recorded accruals; however, we believe the estimated amount of any potential additional liability would not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows.

        We had insurance recovery assets related to risk management matters of $503.7 and $496.7 at December 31, 2014 and 2013, respectively, included in "Other assets" within our consolidated balance sheets.

        We believe that we are in substantial compliance with applicable environmental requirements. We are currently involved in various investigatory and remedial actions at our facilities and at third-party waste disposal sites. It is our policy to accrue for estimated losses from legal actions or claims when events exist that make the realization of the losses or expenses probable and they can be reasonably estimated. Our environmental accruals cover anticipated costs, including investigation, remediation, and operation and maintenance of clean-up sites. 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. We expense costs incurred to investigate and remediate environmental issues unless they extend the economic useful lives of related assets. We record liabilities when it is probable that an obligation has been incurred and the amounts can be reasonably estimated. Our estimates are based primarily on investigations and remediation plans established by independent consultants, regulatory agencies and potentially responsible third parties. It is our policy to realize a change in estimates once it becomes probable and can be reasonably estimated. In determining our accruals, we generally do not discount environmental accruals and do not discount other legal accruals and do not reduce them by anticipated insurance, litigation and other 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.

        We are self-insured for certain of our workers' compensation, automobile, product and general liability, disability and health costs, and we believe that we maintain adequate accruals to cover our retained liability. Our accruals for self-insurance liabilities are determined by us, are based on claims filed and an estimate of claims incurred but not yet reported, and generally are not discounted. We consider a number of factors, including third-party actuarial valuations, when making these determinations. We maintain third-party stop-loss insurance policies to cover certain liability costs in excess of predetermined retained amounts; however, this insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against potential loss exposures. The key assumptions considered in estimating the ultimate cost to settle reported claims and the estimated costs associated with incurred but not yet reported claims include, among other things, our historical and industry claims experience, trends in health care and administrative costs, our current and future risk management programs, and historical lag studies with regard to the timing between when a claim is incurred versus when it is reported.


New Accounting Pronouncements

        See Note 3 to our consolidated financial statements for a discussion of recent accounting pronouncements.

46



ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

(All currency amounts are in millions)

        We are exposed to market risk related to changes in interest rates, foreign currency exchange rates and commodity raw material prices, and we selectively use financial instruments to manage these risks. We do not enter into financial instruments for speculative or trading purposes; however, these instruments may be deemed speculative if the future cash flows originally hedged are no longer probable of occurring as anticipated. Our currency exposures vary, but are primarily concentrated in the Euro, Chinese Yuan, South African Rand and GBP. We generally do not hedge currency translation exposures. Our exposures for commodity raw materials vary, with the highest concentration relating to steel, copper and oil. See Note 13 to our consolidated financial statements for further details.

        The following table provides information, as of December 31, 2014, about our primary outstanding debt obligations and presents principal cash flows by expected maturity dates, weighted-average interest rates and fair values.

 
  Expected Maturity Date  
 
  2015   2016   2017   2018   2019   Thereafter   Total   Fair Value  

6.875% senior notes

  $   $   $ 600.0   $   $   $   $ 600.0   $ 665.3  

Average interest rate

                                        6.875 %      

Term loan

    28.8     28.8     28.8     488.6             575.0     575.0  

Average interest rate

                                        1.531 %      

Domestic revolving loan facility

    133.0                         133.0     133.0  

Average interest rate

                                        1.708 %      

Trade receivables financing arrangement

    10.0                         10.0     10.0  

Average interest rate

                                        1.356 %      

        We believe that cash and equivalents, cash flows from operations, and availability under revolving credit facilities and our trade receivables financing arrangement will be sufficient to fund working capital needs, planned capital expenditures, dividend payments, other operational cash requirements and required debt service obligations for at least the next 12 months.

        We had FX forward contracts with an aggregate notional amount of $298.0 outstanding as of December 31, 2014, with substantially all such contracts scheduled to mature in 2015. The fair value of our open contracts was a net liability of $4.6, with $4.5 recorded as a current liability and $0.1 recorded as a noncurrent liability. We had FX embedded derivatives with an aggregate notional amount of $246.0 outstanding at December 31, 2014, with scheduled maturities of $151.7, $84.0 and $10.3 in 2015, 2016 and years thereafter, respectively. The fair value of the associated embedded derivatives was a net asset of $0.7, with $5.1 recorded as a current asset, $1.2 recorded as a noncurrent asset, $4.7 recorded as a current liability and $0.9 recorded as a noncurrent liability as of December 31, 2014.

        We had commodity contracts with an unrealized loss, net of tax, recorded in accumulated other comprehensive income of $1.0 at December 31, 2014. We expect to reclassify the December 31, 2014 unrealized loss to cost of products sold over the next 12 months as the hedged transactions impact earnings. The fair value of these contracts was $1.4 (recorded as a current liability) as of December 31, 2014.

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ITEM 8. Financial Statements And Supplementary Data

SPX Corporation and Subsidiaries
Index To Consolidated Financial Statements

December 31, 2014

        All schedules are omitted because they are not applicable, not required or because the required information is included in our consolidated financial statements or notes thereto.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of SPX Corporation:

        We have audited the accompanying Consolidated Balance Sheets of SPX Corporation and subsidiaries (the "Company") as of December 31, 2014 and 2013, and the related Consolidated Statements of Operations, Comprehensive Income, Equity, and Cash Flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the consolidated financial statements of EGS Electrical Group, LLC and subsidiaries ("EGS") for the fiscal years ended September 30, 2013 and 2012, the Company's investment accounted for by use of the equity method (see Note 9 to the Company's consolidated financial statements). The Company's equity in income of EGS for the fiscal years ended September 30, 2013 and 2012 was $41.9 million and $39.0 million, respectively. The consolidated financial statements of EGS were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for EGS, is based solely on the report of the other auditors.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

        In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements present fairly, in all material respects, the financial position of SPX Corporation and subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 20, 2015 expressed an unqualified opinion on the Company's internal control over financial reporting based on our audit.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina
February 20, 2015

49


SPX Corporation and Subsidiaries
Consolidated Statements of Operations
(in millions, except per share amounts)

 
  Year ended December 31,  
 
  2014   2013   2012  

Revenues

  $ 4,721.1   $ 4,773.3   $ 4,894.6  

Costs and expenses:

                   

Cost of products sold

    3,357.5     3,392.3     3,554.2  

Selling, general and administrative

    1,068.7     963.9     1,120.9  

Intangible amortization

    31.8     33.0     34.1  

Impairment of goodwill and other long-term assets

    38.1     6.7     285.9  

Special charges, net

    23.1     32.3     23.4  

Operating income (loss)

    201.9     345.1     (123.9 )

Other income (expense), net

    484.6     (11.3 )   14.0  

Interest expense

    (69.8 )   (112.6 )   (114.4 )

Interest income

    8.6     8.2     6.3  

Loss on early extinguishment of debt

    (32.5 )        

Equity earnings in joint ventures

    1.4     42.2     38.6  

Income (loss) from continuing operations before income taxes

    594.2     271.6     (179.4 )

Income tax (provision) benefit

    (214.1 )   (60.3 )   14.2  

Income (loss) from continuing operations

    380.1     211.3     (165.2 )

Income (loss) from discontinued operations, net of tax

    (5.0 )   5.3     35.0  

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

    13.3     (4.0 )   313.4  

Income from discontinued operations, net of tax

    8.3     1.3     348.4  

Net income

    388.4     212.6     183.2  

Less: Net income (loss) attributable to noncontrolling interests

    (9.5 )   2.4     2.8  

Net income attributable to SPX Corporation common shareholders

  $ 397.9   $ 210.2   $ 180.4  

Amounts attributable to SPX Corporation common shareholders:

                   

Income (loss) from continuing operations, net of tax

  $ 389.6   $ 209.1   $ (168.2 )

Income from discontinued operations, net of tax

    8.3     1.1     348.6  

Net income

  $ 397.9   $ 210.2   $ 180.4  

Basic income (loss) per share of common stock:

                   

Income (loss) from continuing operations attributable to SPX Corporation common shareholders

  $ 9.19   $ 4.61   $ (3.36 )

Income from discontinued operations attributable to SPX Corporation common shareholders

    0.19     0.02     6.97  

Net income per share attributable to SPX Corporation common shareholders

  $ 9.38   $ 4.63   $ 3.61  

Weighted-average number of common shares outstanding — basic

    42.400     45.384     50.031  

Diluted income (loss) per share of common stock:

                   

Income (loss) from continuing operations attributable to SPX Corporation common shareholders

  $ 9.05   $ 4.55   $ (3.36 )

Income from discontinued operations attributable to SPX Corporation common shareholders

    0.20     0.02     6.97  

Net income per share attributable to SPX Corporation common shareholders

  $ 9.25   $ 4.57   $ 3.61  

Weighted-average number of common shares outstanding — diluted

    43.031     46.006     50.031  

The accompanying notes are an integral part of these statements.

50



SPX Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(in millions)

 
  Year ended December 31,  
 
  2014   2013   2012  

Net income

  $ 388.4   $ 212.6   $ 183.2  

Other comprehensive income (loss), net:

                   

Pension liability adjustment, net of tax (provision) benefit of $(5.2), $1.0 and $0.8 in 2014, 2013 and 2012, respectively

    9.7     (2.2 )   (1.0 )

Net unrealized gains (losses) on qualifying cash flow hedges, net of tax (provision) benefit of $0.1, $(1.2) and $(0.4) in 2014, 2013 and 2012, respectively

    (0.5 )   2.5     1.1  

Net unrealized gains (losses) on available-for-sale securities

    3.7     (0.6 )   (1.6 )

Foreign currency translation adjustments

    (237.8 )   2.4     97.1  

Other comprehensive income (loss), net

    (224.9 )   2.1     95.6  

Total comprehensive income

    163.5     214.7     278.8  

Less: Total comprehensive income (loss) attributable to noncontrolling interests

    (9.5 )   1.8     3.4  

Total comprehensive income attributable to SPX Corporation common shareholders

  $ 173.0   $ 212.9   $ 275.4  

The accompanying notes are an integral part of these statements.

51



SPX Corporation and Subsidiaries
Consolidated Balance Sheets
(in millions, except share data)

 
  December 31,
2014
  December 31,
2013
 

ASSETS

             

Current assets:

             

Cash and equivalents

  $ 427.6   $ 691.8  

Accounts receivable, net

    1,067.4     1,210.4  

Inventories, net

    497.8     505.9  

Other current assets

    98.5     104.4  

Deferred income taxes

    123.8     119.6  

Assets of discontinued operations

        100.9  

Total current assets

    2,215.1     2,733.0  

Property, plant and equipment:

             

Land

    56.4     46.4  

Buildings and leasehold improvements

    361.8     387.9  

Machinery and equipment

    825.9     796.0  

    1,244.1     1,230.3  

Accumulated depreciation

    (573.2 )   (533.8 )

Property, plant and equipment, net

    670.9     696.5  

Goodwill

    1,455.4     1,549.1  

Intangibles, net

    831.0     928.3  

Other assets

    729.8     949.3  

TOTAL ASSETS

  $ 5,902.2   $ 6,856.2  

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable

  $ 462.0   $ 497.5  

Accrued expenses

    892.3     990.8  

Income taxes payable

    43.7     73.1  

Short-term debt

    181.1     26.9  

Current maturities of long-term debt

    30.8     558.7  

Liabilities of discontinued operations

        27.4  

Total current liabilities

    1,609.9     2,174.4  

Long-term debt

    1,157.8     1,090.0  

Deferred and other income taxes

    294.9     427.2  

Other long-term liabilities

    1,018.5     992.6  

Total long-term liabilities

    2,471.2     2,509.8  

Commitments and contingent liabilities (Note 14)

             

Equity:

             

SPX Corporation shareholders' equity:

             

Common stock (100,063,887 and 40,858,006 issued and outstanding at December 31, 2014, respectively, and 99,801,498 and 45,281,329 issued and outstanding at December 31, 2013, respectively)

    1,008.2     1,004.5  

Paid-in capital

    1,600.8     1,571.5  

Retained earnings

    2,637.8     2,303.1  

Accumulated other comprehensive income

    62.6     287.5  

Common stock in treasury (59,205,881 and 54,520,169 shares at December 31, 2014 and 2013, respectively)

    (3,491.5 )   (3,008.6 )

Total SPX Corporation shareholders' equity

    1,817.9     2,158.0  

Noncontrolling interests

    3.2     14.0  

Total equity

    1,821.1     2,172.0  

TOTAL LIABILITIES AND EQUITY

  $ 5,902.2   $ 6,856.2  

   

The accompanying notes are an integral part of these statements.

52


SPX Corporation and Subsidiaries
Consolidated Statements of Equity
(in millions, except per share amounts)

 
  Common
Stock
  Paid-In
Capital
  Retained
Earnings
  Accum. Other
Comprehensive
Income
  Common
Stock In
Treasury
  SPX
Corporation
Shareholders'
Equity
  Noncontrolling
Interests
  Total
Equity
 

Balance at December 31, 2011

  $ 993.6   $ 1,502.2   $ 2,008.9   $ 189.8   $ (2,510.3 ) $ 2,184.2   $ 10.0   $ 2,194.2  

Net income

            180.4             180.4     2.8     183.2  

Other comprehensive income, net

                95.0         95.0     0.6     95.6  

Dividends declared ($1.00 per share)

            (50.9 )           (50.9 )       (50.9 )

Exercise of stock options and other incentive plan activity

    4.4     20.6                 25.0         25.0  

Stock-based compensation expense, including $1.5 related to discontinued operations

        40.4                 40.4         40.4  

Restricted stock and restricted stock unit vesting, including related tax benefit of $0.5 and net of tax withholdings

    0.9     (9.5 )           4.3     (4.3 )       (4.3 )

Common stock repurchases

                    (245.6 )   (245.6 )       (245.6 )

Dividends attributable to noncontrolling interests

                            (0.7 )   (0.7 )

Other changes in noncontrolling interests

                            (1.4 )   (1.4 )

Balance at December 31, 2012

    998.9     1,553.7     2,138.4     284.8     (2,751.6 )   2,224.2     11.3     2,235.5  

Net income

            210.2             210.2     2.4     212.6  

Other comprehensive income (loss), net

                2.7         2.7     (0.6 )   2.1  

Dividends declared ($1.00 per share)

            (45.5 )           (45.5 )       (45.5 )

Exercise of stock options and other incentive plan activity

    2.2     14.7                 16.9         16.9  

Stock-based compensation expense, including $0.6 related to discontinued operations

        33.5                 33.5         33.5  

Restricted stock and restricted stock unit vesting, including related tax benefit of $1.7 and net of tax withholdings

    3.4     (27.4 )           3.2     (20.8 )       (20.8 )

Common stock repurchases

                    (260.2 )   (260.2 )       (260.2 )

Other changes in noncontrolling interests

        (3.0 )               (3.0 )   0.9     (2.1 )

Balance at December 31, 2013

    1,004.5     1,571.5     2,303.1     287.5     (3,008.6 )   2,158.0     14.0     2,172.0  

Net income (loss)

            397.9             397.9     (9.5 )   388.4  

Other comprehensive loss, net

                (224.9 )       (224.9 )       (224.9 )

Dividends declared ($1.50 per share)

            (63.2 )           (63.2 )       (63.2 )

Incentive plan activity

    1.6     14.8                 16.4         16.4  

Stock-based compensation expense

        38.4                 38.4         38.4  

Restricted stock and restricted stock unit vesting, including related tax benefit of $6.7 and net of tax withholdings

    2.1     (23.9 )           5.9     (15.9 )       (15.9 )

Common stock repurchases

                    (488.8 )   (488.8 )       (488.8 )

Dividends attributable to noncontrolling interests

                            (0.5 )   (0.5 )

Other changes in noncontrolling interests

                            (0.8 )   (0.8 )

Balance at December 31, 2014

  $ 1,008.2   $ 1,600.8   $ 2,637.8   $ 62.6   $ (3,491.5 ) $ 1,817.9   $ 3.2   $ 1,821.1  

   

The accompanying notes are an integral part of these statements.

53



SPX Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in millions)

 
  Year ended December 31,  
 
  2014   2013   2012  

Cash flows from operating activities:

                   

Net income

  $ 388.4   $ 212.6   $ 183.2  

Less: Income from discontinued operations, net of tax

    8.3     1.3     348.4  

Income (loss) from continuing operations

    380.1     211.3     (165.2 )

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

                   

Special charges, net

    23.1