EX-99.1 2 a2225937zex-99_1.htm EX-99.1

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Exhibit 99.1

LOGO

[                    ], 2015

Dear SPX Corporation Shareholder:

        We are pleased to inform you that on September 8, 2015, the board of directors of SPX Corporation ("SPX") approved the spin-off of SPX FLOW, Inc. ("Flowco"), a wholly-owned subsidiary of SPX. Upon completion of the spin-off, SPX shareholders will own 100% of Flowco outstanding common stock.

        We believe separating Flowco from SPX, allowing each company to operate as an independent, publicly-traded company, is in the best interests of both SPX and Flowco. We believe the spin-off will allow management of each company greater flexibility to focus on their respective businesses, to pursue opportunities in their respective operations, and to increase each company's access to capital, enabling them to create significant value for shareholders, customers and employees.

        Flowco will consist of SPX's current Flow Technology reportable segment, SPX's Hydraulic Technologies business, various related legal entities, and certain SPX corporate assets and liabilities. Flowco's broad component offerings will include a variety of centrifugal and reciprocating pumps, various control valves, filtration and dehydration equipment, mixers, heat exchangers and hydraulic technologies. It will also provide skidded and full-line systems, as well as aftermarket replacement components, parts and services. We believe that Flowco is well-positioned for future growth and operational improvement as a leading provider of highly engineered flow technologies, solutions and aftermarket parts and services for food and beverage, power and energy and industrial applications.

        SPX, the existing publicly-traded company, will continue to hold SPX's current Thermal Equipment and Services reportable segment and its power transformer, Radiodetection, Genfare and communications businesses. SPX's key product lines will include a wide variety of cooling technologies, power transformers, heat exchangers, pollution control filters, residential and commercial boilers, comfort heating products, underground locators, fare collection systems and communication technologies. We believe that SPX will be well-positioned after the spin-off for a global power market recovery and infrastructure investment with leading positions in power and HVAC markets and a diverse offering of highly engineered, specialty infrastructure products.

        The spin-off will be completed by way of a pro rata distribution of Flowco common stock to SPX's shareholders of record as of the close of business, Eastern time, on September 16, 2015, the spin-off record date. Each SPX shareholder will receive, effective as of 11:59 p.m., Eastern time, on September 26, 2015, one share of Flowco common stock for every share of SPX common stock held by such shareholder on the record date. The distribution of these shares will be made in book-entry form, which means that no physical share certificates will be issued.

        We intend that your receipt of shares of Flowco common stock in the distribution be tax-free for U.S. federal income tax purposes. You should consult your own tax advisor as to the particular tax consequences of the distribution to you, including potential tax consequences under state, local and non-U.S. tax laws.

        The distribution does not require shareholder approval, nor do you need to take any action to receive your shares of Flowco common stock. Immediately following the spin-off, shareholders of record will own common stock in both SPX and Flowco. SPX common stock will continue to be listed and traded on the New York Stock Exchange. In connection with the spin-off, we expect SPX stock to trade under a new symbol "SPXC." We expect that Flowco common stock will be listed and traded on the New York Stock Exchange under the symbol "FLOW." You will be able to trade in the common stock of each of the companies separately.


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        The enclosed information statement, which we are mailing to all SPX shareholders, describes the spin-off in detail and contains important information about Flowco, including its historical combined financial statements. We urge you to read this information statement carefully.

        Thank you for your continued support of SPX. We look forward to your support of Flowco in the future.

    Yours sincerely,

 

 

Christopher J. Kearney
Chairman, President and Chief Executive Officer
SPX Corporation

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Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

SUBJECT TO COMPLETION, DATED SEPTEMBER 8, 2015

INFORMATION STATEMENT

SPX FLOW, Inc.

Common Stock
(par value $0.01 per share)



        We are sending this information statement to you in connection with the separation of SPX FLOW, Inc., a newly-formed company (this company or, where relevant, the businesses and assets being transferred to this company, "Flowco"), from SPX Corporation (collectively with its predecessors and consolidated subsidiaries, other than, for all periods following the distribution, Flowco and its combined subsidiaries, "SPX"), following which Flowco will be an independent, publicly-traded company. As part of the separation, SPX is undergoing an internal reorganization, after which it will contribute or otherwise transfer to Flowco its Flow Technology reportable segment, its Hydraulic Technologies business, various related legal entities, and certain of its corporate assets and liabilities, and complete the separation by distributing all shares of Flowco common stock on a pro rata basis to the holders of SPX common stock. We refer to this pro rata distribution as the "distribution," and we refer to the separation, including the internal reorganization and distribution, as the "spin-off." We intend that your receipt of shares of Flowco common stock in the distribution be tax-free for U.S. federal income tax purposes. Every share of SPX common stock outstanding as of the close of business, Eastern time, on September 16, 2015, the record date for the distribution, will entitle the holder thereof to receive one share of Flowco common stock. The distribution of shares will be made in book-entry form. The distribution will be effective as of 11:59 p.m., Eastern time, on September 26, 2015. Immediately after the distribution becomes effective, Flowco will be an independent, publicly-traded company.

        No vote or further action of SPX shareholders is required in connection with the spin-off. We are not asking you for a proxy. SPX shareholders will not be required to pay any consideration for the shares of Flowco common stock they receive in the spin-off, and they will not be required to surrender or exchange shares of their SPX common stock or take any other action in connection with the spin-off.

        SPX currently owns all outstanding shares of Flowco common stock. Accordingly, there is no current trading market for Flowco common stock. We expect, however, that a limited trading market for Flowco common stock, commonly known as a "when-issued" trading market, will develop beginning on or shortly before the record date for the distribution, and we expect "regular-way" trading of Flowco common stock to begin the first trading day after the distribution date. We have applied for authorization to list Flowco common stock on the New York Stock Exchange under the ticker symbol "FLOW."

        In reviewing this information statement, you should carefully consider the matters described in "Risk Factors," beginning on page 18 of this information statement.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

        This information statement is not an offer to sell, or a solicitation of an offer to buy, any securities.

The date of this information statement is [                    ], 2015.

This information statement was first mailed to SPX shareholders
on or about [                    ], 2015.


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  Page  

SUMMARY

    1  

RISK FACTORS

    18  

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

    35  

INDUSTRY DATA

    36  

THE SPIN-OFF

    37  

DIVIDEND POLICY

    47  

CAPITALIZATION

    48  

SELECTED HISTORICAL COMBINED FINANCIAL DATA

    49  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

    52  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    59  

BUSINESS

    86  

MANAGEMENT

    99  

EXECUTIVE COMPENSATION

    107  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    139  

DESCRIPTION OF MATERIAL INDEBTEDNESS AND OTHER FINANCING ARRANGEMENTS

    143  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    144  

DESCRIPTION OF CAPITAL STOCK

    146  

WHERE YOU CAN FIND MORE INFORMATION

    152  

INDEX TO FINANCIAL STATEMENTS

    F-1  

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SUMMARY

        This summary highlights information contained in this information statement and provides an overview of our company, our separation from SPX and the distribution of our common stock by SPX to its shareholders. For a more complete understanding of our business and the spin-off, you should read this entire information statement carefully, particularly the discussion set forth under "Risk Factors" beginning on page 18 of this information statement, and our audited and unaudited historical combined financial statements, our unaudited pro forma condensed combined financial statements and the respective notes to those statements appearing elsewhere in this information statement. Except as otherwise indicated or unless the context otherwise requires, "Flow Business," "Flowco," "we," "us," and "our" refer to SPX FLOW, Inc., and its combined subsidiaries after giving effect to the internal reorganization and the distribution, and "SPX" refers to SPX Corporation, its predecessors and its consolidated subsidiaries, other than, for all periods following the distribution, SPX FLOW, Inc. and its combined subsidiaries.

        All dollar amounts below are in millions unless otherwise noted.

Our Company

        We are a leading global supplier of highly engineered flow components, process equipment and turn-key systems, along with the related aftermarket parts and services, into the food and beverage, power and energy, and industrial end markets. We have operations in over 35 countries and sales in over 150 countries around the world. Our innovative solutions play a critical role in helping meet rising global demand in the markets we serve. Our total revenue for 2014 was approximately $2.8 billion, with 71% from sales to destinations outside the United States, including 30% from sales into emerging markets.

        Our product portfolio of pumps, valves, mixers, filters, air dryers, hydraulic tools, homogenizers, separators and heat exchangers, along with the related aftermarket parts and services, supports global industries, including food and beverage, oil and gas, power generation (including nuclear and conventional), chemical processing, compressed air and mining. Our products feature uncompromising design and quality, while offering long service life, production efficiency and cost effective performance. In addition, our products help our customers increase productivity, control costs, reduce energy and waste, and meet stringent compliance regulations. Our product development and engineering experience enables us to work closely with customers to provide solutions configured to meet their specific application and business needs.

        We report our operating results under three segments: Food and Beverage, Power and Energy, and Industrial. From a segment perspective, 35% of our 2014 revenues were within Food and Beverage, 35% within Power and Energy, and 30% within Industrial.

        We initially established a presence in flow-related businesses when we acquired Lightnin Mixers as part of the 1998 General Signal merger. In 2001, we added three more flow-related businesses, Waukesha Cherry-Burrell pumps and valves, Bran+Luebbe metering and dosing pumps, and Dollinger filtration products, through the acquisition of United Dominion Industries. Subsequent smaller acquisitions of Copes Vulcan, M&J Valve, Hankison and Johnson Pumps broadened our product offerings and improved our organic growth profile. By the end of 2007, annual revenues associated with the flow businesses had grown to more than $1.0 billion.

        In 2007, the acquisition of APV significantly expanded our geographic presence and established a global platform in the dairy and food and beverage industries. Smaller acquisitions during 2010 and 2011 of Anhydro, Gerstenberg Schroeder, Murdoch and e&e broadened our processing capabilities into discrete product categories such as butters, fats and oils, powdered products, coffee and extracts. In 2011, the acquisition of ClydeUnion Pumps ("Clyde Union") further expanded our geographic presence and established a global platform in the power and energy industry.

 

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        At the end of 2013, we moved to a new operational leadership alignment focused on improving operating performance and strengthening our foundation for growth. This operational alignment was the next significant step in the development of our business and has improved our operating efficiency and enhanced our customer focus by more closely aligning our organizational resources with customers and end markets.

        We believe our current portfolio of products, highly skilled workforce, experienced leadership team, global presence and strategic initiatives, in combination with the growing demand within the end markets we serve, have us well-positioned for future growth.

        See the discussion under "Business—Company Overview" for further information.

Our Strengths

        Strong engineering expertise, highly skilled manufacturing operations and an intricate knowledge of the industries and applications in which our products are typically used are the foundations of our competitive strength. Our competitive strengths include the following:

Diversified product offering of highly engineered process technologies and flow control solutions and the ability to integrate products into automated modular and turn-key solutions:

        We believe the breadth and diversity of our product portfolio is unique to our business and provides a competitive advantage by allowing us to offer a variety of highly engineered solutions to customers, particularly on large capital investments that require multiple flow components within automated modular or full-line, turn-key systems.

Strong brands with leading market positions:

        We have a strong portfolio of brands, many of which have established leadership positions in their respective markets and product categories, with long-standing reputations for innovation and quality.

Diversified, loyal customer base, including long-standing and global customer relationships:

        We offer a unique platform with global sales, engineering, manufacturing, and design capabilities, and we leverage our deep understanding of product application, end markets and our customers to offer highly specialized and engineered solutions. We benefit from long-standing relationships with blue-chip, industry-leading companies in all of our reportable segments, as well as from low customer turnover.

Three global platforms serving attractive end markets with positive long-term growth characteristics and high barriers of entry:

        We believe we participate in highly attractive end markets with positive long-term growth characteristics. Trends positively impacting our key end markets include an increase in global demand for power and energy and processed foods and beverages, particularly in emerging markets driven by population growth, an expanding middle class, and environmental sustainability efforts. Our global scale and capabilities allow us to partner with other multi-national companies to provide products and services in many parts of the world. The complexity and highly engineered aspect of our product offering, safety and regulatory requirements and our customers' dependency on quality and reliability have created high barriers of entry for new competitors in our markets.

 

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Large installed base of original equipment that provides a steady annuity stream of aftermarket sales and a global service center footprint with highly skilled and experienced service technicians:

        Our track record of providing highly engineered and high quality products also gives us a competitive edge in the aftermarket. Our many years of success have led to a large installed base of original equipment, which we believe operates most effectively with our uniquely designed parts. Many of these products are integral to the core processes of our customers, who rely on our expertise to ensure uninterrupted operations. During 2014, approximately 25% of our total revenues were derived from aftermarket parts and services.

        Our installed base, at thousands of customers across more than 70 countries, offers a significant opportunity to expand our aftermarket service business. In recent years, we have added resources and increased our capabilities to service our installed base. We have also increased our focus on developing systems with higher levels of our factory content, which supports pull-through of aftermarket parts and services.

        We are also investing in new service centers, expanding existing service centers, and adding service technicians to better serve our customers. In 2014, we opened a service center in Aberdeen, Scotland dedicated to servicing the North Sea oil and gas industry where our ClydeUnion Pumps brand has a significant installed base. We also expanded our service capabilities in nine existing service centers across the world. In 2015, we have planned investments to add service centers in the Middle East and North America. We are also pursuing a strategic service partnership in the Middle East.

Regional distribution centers and strong distribution channels:

        We have a large distribution network that includes our own regional distribution centers as well as strong, long-standing relationships with key distributors and independent sales representatives. Our ability to supply products to customers in most parts of the world with competitive lead times is a strong advantage for us in the markets we serve.

Advanced engineering focused on new product development and innovation:

        We are focused on a balanced approach to new product development and innovation aimed at enhancing and expanding our current product offerings, as well as developing cutting-edge technology. A key part of our approach to innovation is identifying the needs of our customers and developing new solutions to address those needs. Our product development programs have created a broad technology offering, giving us access to a broad range of end markets. We own approximately 170 domestic and 110 foreign patents, including approximately 20 patents that were issued in the last three years, covering a variety of our products and manufacturing methods.

Operational expertise with global manufacturing capabilities and localized operations:

        We have operations in over 35 countries, including over 50 manufacturing and/or engineering facilities and over 25 service centers. Our global footprint, skilled workforce and ability to drive continuous improvement across all aspects of our organization enable us to deliver a high quality customer experience and also maintain a competitive cost structure.

Highly skilled workforce complemented by a strong, experienced management team:

        Our senior management team has extensive industry and leadership experience. Our eleven executive officers average approximately 29 years of experience in industrial businesses. They have a successful track record in winning new contracts, driving operating efficiency, and leading improvements in technologies and solutions. The management team is committed to creating shareholder value

 

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through continued operational improvement, profitable growth, strategic focus around our end markets, and disciplined execution of our capital allocation methodology.

Proven track record of delivering strong financial performance:

        We have a proven track record of driving strong growth and profitability through our highly engineered flow control systems and process equipment solutions, integrated low cost operating footprint and leading market positions. Over the last three years, we have focused on improving profitability through cost reduction efforts, a more disciplined, selective approach on large projects, improved project execution, and an expanded aftermarket presence. As part of this focus, we re-aligned our operational organization to focus more clearly on end markets.

Our Strategy

        We have developed a global, pure-play flow organization with a strong foundation on which to further grow our business. Our goal moving forward is to expand and strengthen our position as a global provider of flow control and process technology solutions. Our strategy is focused in two primary areas: driving sustainable, profitable growth and improving the efficiency of our global manufacturing operations and overall return profile of our business. The core initiatives supporting this strategy include the following:

Driving sustainable, profitable growth:

Increase our aftermarket capabilities and expand our global service center footprint:

        During 2014, approximately 25% of our total revenues were derived from aftermarket parts and services. Our aftermarket business provides a steady source of revenue and cash flows at higher margins than are typical in the sale of original equipment. We have focused initiatives across all three business segments to increase our aftermarket business.

        Our installed base at thousands of customers across the world offers a significant opportunity to expand our aftermarket service business. Today, we only service a small portion of our installed base. As we move forward, we have programs in place to secure the aftermarket business in new installations and we are also working to capture aftermarket business on our historical installations.

        In recent years, we have added resources and increased our capabilities to service our installed base. We have also increased our focus on developing systems with higher levels of our factory content, which supports pull-through of aftermarket parts and services.

        We plan to invest in new service centers, expand our capabilities at existing service centers, and add service technicians to better serve our customers. In 2015, we have planned investments to add service centers in the Middle East and North America. We are also pursuing a strategic service partnership in the Middle East.

Leverage combined technology offerings:

        Many of our products are used in similar applications and are complementary to each other. This includes providing integrated solutions for customers rather than individual components. A key part of this commercial initiative involves leveraging combined technology offerings into highly profitable market segments including oil pipelines, subsea oil exploration, nuclear power, dairy processing and chemical processing.

        As an example, we are leveraging our strong position as a valve supplier with key customer relationships in the North American oil pipeline industry to expand our sales of pipeline pump products.

 

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Further develop global customer relationships:

        As we look to grow our business, we plan to strengthen our current global customer relationships through key account management programs. By increasing our intimacy with customers and gaining a deeper understanding of their business needs and investment plans, we believe we can better position our business to partner and grow with many of our large, multi-national customers.

Expand sales and distribution channels, including e-business solutions:

        Sales and distribution channels are critically important to our business model. As we work to develop stronger relationships with our current channel partners, we are also seeking new and alternative methods to expand our sales channels. One of our key areas of focus is enhancing our e-business solutions to allow customers to purchase original equipment, spares and parts on-line.

        We are also seeking new distribution partners to expand our product offerings into adjacent markets.

Continue to develop new products to enhance our customers' production capabilities:

        We believe the breadth of our product offerings is a competitive advantage that allows us to offer more highly engineered content to customers, particularly on large capital investments that may require multiple components, skidded systems, or automated solutions. We invested approximately $20.0 in research and development during 2014 and are committed to continuing to invest in our product portfolio and expanding into adjacent and complementary technologies.

Expand into adjacent industries, product categories and geographies and selectively pursue acquisitions:

        We intend to leverage our existing end market platforms to not only increase current and new customer penetration, but also to expand into adjacent product categories.

        A disciplined approach to acquisitions is an important part of our growth strategy. We believe that we have created a strong base business and are well-positioned to take advantage of the high level of fragmentation in the flow control and adjacent markets. We have created a thoughtful and stringent framework for evaluating potential acquisitions, joint ventures and minority interest investment opportunities with a particular focus on opportunities that (a) strengthen our existing businesses, (b) expand our product offerings and technological know-how, and/or (c) provide access to new customers from the standpoint of end markets and/or geographies.

Improving Operating Efficiency:

Maintain a disciplined approach to project selection:

        Throughout our business, we have implemented a more disciplined approach to project selection that prioritizes strategic growth and aftermarket annuity streams and also better assesses project risk. We are focusing on new system and product opportunities in higher-growth end market applications. Through disciplined project selection, we have built a more strategic backlog, experienced improved operational execution and are gaining important aftermarket service opportunities.

Continuous operational improvement:

        We strive to continuously improve our operational performance to drive higher customer satisfaction and internal productivity. At the end of 2013, we established a centralized global manufacturing team responsible for driving continuous improvement across our business. As part of this effort, our global manufacturing operations team implemented a scorecard with a consistent set of operating metrics such as on-time delivery, quality, cycle times and safety. This enables us to quickly

 

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identify areas of opportunity to improve our operating efficiency. We also have a centralized team of experienced operational experts that we can deploy to help drive operational improvement.

        We believe there is significant potential to drive continuous improvement throughout our organization by focusing on lean principles and value engineering. We have also experienced success by sharing best practices throughout our broader organization.

        Additionally, we continue to work to rationalize our Enterprise Resource Planning ("ERP") systems in an effort to further standardize systems across the organization. We also plan to focus on improving working capital utilization, with a specific emphasis on accounts receivable and inventory turnover rates.

Expand our configured-to-order approach:

        In conjunction with our lean initiatives, we are driving our engineering and commercial teams to capture business that leverages existing engineering designs and manufacturing work flows. This involves pursuing orders that allow our business to reuse the high level of quality engineering involved in designing our products and systems. Our goal is to separate our design and manufacturing processes into modular, repeatable segments. This allows us to leverage the repeatability of common elements in the design and manufacturing process, while also allowing for the customization often required to meet our customers' needs across various stringent applications.

        By driving a configured-to-order approach, we intend to achieve higher efficiency in our engineering and manufacturing operations, more reliable production schedules, better predictability in our supply needs and shorter lead times on delivery to our customers.

Optimize our global footprint through localization and rationalization:

        We have significantly reduced our cost structure through previous restructuring actions. We believe there is significant potential to further optimize our global footprint. We are focused on expanding our global presence in higher growth regions of the world and utilizing lower-cost manufacturing and sourcing opportunities to further reduce our cost structure and remain competitive in the markets we serve.

        We continue to analyze our global footprint and believe there are opportunities to migrate our operations to lower cost regions where we already have successful operations. As part of this initiative, we have purchased land in Bydgoszcz, Poland on which we plan to construct a 300,000 square foot facility. Over the next few years, we intend to shift operations currently in several high cost regions into this new facility in Poland.

        In emerging regions where we see strong potential to sell our products and services, we are working to localize our operations, including our operations in South Korea, China and India.

Leverage global supplier relationships:

        Only approximately 30% of our total sourcing spend is concentrated in enterprise-wide programs. We believe there is a significant opportunity to leverage our global supplier relationships.

Corporate Information

        Our headquarters are located at 13320 Ballantyne Corporate Place, Charlotte, NC 28277. Our telephone number will be (704) 752-4400. Our website address is www.spxflow.com. Information contained on, or connected to, our website or SPX's website does not and will not constitute part of this information statement or the registration statement on Form 10 of which this information statement is a part.

 

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The Spin-Off

Overview

        On October 29, 2014, SPX announced that its board of directors had unanimously approved a plan to spin-off its Flow Technology reportable segment, its Hydraulic Technologies business, various related legal entities, and certain of its corporate assets and liabilities, and on September 8, 2015, the board of directors of SPX approved the spin-off of Flowco from SPX, following which Flowco will be an independent, publicly-traded company.

        Before our spin-off from SPX, we will enter into a Separation and Distribution Agreement and several other agreements with SPX related to the spin-off. These agreements will govern the relationship between us and SPX after completion of the spin-off and provide for the allocation between us and SPX of various assets, liabilities and obligations. See "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off."

        We expect that, in connection with the spin-off, we will incur indebtedness of approximately $1.0 billion, including $600.0 aggregate principal amount of 6.875% Senior Notes due 2017 (the "2017 Notes"), which we will become obligated to repay. SPX's board of directors believes that following the spin-off we will be well capitalized with sufficient financial flexibility to pursue future growth opportunities.

        The distribution of Flowco common stock as described in this information statement is subject to the satisfaction or waiver of certain conditions. In addition, SPX has the right to abandon and not complete the spin-off at any time prior to the distribution. See "The Spin-Off—Conditions to the Spin-Off."

Questions and Answers about the Spin-Off

        The following provides only a summary of the terms of the spin-off. For a more detailed description of the matters described below, see "The Spin-Off."

Q:
What is the spin-off?

A:
The spin-off is the series of transactions by which Flowco will separate from SPX. To complete the spin-off, SPX will distribute to its shareholders all outstanding shares of Flowco common stock. We refer to this as the distribution. Following the distribution, Flowco will be a separate company from SPX, and SPX will not retain any ownership interest in Flowco. The number of shares of SPX common stock you own will not change as a result of the spin-off.

Q:
What is Flowco?

A:
Flowco is a wholly-owned direct subsidiary of SPX whose shares will be distributed to SPX shareholders upon completion of the spin-off. Flowco consists of SPX's Flow Technology reportable segment, SPX's Hydraulic Technologies business, various related legal entities, and certain SPX corporate assets and liabilities. After we complete the spin-off, Flowco will be an independent public company. Its broad component offerings will include a variety of centrifugal and reciprocating pumps, various control valves, filtration and dehydration equipment, mixers, plate heat exchangers and hydraulic technologies. It will also provide skidded and full-line systems, as well as aftermarket replacement components, parts and services. We believe that Flowco is well-positioned for future growth and operational improvement as a leading provider of highly engineered flow technologies, solutions and aftermarket parts and services for food and beverage, power and energy and industrial applications.

 

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Q:
What will I receive in the spin-off?

A:
As a holder of SPX common stock, you will retain your SPX shares and will receive one share of Flowco stock for every share of SPX common stock you own as of the record date. For a more detailed description, see "The Spin-Off."

Q:
Why is the separation of Flowco structured as a spin-off?

A:
On October 29, 2014, the board of directors of SPX approved a plan to spin off SPX's Flow Technology reportable segment, its Hydraulic Technologies business, various related legal entities, and certain of its corporate assets and liabilities, into a new company. SPX believes that a spin-off is the most efficient way to accomplish a separation of our business from SPX for several reasons including: (i) a spin-off offers a higher degree of certainty of completion in a timely manner than other separation transactions, lessening disruption to SPX's business operations; (ii) a spin-off provides greater assurance that decisions regarding SPX's and our capital structure support future financial stability; and (iii) SPX intends that a spin-off be a tax-free distribution of Flowco common stock to SPX shareholders. After evaluating the feasibility of other alternatives, including the possibility of selling one or more businesses of SPX, SPX believes that a spin-off will enhance the long-term value of both SPX and Flowco. See "The Spin-Off—Reasons for the Spin-Off."

Q:
When is the record date for the distribution?

A:
The record date will be the close of business, Eastern time, on September 16, 2015.

Q:
When will the distribution occur?

A:
The distribution will be effective at 11:59 p.m., Eastern time, on September 26, 2015. Flowco expects that it will take the distribution agent, acting on behalf of SPX, up to two weeks after the distribution date to fully distribute the shares of Flowco common stock to SPX shareholders. The ability to trade Flowco shares will not be affected during that time.

Q:
What are the reasons for and benefits of separating Flowco from SPX?

A:
SPX believes the spin-off will provide a number of benefits, including:

The creation of two strong, stand-alone companies with leading positions in the markets they serve.

Flowco will be a pure-play flow company, well-positioned as a leading provider of flow technologies across food and beverage, power and energy and industrial markets.

SPX will be well-positioned as a leading supplier of power, HVAC and highly engineered infrastructure products.

Allowing investors to gain a better understanding and distinctly value the unique attributes of each of the future separate companies.

Enhancing the ability of the management team of each company to pursue a more focused commercial and operational strategy aligned to the best interests of its business, customers, suppliers, other business partners and shareholders.

Providing the ability to more closely align incentive compensation with the nature of each business, as well as the ability to attract and retain key employees.

Allowing the opportunity for each company to implement a capital structure that best supports and reflects its respective business and financial profile, fiscal policy and capital allocation methodology.

 

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    Increasing the flexibility for both future companies to independently evaluate and pursue organic and inorganic growth opportunities without limitations inherent in the existing SPX entity.

    For a more detailed discussion of the reasons for the spin-off, see "The Spin-Off—Reasons for the Spin-Off."

Q:
What are the risks associated with the spin-off?

A:
An investment in Flowco common stock is subject to both general and specific risks relating to Flowco's business in general and the industries in which it operates, the spin-off, and ownership of Flowco common stock.

    Risks relating to our business in general and the industries in which we operate range from macroeconomic and competitive risk to the structure of our company, to litigation and other matters.

    Risks relating to the spin-off include that we may not achieve some or all of the expected benefits of the spin-off; the risk that we incur greater costs as an independent company than we did when we were a part of SPX; and the risk that we and/or SPX and the SPX shareholders become subject to significant tax liabilities because the distribution fails to qualify for its intended tax-free treatment.

    Risks relating to the ownership of Flowco common stock include the risk that an active trading market for our common stock may not develop or be sustained after the spin-off; the risk that the price of our common stock fluctuates significantly following the spin-off or substantial sales of our common stock occur in connection with the spin-off; and the risk that certain provisions in Flowco's amended and restated certificate of incorporation and bylaws, certain provisions of Delaware law and Flowco's agreements with SPX may prevent or delay an acquisition by Flowco or other strategic transactions.

    The above list of risk factors is not exhaustive. Please read the information in the section entitled "Risk Factors" starting on page 18 for a more thorough description of these and other risks.

Q:
Can SPX decide to cancel the spin-off even if all the conditions to the spin-off have been satisfied?

A:
SPX has the right to abandon and not complete the spin-off at any time prior to the distribution.

Q:
What is being distributed in the spin-off?

A:
Approximately 41 million shares of Flowco common stock will be distributed in the spin-off, based on the number of shares of SPX common stock expected to be outstanding as of the record date. The actual number of shares of Flowco common stock to be distributed will be calculated on September 16, 2015, the record date for the distribution. The shares of Flowco common stock to be distributed by SPX will constitute all issued and outstanding shares of Flowco common stock immediately prior to the distribution. For more information on the shares being distributed in the spin-off, see "Description of Capital Stock—Common Stock."

Q:
What do I have to do to participate in the spin-off?

A:
You do not need to take any action, although we urge you to read this entire document carefully. No shareholder approval of the distribution is required or sought. You are not being asked for a proxy. No action is required on your part to receive your shares of Flowco common stock. You will not be required to pay anything for the new shares or to surrender any shares of SPX common stock to participate in the spin-off.

 

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Q:
How will the spin-off affect equity awards held by SPX employees?

A:
SPX employees and directors with vested stock will be treated in the same manner as any other SPX shareholder.

    The treatment of stock options and unvested equity awards held by SPX employees and directors is described in "Executive Compensation—Compensation Discussion and Analysis—2015 Compensation Changes" beginning on page 115.

    For more information on the treatment of equity awards, see "The Spin-Off—Treatment of Equity Awards."

Q:
What are the U.S. federal income tax consequences of the distribution to SPX shareholders?

A:
The distribution is conditioned upon, among other matters, SPX's receipt of an opinion of Fried, Frank, Harris, Shriver & Jacobson LLP ("Tax Counsel"), that is consistent with SPX's intent that the spin-off be tax-free to SPX and SPX's shareholders, for U.S. federal income tax purposes. Assuming that the spin-off qualifies as a transaction that generally is tax-free under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended ("Code"), SPX shareholders generally will not be required, for U.S. federal income tax purposes, to recognize any gain or loss or to include any amount in their income upon their receipt of shares of Flowco common stock in the distribution.

    For more information regarding the material U.S. federal income tax consequences to you of the distribution, please refer to "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Distribution." WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE DISTRIBUTION TO YOU, INCLUDING ANY CONSEQUENCES UNDER STATE, LOCAL OR NON-U.S. LAW.

Q:
How will I determine the tax basis I will have in the Flowco common stock I receive in the distribution?

A:
Generally, for U.S. federal income tax purposes, assuming your receipt of shares of Flowco common stock in the distribution is tax-free, the tax basis in the shares of SPX common stock that you hold immediately prior to the distribution will be allocated between such shares and the shares of Flowco common stock you receive in the distribution in proportion to the relative fair market values of such shares immediately following the distribution. You should consult your tax advisor about how this allocation will work in your situation (including if you have purchased SPX shares at different times or for different amounts) and regarding any particular consequences of the distribution to you, including under state, local or non-U.S. law. For more information regarding the material U.S. federal income tax consequences to you of the distribution, please refer to "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Distribution."

Q:
Will the Flowco common stock be listed on a stock exchange?

A:
Yes. Although there is no current public market for Flowco common stock, Flowco has applied for authorization to list its common stock on the NYSE under the symbol "FLOW." We anticipate that trading of Flowco common stock will commence on a "when-issued" basis beginning on or shortly before the record date. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. When-issued trades generally settle within four trading days after the distribution date. On the first trading day following the distribution date, any when-issued trading of Flowco common stock will end and "regular-way" trading will begin. "Regular-way" trading refers to trading after a security has been issued and

 

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    typically involves a transaction that settles on the third full trading day following the date of the transaction. See "The Spin-Off—Trading Market for Our Common Stock" for more information.

Q:
Will my shares of SPX common stock continue to trade?

A:
Yes. SPX common stock will continue to be listed and trade on the NYSE. In connection with the spin-off, we expect SPX stock to trade under a new symbol "SPXC."

Q:
If I sell, on or before the distribution date, shares of SPX common stock that I held on the record date, am I still entitled to receive shares of Flowco common stock distributable with respect to the shares of SPX common stock I sold?

A:
Beginning on or shortly before the record date and continuing through the distribution date for the spin-off, SPX's common stock will begin to trade in two markets on the NYSE: a "regular-way" market and an "ex-distribution" market. If you are a holder of record of shares of SPX common stock as of the record date for the distribution and choose to sell those shares in the regular-way market after the record date for the distribution and before the distribution date, you also will be selling the right to receive shares of Flowco common stock in connection with the spin-off. However, if you are a holder of record of shares of SPX common stock as of the record date for the distribution and choose to sell those shares in the ex-distribution market after the record date for the distribution and before the distribution date, you will not be selling the right to receive shares of Flowco common stock in connection with the spin-off and you will still receive shares of Flowco common stock.

Q:
Will the spin-off affect the trading price of my SPX stock?

A:
Yes, we expect the trading price of shares of SPX common stock immediately following the distribution will be lower than the price of shares of SPX in the "regular-way" market immediately prior to the distribution because it will no longer reflect the value of SPX's existing Flow Technology reportable segment, its Hydraulic Technologies business, various related legal entities, and certain SPX corporate assets and liabilities. However, we cannot predict or provide you with any assurance as to the price at which the SPX shares will trade following the spin-off.

Q:
What are the financing plans for Flowco?

A:
We expect that, in connection with the spin-off, we will incur indebtedness of approximately $1.0 billion, including $600.0 aggregate principal amount of the 2017 Notes, which we will become obligated to repay.

Q:
What will the relationship be between SPX and Flowco after the spin-off?

A:
Following the spin-off, Flowco will be an independent, publicly-traded company and SPX will have no continuing stock ownership interest in Flowco. In conjunction with the spin-off, Flowco will have entered into a Separation and Distribution Agreement and several other agreements with SPX for the purpose of allocating between Flowco and SPX various assets, liabilities and obligations. These agreements will also govern Flowco's relationship with SPX following the spin-off. These agreements will also include arrangements for transitional services. We describe these agreements in more detail under "Certain Relationships and Related Party Transactions."

Q:
What will Flowco's dividend policy be after the spin-off?

A:
Flowco's dividend policy will be established by the Flowco board of directors (the "Board") based on Flowco's financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice and other business considerations that the

 

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    Board considers relevant. In addition, the terms of the agreements governing our new debt or debt that we may incur in the future may limit or prohibit the payments of dividends. For more information, see "Dividend Policy."

Q:
Will Flowco have a stock repurchase program after the spin-off?

A:
We do not expect Flowco to have a stock repurchase program in place immediately following the spin-off.

Q:
Will I have appraisal rights in connection with the spin-off?

A:
As a holder of SPX's common stock, you will not have any appraisal rights in connection with the spin-off.

Q:
Who will be the transfer agent for Flowco common stock after the spin-off?

A:
After the distribution, the transfer agent for Flowco's common stock will be Computershare.

Q:
Who is the distribution agent for the spin-off?

A:
The distribution agent for the spin-off will be Computershare.

Q:
Where can I get more information?

A:
If you have any questions relating to the mechanics of the distribution, you should contact the distribution agent at:


Computershare
P.O. Box 30170
College Station, TX 77842-3170
Telephone:
Inside the United States
877-498-8861
Outside the United States
781-575-2879
TDD/TTY for hearing impaired
800-952-9245


Before the spin-off, if you have any questions relating to the spin-off, you should contact SPX at:


SPX Corporation
13320-A Ballantyne Corporate Place
Charlotte, NC 28277
Attention: Investor Relations
Phone: (704) 752-4486
www.spx.com/en/investor-relations


After the spin-off, if you have any questions relating to Flowco, you should contact Flowco at:


SPX FLOW, Inc.
13320 Ballantyne Corporate Place
Charlotte, NC 28277
Attention: Ryan Taylor, VP, Communications, Market Insights & Financial Planning
Phone: (704) 752-4486
ryan.taylor@spx.com

 

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Summary of the Spin-Off

 
   

Distributing Company

  SPX Corporation, a Delaware corporation. After the distribution, SPX will own no shares of Flowco common stock.

Distributed Company

 

SPX FLOW, Inc., a newly-formed Delaware corporation and a wholly-owned direct subsidiary of SPX. After the spin-off, Flowco will be an independent, publicly-traded company.

Distributed Securities

 

All shares of Flowco common stock owned by SPX, which will be 100% of Flowco common stock issued and outstanding immediately prior to the distribution.

Record Date

 

The record date for the distribution is the close of business, Eastern time, on September 16, 2015.

Distribution Date

 

The distribution will be effective at 11:59 p.m., Eastern time, on September 26, 2015.

Internal Reorganization

 

As part of the spin-off, SPX is undergoing an internal reorganization that will, among other things, result in Flowco owning SPX's existing Flow Technology reportable segment, its Hydraulic Technologies business, various related legal entities, and certain of its corporate assets and liabilities. For more information, see the description of this internal reorganization in "The Spin-Off—Manner of Effecting the Spin-Off—Internal Reorganization."

Indebtedness and Other Financing Arrangements

 

We expect that, in connection with the spin-off, we will incur indebtedness of approximately $1.0 billion, including $600.0 aggregate principal amount of the 2017 Notes, which we will become obligated to repay.

Distribution Ratio

 

Each holder of SPX common stock will receive one share of Flowco common stock for every share of SPX common stock held on the record date.

The Distribution

 

On the distribution date, SPX will release the shares of Flowco common stock to the distribution agent to distribute to SPX shareholders. The shares will be distributed in book-entry form, which means that no physical share certificates will be issued. We expect that it will take the distribution agent up to two weeks to electronically issue shares of Flowco common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. You will receive written advice from the distribution agent as to the number of Flowco shares that have been issued to you, about two weeks following our public announcement that the distribution has taken place. Any delay in the electronic issuance of Flowco shares by the distribution agent will not affect trading in Flowco common stock. Following the distribution, shareholders who hold their shares in book-entry form may request that their shares be transferred to a brokerage or other account at any time. You will not be

   

 

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required to make any payment, to surrender or exchange your shares of SPX common stock or to take any other action to receive your shares of Flowco common stock.

Conditions to the Spin-Off

 

Completion of the spin-off is subject to the satisfaction or waiver by SPX of the following conditions:

 

Flowco's registration statement on Form 10, of which this information statement is a part, shall have become effective under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with no stop order in effect with respect thereto, and this information statement shall have been mailed to the shareholders of SPX;

 

Flowco common stock shall have been approved for listing on the NYSE, subject to official notice of distribution;

 

SPX shall have received from Tax Counsel an opinion that is consistent with SPX's intent that the spin-off be tax-free to SPX and SPX's shareholders for U.S. federal income tax purposes;

 

All permits, registrations and consents required under state and foreign securities or blue sky laws in connection with the distribution shall have been obtained and be in full force and effect;

 

No order or other legal restraint preventing the distribution or any of the related transactions shall be in effect, and no other event shall have occurred or failed to occur that prevents the distribution or any of the related transactions;

 

All governmental approvals necessary to complete the distribution shall have been obtained and be in effect;

 

The financing arrangements contemplated to be entered into by SPX and Flowco in connection with the separation shall have been executed and delivered and the proceeds of those financing shall have been (or substantially concurrently will be) received by Flowco and SPX, as applicable;

 

The board of directors of SPX shall have received an opinion in form and substance satisfactory to the board of directors of SPX with respect to the solvency, capital adequacy and sufficiency of surplus of each of SPX and Flowco after giving effect to the separation and distribution (see "The Spin-Off—Capital Adequacy Opinion"); and

 

No events or developments shall have occurred or exist that, in the judgment of the board of directors of SPX, in its sole and absolute discretion, make it inadvisable to effect the distribution or the related transactions, or would result in the distribution or the related transactions not being in the best interest of SPX or its shareholders.

 

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These conditions are for the sole benefit of SPX and do not give rise to or create any duty on the part of SPX or the board of directors of SPX to waive or not waive any such condition. SPX may, in its sole and absolute discretion, determine all terms of the distribution, including the form, structure and terms of any transactions to effect the distribution and the timing of and conditions to the consummation of the distribution. In addition, SPX may, at any time prior to the distribution, decide to abandon the distribution or modify or change the terms of the distribution.

Trading Market and Symbol

 

We have applied for authorization to list Flowco common stock on the NYSE under the ticker symbol "FLOW." We anticipate that, beginning on or shortly before the record date, trading of shares of Flowco common stock will begin on a "when-issued" basis and will continue up to and including the distribution date, and we expect "regular-way" trading of Flowco common stock will begin the first trading day after the distribution date. We also anticipate that, beginning on or shortly before the record date, there will be two markets in SPX common stock: a regular-way market on which shares of SPX common stock will trade with an entitlement to shares of Flowco common stock to be distributed in the distribution, and an "ex-distribution" market on which shares of SPX common stock will trade without an entitlement to shares of Flowco common stock. For more information, see "The Spin-Off—Trading Market for Our Common Stock."

Material U.S. Federal Income Tax Consequences

 

The distribution is conditioned upon, among other matters, SPX's receipt from Tax Counsel of an opinion that is consistent with SPX's intent that the spin-off be tax-free to SPX and SPX's shareholders for U.S. federal income tax purposes. Assuming that the spin-off qualifies as a transaction that generally is tax-free under Sections 355 and 368(a)(1)(D) of the Code, SPX shareholders generally will not be required, for U.S. federal income tax purposes, to recognize any gain or loss or to include any amount in their income upon their receipt of shares of Flowco common stock in the distribution.

 

For more information regarding the material U.S. federal income tax consequences of the distribution, please refer to "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Distribution."

 

SPX SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR CONSEQUENCES TO THEM OF THE DISTRIBUTION, INCLUDING ANY CONSEQUENCES UNDER STATE, LOCAL OR NON-U.S. LAW.

 

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Relationship with SPX after the Spin-Off

 

We will enter into a Separation and Distribution Agreement and other agreements with SPX prior to the spin- off. These agreements will govern our relationship with SPX after completion of the spin-off and provide for the allocation between us and SPX of various assets, liabilities, and obligations. In addition, we will enter into a Transition Services Agreement with SPX under which SPX will provide us with certain services, and we will provide SPX with certain services, on an interim basis following the distribution. We also will enter into an Employee Matters Agreement that will set forth our agreements with SPX concerning certain employee compensation and benefit matters. Further, we will enter into a Tax Matters Agreement with SPX that will, among other things, allocate responsibility for certain taxes, require us to indemnify SPX in certain instances for taxes resulting from the spin-off and contain certain restrictions (which generally relate to acquisitions of our stock and similar transactions) designed to preserve the intended tax-free treatment of the spin-off. We will also enter into a Trademark License Agreement, pursuant to which we will license rights to use described logos and other trademarks to SPX. We describe these arrangements in greater detail under "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off," and describe some of the risks of these arrangements under "Risk Factors—Risks Relating to the Spin-Off."

Dividend Policy

 

Flowco's dividend policy will be established by the Board based on Flowco's financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice and other business considerations that the Board considers relevant. In addition, the terms of the agreements governing our new debt will, and debt that we may incur in the future may, limit or prohibit the payments of dividends. For more information, see "Dividend Policy."

Distribution Agent

 

Computershare.

Risk Factors

 

We face both general and specific risks and uncertainties relating to our business, our relationship with SPX and our being an independent, publicly-traded company. We also are subject to risks relating to the spin-off. You should carefully read "Risk Factors" beginning on page 18 of this information statement.

 

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Summary Historical and Unaudited Pro Forma Combined Financial Data

        The table below presents summary historical and unaudited pro forma combined financial data for the periods indicated. We derived the summary pro forma combined financial data as of and for the six months ended June 27, 2015, and for the year ended December 31, 2014, from the unaudited pro forma condensed combined financial statements included elsewhere in this information statement, and the summary historical combined financial data (i) as of and for the six months ended June 27, 2015 and (ii) for the six months ended June 28, 2014 from the unaudited condensed combined financial statements included elsewhere in this information statement. We derived the summary historical combined financial data as of December 31, 2014 and 2013, and for each of the years in the three-year period ended December 31, 2014, from our audited combined financial statements included elsewhere in this information statement. We derived the summary historical combined financial data as of June 28, 2014 and December 31, 2012 from our unaudited combined financial statements that are not included in this information statement.

        The unaudited pro forma condensed combined financial statements do not purport to represent what our financial position and results of operations would have been had the distribution and related transactions summarized under "Certain Relationships and Related Party Transactions" occurred on the dates indicated or to project our financial performance for any future period. In addition, the unaudited pro forma condensed combined financial statements are provided for illustrative and informational purposes only and are not necessarily indicative of our results of operations or financial condition had the distribution and our anticipated post-spin-off capital structure been completed on the dates assumed. Also, they may not reflect the results of operations or financial condition that would have resulted had we been operating as an independent, publicly traded company during such period. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable, but actual results may differ from the pro forma adjustments. These adjustments are subject to change based on the finalization of the Separation and Distribution Agreement with SPX and the other agreements described under "Certain Relationships and Related Party Transactions." In addition, they are not necessarily indicative of our future results of operations or financial condition.

        You should read this summary financial data together with "Capitalization," "Unaudited Pro Forma Condensed Combined Financial Statements," "Selected Historical Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the combined financial statements and accompanying notes included in this information statement.

 
  As of and for the
Six Months Ended
  As of and for the Year Ended  
 
  June 27,   June 28,   December 31,  
 
  Pro Forma
2015
  2015   2014   Pro Forma
2014
  2014   2013   2012  

Revenues

  $ 1,186.3   $ 1,186.3   $ 1,365.6   $ 2,769.6   $ 2,769.6   $ 2,804.8   $ 2,846.3  

Operating income

    98.4     98.4     109.4     254.6     254.6     231.2     188.9  

Net income attributable to Flowco

    61.1     70.5     57.2     119.0     134.5     131.0     126.9  

Total assets

    3,482.8     3,952.9     4,444.3     N/A     4,028.1     4,490.7     3,918.4  

Long-term debt (including capital lease obligations)

    1,009.7     397.2     990.7     N/A     976.6     965.1     762.9  

 

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RISK FACTORS

        You should carefully consider each of the following risks and uncertainties, which we believe are the principal risks that we face and of which we are currently aware, and all of the other information in this information statement. Some of the risks and uncertainties described below relate to our business, while others relate to the spin-off. Other risks relate principally to the securities markets and ownership of our common stock.

        If any of the following events actually occur, our business, financial condition or financial results could be materially adversely affected, the trading price of our common stock could decline and you could lose all or part of your investment. Additional risks and uncertainties that we do not presently know about or currently believe are not material may also adversely affect our business and operations.

Risks Relating to Our Business

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 65% 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;

    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;

    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;

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    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 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 food and beverage markets and the oil and gas, chemical, mining, and petrochemical markets.

        Contract timing on large construction projects, including food and beverage systems and projects in the oil and gas industries, 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 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Reportable Segments." In addition, certain of our businesses have seasonal fluctuations. Historically, some of our key businesses tend to be stronger in the second half of the year.

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, 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 price fluctuations.

        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 our oil and gas business. Reduced demand for our products and services could result in the delay or cancellation of

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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 could affect our ability to market our products or collect receivables. In addition, financial difficulties faced by our customers may lead to cancellation or delay of orders.

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

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 unauthorized 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.

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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 stemming from the cost of materials and products purchased overseas.

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 are subject to domestic and international environmental protection laws and regulations with respect to our business operations and are operating in compliance with, or taking action aimed at ensuring compliance with, these laws and regulations. There can be no assurance that our compliance obligations with environmental protection laws and regulations, individually or in the aggregate, 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 rights 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 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates—Contingent Liabilities" and Note 13 to our annual combined 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.

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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.

        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 Shifting 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.

Cost overruns, delays, penalties or liquidated damages could negatively impact our results, particularly with respect to long-term fixed-price contracts.

        Substantially all our revenues are recorded and earned under fixed-price arrangements. A portion of our revenues and earnings is generated through long-term contracts. We recognize revenues for the majority of these long-term 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. During 2014, 2013 and 2012, approximately 21%, 22% and 24%, respectively, of our total revenues were recorded under the percentage-of-completion method.

        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 or time 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 substantially all of our long-term contracts are at a fixed price, we face the risk that cost overruns, delays, penalties or liquidated damages may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on our projects.

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

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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.

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 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.

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 are inherently difficult to predict, 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

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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 and other synergies. 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.

        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.

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 $1,740.3. We conduct annual impairment testing to determine if we will be able to recover all or a portion of the carrying

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

        We have various collective labor arrangements covering certain U.S. and non-U.S. employee groups. We are subject to potential work stoppages and other potential labor disputes. Further, we may be subject to work stoppages, which are beyond our control, at our suppliers or customers.

We could experience operational difficulties and additional expense related to further implementations of Enterprise Resource Planning ("ERP") software.

        We are in the process of upgrading, and where necessary, implementing, a standard ERP software program across many of our business locations. Our expanded ERP software platform has involved, and will continue to involve, substantial expenditures on system hardware and software, as well as design, development and implementation activities. Operational disruptions during the course of these activities could materially impact our operations. For example, our ability to forecast sales demand, ship products, manage our product inventory, and record and report financial and management information on a timely and accurate basis could be impaired if there are significant problems implementing the expansion.

        Additionally, our cost estimates related to our new ERP system are based on assumptions which are subject to wide variability, require a great deal of judgment, and are inherently uncertain.

Our ordinary course and future restructuring activities could result in additional costs and operational difficulties.

        We face risks relating to our ongoing and future efforts to reduce global costs, including those designed to reduce headcount and consolidate our manufacturing and engineering footprint. We risk the loss of valuable employees, operational difficulties, product quality, restructuring costs, and difficulties arising from negotiations with work councils and other labor groups. We also risk disruption to our customer relationships if we are unable to meet our commitments to them. Further, these actions may take longer than anticipated, prove more costly than expected and distract management from other activities. Finally, we may not fully realize the expected benefits of these activities.

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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 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.

Risks Relating to the Spin-Off

We face risks related to SPX's planned spin-off of its flow business.

        Unanticipated developments, including possible delays in obtaining required approvals, uncertainty of the financial markets, and challenges relating to the structure of the spin-off or resulting companies, could delay or prevent the planned spin-off, or cause it to occur on less favorable terms or conditions than projected. Even if the spin-off is completed as and on the timetable currently contemplated, we may not realize some or all projected benefits, or expenses relating to the planned spin-off may be significantly higher than projected.

        Additionally, the planned spin-off requires significant time and attention, which could distract management and other employee attention from the day-to-day operation of SPX's current Flow Technology reportable segment and its Hydraulic Technologies business.

The spin-off could result in substantial tax liabilities to SPX, Flowco and SPX's shareholders.

        Among the conditions to completing the spin-off will be SPX's receipt from Tax Counsel of an opinion that is consistent with SPX's intent that the spin-off be tax-free to SPX and SPX's shareholders for U.S. federal income tax purposes. However, if the factual assumptions or representations upon which this opinion is based are inaccurate or incomplete in any material respect, this opinion may be invalid and the conclusions reached therein could be jeopardized. Furthermore, this opinion will not be binding on the Internal Revenue Service ("IRS") or on any court. Accordingly, the IRS may challenge the conclusions set forth in the opinion and any such challenge could prevail. If, notwithstanding the opinion of Tax Counsel, the spin-off or a related transaction is determined to be taxable, SPX could be subject to substantial tax liabilities. In such case, each member of the SPX consolidated group

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immediately before the spin-off (including us and certain of our subsidiaries) would be jointly and severally liable, under U.S. Treasury Regulations, for the entire amount of the resulting U.S. federal income tax liabilities of SPX. In addition, if the spin-off is determined to be taxable, each holder of SPX common stock who receives Flowco shares in the distribution generally would be treated as receiving a taxable distribution of property in an amount equal to the fair market value of the Flowco shares received.

        Even if the spin-off otherwise qualifies as a tax-free transaction, the distribution could be taxable to SPX and Flowco (but not to SPX's shareholders) in certain circumstances if one or more acquisitions of SPX's stock or Flowco's stock are deemed to be part of a plan or series of related transactions that includes the spin-off. In this event—which could occur for reasons outside of our control (such as actions taken by SPX)—we would be jointly and severally liable for the resulting U.S. federal income tax liabilities of SPX, which would be substantial. In connection with the spin-off, we intend to enter into a Tax Matters Agreement with SPX, under which we will agree (i) generally not to enter into certain transactions that could cause the spin-off to be taxable, and (ii) to indemnify SPX for any tax liabilities resulting from such a transaction. This obligation and potential tax liability may discourage, delay or prevent a change of control or acquisition of our common stock.

        For more information, please refer to "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Distribution" and "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off—Tax Matters Agreement."

The combined post-separation value of SPX and Flowco stock may not equal or exceed the pre-separation value of SPX common stock.

        As a result of the distribution, SPX expects the trading price of SPX common shares immediately following the distribution to be lower than the "regular-way" trading price of such shares immediately prior to the distribution because the trading price will no longer reflect the value of SPX's existing Flow Technology reportable segment businesses, its Hydraulic Technologies business, various related legal entities, and certain of its corporate assets and liabilities being transferred to Flowco. There can be no assurance that the aggregate market value of the SPX common stock and the Flowco common stock following the separation will be higher than or the same as the market value of SPX common stock if the separation did not occur.

We may not be able to engage in certain corporate transactions after the separation.

        To preserve the intended tax-free treatment of the spin-off, under the Tax Matters Agreement that we will enter into with SPX, for a period of two years following the distribution, we generally will be prohibited from taking certain actions that would prevent the spin-off from qualifying as a transaction that generally is tax-free to SPX and SPX's shareholders, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code.

        These restrictions, which generally relate to acquisitions of our stock and similar transactions, may limit our ability to pursue certain strategic transactions or other transactions that we may otherwise believe to be in the best interests of our shareholders or that might increase the value of our business. For more information, please refer to "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Distribution" and "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off—Tax Matters Agreement."

Until the separation occurs, SPX has sole discretion to change the terms of the separation in ways which may be unfavorable to us.

        Until the separation occurs, we will be a wholly-owned subsidiary of SPX. Accordingly, SPX will effectively have the sole and absolute discretion to determine and change the terms of the separation,

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including the establishment of the record date for the distribution and the separation date. These changes could be unfavorable to us.

We may be unable to make, on a timely basis, the changes necessary to operate as an independent, publicly-owned company.

        As a public entity, we will be subject to the reporting requirements of the Exchange Act and requirements of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports about our business and financial condition. Under the Sarbanes-Oxley Act, we must maintain effective disclosure controls and procedures and internal control over financial reporting, which requires significant resources and management oversight. We will implement additional procedures and processes to address the standards and requirements applicable to public companies. To comply with these requirements, we may need to upgrade our systems; implement additional financial and management controls, reporting systems and procedures; and hire additional accounting and finance staff. We expect to incur additional annual expenses for the purpose of addressing these requirements, and those expenses may be significant. These activities may divert management's attention from other business concerns, which could have a material adverse effect on our financial position, results of operations or cash flows. If we cannot favorably assess the effectiveness of our internal control over financial reporting, or our independent registered public accounting firm cannot provide an unqualified attestation report on the effectiveness of our internal control over financial reporting, investor confidence and, in turn, the market price of our common stock could decline.

We do not have an operating history as an independent company and our historical and pro forma financial information may not be reliable indicators of our future results.

        The historical financial information we have included in this information statement has been derived from SPX's consolidated financial statements and accounting records and does not necessarily reflect what our financial position, results of operations and cash flows would have been had we been a separate, stand-alone entity during the periods presented. SPX did not account for us, and we were not operated, as a single stand-alone entity for the periods presented. Actual costs that may have been incurred if we had been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. In addition, the historical information may not be indicative of what our results of operations, financial position and cash flows will be in the future. For example, following the spin-off, changes will occur in our cost structure, funding and operations, including changes in our tax structure and increased costs associated with becoming a public, stand-alone company.

        Additionally, in preparing our unaudited pro forma condensed combined financial information, we based the pro forma adjustments on available information and assumptions that we believe are reasonable and factually supportable; however, our assumptions may prove not to be accurate. Also, our unaudited pro forma condensed combined financial information may not give effect to various ongoing additional costs we may incur in connection with being an independent public company. Accordingly, our unaudited pro forma condensed combined financial information does not reflect what our financial condition and results of operations would have been as an independent public company and is not necessarily indicative of our future financial condition or future results of operations. Please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Statements" and our historical unaudited interim condensed combined financial statements and historical audited combined financial statements and the notes to those statements included elsewhere in this information statement.

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In connection with our spin-off, SPX will indemnify us for certain liabilities and we will indemnify SPX for certain liabilities. If we are required to act on these indemnities to SPX, we may need to divert cash to meet those obligations and our financial results could be negatively impacted. The SPX indemnity may not be sufficient to insure us against the full amount of liabilities for which it will be allocated responsibility, and SPX may not be able to satisfy its indemnification obligations in the future.

        Pursuant to the Separation and Distribution Agreement, the Employee Matters Agreement and the Tax Matters Agreement between us and SPX, SPX will agree to indemnify us for certain liabilities, and we will agree to indemnify SPX for certain liabilities, in each case for uncapped amounts, as discussed further in "Certain Relationships and Related Transactions—Agreements with SPX Related to the Spin-Off." Such indemnities may be significant and could negatively impact our business, particularly our indemnity to SPX regarding the intended tax-free treatment of the distribution. Third parties could also seek to hold us responsible for any of the liabilities that SPX has agreed to retain. Further, the indemnity from SPX may not be sufficient to protect us against the full amount of such liabilities, and SPX may not be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from SPX any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.

The spin-off may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements.

        The spin-off is subject to review under various state and federal fraudulent conveyance laws. Fraudulent conveyance laws generally provide that an entity engages in a constructive fraudulent conveyance when (1) the entity transfers assets and does not receive fair consideration or reasonably equivalent value in return, and (2) the entity (a) is insolvent at the time of the transfer or is rendered insolvent by the transfer, (b) has unreasonably small capital with which to carry on its business, or (c) intends to incur or believes it will incur debts beyond its ability to repay its debts as they mature. An unpaid creditor or an entity acting on behalf of a creditor (including, without limitation, a trustee or debtor-in-possession in a bankruptcy by us or SPX or any of our respective subsidiaries) may bring a lawsuit alleging that the spin-off or any of the related transactions constituted a constructive fraudulent conveyance. If a court accepts these allegations, it could impose a number of remedies, including, without limitation, voiding our claims against SPX, requiring our shareholders to return to SPX some or all of the shares of our common stock issued in the spin-off, or providing SPX with a claim for money damages against us in an amount equal to the difference between the consideration received by SPX and the fair market value of our company at the time of the spin-off.

        The measure of insolvency for purposes of the fraudulent conveyance laws will vary depending on which jurisdiction's law is applied. Generally, an entity would be considered insolvent if (1) the present fair saleable value of its assets is less than the amount of its liabilities (including contingent liabilities); (2) the present fair saleable value of its assets is less than its probable liabilities on its debts as such debts become absolute and matured; (3) it cannot pay its debts and other liabilities (including contingent liabilities and other commitments) as they mature; or (4) it has unreasonably small capital for the business in which it is engaged. We cannot assure you what standard a court would apply to determine insolvency or that a court would determine that we, SPX or any of our respective subsidiaries were solvent at the time of or after giving effect to the spin-off.

        The distribution of our common stock is also subject to review under state corporate distribution statutes. Under the General Corporation Law of the State of Delaware (the "DGCL"), a corporation may only pay dividends to its shareholders either (1) out of its surplus (net assets minus capital) or (2) if there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Although SPX intends to make the distribution of our common stock

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entirely from surplus, we cannot assure you that a court will not later determine that some or all of the distribution to SPX shareholders was unlawful.

        The SPX board of directors believes that SPX and Flowco each will be solvent at the time of the spin-off (including immediately after the distribution of shares of Flowco common stock), will be able to repay its debts as they mature following the spin-off and will have sufficient capital to carry on its businesses and the spin-off, and that the distribution will be made entirely out of surplus in accordance with Section 170 of the DGCL. The expectations of the SPX board of directors in this regard are based on a number of assumptions, including its expectations as to the post-spin-off operating performance and cash flow of each of SPX and Flowco and its analysis of the post-spin-off assets and liabilities of each company. We cannot assure you, however, that a court would reach the same conclusions as SPX's board of directors in determining whether SPX or we were insolvent at the time of, or after giving effect to, the spin-off, or whether lawful funds were available for the separation and the distribution to SPX's shareholders.

A court could require that we assume responsibility for obligations allocated to SPX under the Separation and Distribution Agreement.

        Under the Separation and Distribution Agreement, from and after the spin-off, each of SPX and we will be responsible for the debts, liabilities and other obligations related to the business or businesses which it owns and operates following the consummation of the spin-off. Although we do not expect to be liable for any obligations that are not allocated to us under the Separation and Distribution Agreement, a court could disregard the allocation agreed to between the parties, and require that we assume responsibility for obligations allocated to SPX (including, for example, environmental liabilities), particularly if SPX were to refuse or were unable to pay or perform the allocated obligations. See "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off—Separation and Distribution Agreement."

We will be subject to continuing contingent tax liabilities of SPX following the spin-off.

        Under the Code and U.S. Treasury Regulations, each corporation that was a member of the SPX consolidated group for U.S. federal income tax purposes during any taxable period (or portion thereof) ending on or before the effective time of the distribution is jointly and severally liable for the entire U.S. federal income tax liability of the SPX consolidated group for that taxable period. In connection with the spin-off, we intend to enter into a Tax Matters Agreement with SPX that generally will allocate economic responsibility for taxes of the SPX consolidated group to SPX. However, if SPX is unable to pay any such taxes, we could be liable for the entire amount of such taxes, which would include taxes arising out of the distribution if SPX were to take an action (over which we may have no control) that causes the spin-off to be taxable to SPX.

We might have been able to receive better terms from unaffiliated third parties than the terms we receive in our agreements with SPX.

        The agreements related to the spin-off, including the Separation and Distribution Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the Transition Services Agreement, the Trademark License Agreement, and any other agreements, have been negotiated in the context of our separation from SPX while we are still part of SPX. Although these agreements are intended to be on an arm's-length basis, they may not reflect terms that would have resulted from arm's-length negotiations among unaffiliated third parties. The terms of the agreements being negotiated in the context of our separation concern, among other things, allocations of assets, liabilities, rights, indemnifications and other obligations among SPX and us. See "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off" for more detail.

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After the spin-off, certain of our executive officers and directors may have actual or potential conflicts of interest because of their current or former positions in SPX or their ownership of SPX equity.

        Certain of the persons who will be our executive officers and directors will be former directors, officers or employees of SPX and thus have professional relationships with SPX's executive officers and directors. One of our directors, our Chairman, President and Chief Executive Officer, will continue to serve on the board of directors of SPX following the spin-off. In addition, the majority of our executive officers and directors have a financial interest in SPX as a result of their beneficial ownership of SPX equity. These relationships and financial interests may create, or may create the appearance of, conflicts of interest when these directors and officers face decisions that could have different implications for SPX than for us.

After the spin-off, SPX's insurers may deny coverage to us for losses associated with occurrences prior to the spin-off.

        In connection with the separation, we will enter into agreements with SPX to address several matters associated with the spin-off, including insurance coverage. See "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off." After the spin-off, SPX's insurers may deny coverage to us for losses associated with occurrences prior to the spin-off. Accordingly, we may be required to temporarily or permanently bear the costs of such lost coverage.

The one-time and ongoing costs of the spin-off may be greater than we expected.

        There are risks and uncertainties relating to the execution of the spin-off, including the timing and certainty of the completion of the internal reorganization prior to the distribution and the timing and certainty of the satisfaction or waivers of the conditions to the distribution. In addition, we and SPX will incur costs in connection with the transition to being a stand-alone public company that relate primarily to accounting, tax, legal and other professional costs; financing costs in connection with refinancing SPX's outstanding indebtedness and obtaining our financing as a stand-alone company; compensation costs, such as modifications to certain incentive awards upon completion of the spin-off; recruiting and relocation costs associated with hiring our senior management personnel; and costs to separate information systems. These costs, whether incurred before or after the spin-off, may be greater than anticipated and could have a material adverse effect on our financial position, results of operations and cash flows.

Risks Relating to Our Common Stock

There is no existing market for our common stock and we cannot be certain that an active trading market will develop or be sustained after the spin-off. If the price of our common stock fluctuates significantly following the spin-off, shareholders could incur substantial losses of any investment in our common stock.

        There currently is no public market for our common stock. We cannot assure you that an active trading market for our common stock will develop as a result of the spin-off or be sustained in the future. The lack of an active market may make it more difficult for you to sell our common stock and could lead to the price of our common stock being depressed or more volatile. We cannot predict the prices at which our common stock may trade after the spin-off. The price of our common stock could fluctuate widely in response to a variety of matters, including those listed in our risk factors.

        In addition, the stock market has experienced extreme price and volume fluctuations in recent years that have significantly affected the quoted prices of the securities of many companies, including companies in our industry. The changes often appear to occur without regard to specific operating performance. The price of our common stock could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our stock price.

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Substantial sales of our common stock may occur in connection with the spin-off, which could cause the price of our common stock to decline.

        The shares of our common stock that SPX distributes to its shareholders may be sold immediately in the public market. SPX shareholders could sell our common stock received in the distribution if we do not fit their investment objectives or, in the case of index funds, if we are not part of the index in which they invest. Sales of significant amounts of our common stock or a perception in the market that such sales will occur may reduce the market price of our common stock.

We cannot assure you that we will pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.

        Our dividend policy will be established by our Board based on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice and other business considerations that our Board considers relevant. In addition, the terms of the agreements governing debt that we incur in connection with the spin-off or in the future may limit or prohibit the payments of dividends. For more information, see "Dividend Policy." We cannot assure you that we will pay dividends in the future or continue to pay any dividends if we do commence the payment of dividends.

Your percentage ownership in Flowco will be diluted in the future.

        Your percentage ownership in Flowco will be diluted because of additional equity awards that we expect will be granted to our directors, officers and employees pursuant to equity incentive plans. In addition, we may issue equity as all or part of the consideration paid for acquisitions and strategic investments we may make in the future.

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.

        Prior to the distribution date, our Board and SPX, as our sole shareholder, will approve and adopt amended and restated versions of our Certificate of Incorporation and By-laws, which will contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirors to negotiate with our Board rather than to attempt a hostile takeover. 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; 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 DGCL, 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. See "Description of Capital Stock" for a more detailed description of these provisions.

        We believe these provisions will protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers. However, these provisions will apply even if the offer may be considered

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beneficial by some shareholders and could delay or prevent an acquisition that our Board determines is not in the best interests of our company and our shareholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

        Provisions in our agreements with SPX may also delay or prevent a merger or acquisition that some shareholders may consider favorable. To preserve the intended tax-free treatment of the spin-off, under the Tax Matters Agreement that we will enter into with SPX, we generally will be prohibited, for a period of two years following the distribution, from taking certain actions that would prevent the spin-off from qualifying as a transaction that generally is tax-free to SPX and SPX's shareholders, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code. These restrictions may limit our ability to pursue certain strategic transactions or other transactions that we may otherwise believe to be in the best interests of our shareholders or that might increase the value of our business. For more information, please refer to "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Distribution" and "Certain Relationships and Related Party Transactions—Tax Matters Agreement."

Risks Relating to Our Indebtedness

We expect to incur new indebtedness in connection with the spin-off, and the degree to which we will be leveraged following completion of the spin-off may have a material adverse effect on our financial position, results of operations and cash flows and restrict our operating flexibility.

        We intend to enter into a credit agreement prior to or concurrently with the spin-off. We expect that the credit agreement will contain a number of significant covenants that, among other things, will restrict our ability to:

    create liens and encumbrances;

    incur additional indebtedness;

    merge, dissolve, liquidate or consolidate;

    make acquisitions, investments, advances or loans;

    dispose of or transfer assets;

    pay dividends or make other payments in respect of our capital stock;

    amend certain material governance or debt documents;

    redeem or repurchase capital stock or prepay, redeem or repurchase certain debt;

    engage in certain transactions with affiliates;

    enter into certain speculative hedging arrangements; and

    enter into certain restrictive agreements.

        Our ability to make scheduled payments of principal or pay interest on, or to refinance, our indebtedness and to satisfy other future 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

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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.

        In addition, the failure of one or more of our larger lenders, or several of our smaller lenders, could significantly reduce the availability of our credit, which could harm our liquidity.

The credit agreement that we plan to enter into in connection with the spin-off could impair our ability to finance our future operations and could cause our expected debt to be accelerated.

        The credit agreement that we plan to enter into in connection with the spin-off 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 will also be required to 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, under the credit agreement, we will be required to comply with additional affirmative and negative covenants. 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, we could default under the credit agreement, and the debt, together with accrued interest, could be declared due and payable. If our debt is accelerated, we may not be able to repay or refinance our debt. In addition, any default under our credit agreement could lead to an acceleration of debt under other debt instruments that we may enter into that contain cross-acceleration or cross-default provisions. Our ability to comply with the provisions governing our 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.

Our variable rate indebtedness may expose us to interest rate risk, which could cause our debt costs to increase significantly.

        Our indebtedness may include variable rates of interest, which will expose us to the risk of rising interest rates. We expect that as of the date of the spin-off, we will have approximately $1.0 billion of aggregate debt outstanding, which may include floating-rate borrowings. If the LIBOR or other applicable base rates under instruments governing our new indebtedness increase in the future, then the interest expense on the floating-rate debt could increase materially.

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SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

        We make forward-looking statements throughout this information statement, including in, among others, the sections entitled "Summary," "Risk Factors," "The Spin-Off," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," that reflect our current expectations and projections about our future results, performance and prospects. Forward-looking statements include all statements that are not historical in nature or are not current facts. We have tried to identify these forward-looking statements by using forward-looking words including "believe," "expect," "plan," "intend," "anticipate," "estimate," "predict," "potential," "continue," "may," "might," "should," "could," "will," or the negative of these terms or similar expressions.

        These forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause our actual results, performance and prospects to differ materially from those expressed in, or implied by, these forward-looking statements. These factors include the risks, uncertainties, assumptions and other factors discussed under "Risk Factors", including, but not limited to, the following risk factors:

    international economic, political, legal, accounting and business conditions;

    the cyclical nature of the markets in which we operate and the impact of industry events;

    capital investment and maintenance expenditures of our customers;

    the impact of commodity availability and price fluctuations on our customers

    the price and availability of raw materials;

    credit and other counterparty risks;

    our failure to protect or unauthorized use of our intellectual property;

    our failure to protect our information systems against data corruption, cyber-based attacks or network security breaches;

    the impact of currency conversion risk on our operations;

    laws and regulations and potential liability relating to claims, complaints and proceedings, including those relating to environmental and other matters;

    governmental laws and regulations;

    changes in tax laws and regulations or other factors that could cause our income tax rate to increase;

    cost overruns, inflation and delays;

    loss of key personnel and an inability to attract and retain qualified employees;

    our failure to compete effectively in our highly competitive industries;

    our strategy to outsource various elements of the products we sell subjecting us to the business risks of our suppliers and subcontractors;

    our failure to successfully complete or integrate acquisitions and to achieve the expected cost savings and other benefits of our acquisitions;

    our failure to successfully complete dispositions;

    potential material non-cash charges to our earnings 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;

    potential work stoppages, labor disputes and other matters associated with our labor force;

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    difficulties stemming from enterprise resource planning software;

    costs and operational concerns relating to restructuring;

    our failure to develop new technology products;

    cost reduction actions;

    defects or errors in our current and planned products which could harm our reputation;

    our inability to achieve some or all of the benefits of the spin-off;

    our inability to engage in certain corporate transactions following the spin-off; and

    risks associated with our debt obligations following the spin-off.


INDUSTRY DATA

        Industry data included in this information statement is estimated and is based on independent industry publications or other publicly available information. Although we believe that the information on which we have based these estimates of our market position and this market data are generally reliable, the accuracy and completeness of this information is not guaranteed and this information has not been independently verified.

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THE SPIN-OFF

Background

        On October 29, 2014, SPX announced that its board of directors had unanimously approved a plan for a spin-off of its Flow Technology reportable segment, its Hydraulic Technologies business, various related legal entities, and certain of its corporate assets and liabilities, and on September 8, 2015, the board of directors of SPX approved the distribution of all the outstanding shares of Flowco to holders of shares of SPX as of the close of business on September 16, 2015, the record date for the distribution. The distribution will be effective at 11:59 p.m., Eastern time, on September 26, 2015, following which Flowco will be an independent, publicly-traded company. To complete the spin-off, SPX will, following an internal reorganization, distribute to its shareholders all outstanding shares of our common stock. The distribution will occur on the distribution date, September 26, 2015. Each holder of SPX common stock will receive one share of our common stock for every share of SPX common stock held on September 16, 2015, the record date.

        If they take no action, holders of SPX common stock will continue to hold their shares in SPX. We do not require and are not seeking a vote of SPX's shareholders in connection with the spin-off, and SPX's shareholders will not have any appraisal rights in connection with the spin-off or the internal reorganization.

        The distribution of our common stock as described in this information statement is subject to the satisfaction or waiver of certain conditions. In addition, SPX has the right not to complete the spin-off if, at any time prior to the distribution, its board of directors determines, in its sole discretion, that the spin-off is not in the best interests of SPX or its shareholders, or that it is not advisable for us to separate from SPX. For a more detailed description, see "—Conditions to the Spin-Off."

Reasons for the Spin-Off

        SPX has undergone a significant transformation over the last several years that has simplified and strengthened its business. As a continuation of that transformation, SPX's board of directors unanimously approved a plan for a spin-off of Flowco into a stand-alone, publicly traded company.

        The spin-off is expected to create two strong, stand-alone companies with leading positions in the markets they serve.

    Flowco will be a pure-play flow company, well positioned as a leading provider of flow technologies across food and beverage, power and energy and industrial markets.

    SPX will be well positioned as a leading supplier of power, HVAC and highly engineered infrastructure products.

        SPX is separating from Flowco because SPX's board and management team believe the spin-off will provide a number of benefits, including:

    Distinct investment identity.  The separation will allow investors to separately value each company based on its distinct investment identity. Flowco's businesses differ from SPX's businesses in several respects, such as the nature of the business, growth profile, end markets in which the businesses operate and business cycles to which the businesses are subject. The separation will enable investors to evaluate the merits, performance and future prospects of each company's respective businesses and to invest in each company separately based on these distinct characteristics. The separation may attract new investors that may not have clearly assessed the value of SPX's businesses as part of SPX's existing, consolidated structure, enhancing the likelihood that SPX and Flowco will, together, achieve an appropriate market valuation.

    Enhanced strategic and management focus.  The separation will allow each company to more effectively pursue its distinct operating priorities and strategies and opportunities for long-term

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      growth and profitability in their respective markets. Flowco's management will be able to focus exclusively on its flow business, while SPX's management will be able to focus exclusively on the retained businesses. Following the separation, management of each company should be able to implement goals and evaluate strategic opportunities in light of investor expectations within such company's markets.

    Alignment of incentive compensation with performance objectives.  The separation will allow each company to more directly tie incentive compensation arrangements for its employees to the performance of its business and the achievement of its strategic objectives, enhancing employee hiring and retention.

    More efficient allocation of capital.  The separation will permit each company to implement a capital structure appropriate to its strategy and business needs and to concentrate its financial resources solely on its own operations without having to compete with the other company's businesses for investment capital. This will provide each company with greater flexibility to invest capital in its businesses in a time and manner appropriate for its distinct strategy and business needs, facilitating a more efficient allocation of capital.

    Strategic flexibility.  The separation will provide each company increased strategic flexibility to make acquisitions and form partnerships and alliances in its target markets, unencumbered by consideration of the potential impact on or of the businesses of the other company, including by allowing each company to effect future acquisitions using its own stock for all or part of the consideration, the value of which will be more closely aligned with the performance of its businesses, and unaffected by the businesses of the other company.

Expenses Associated with the Spin-Off

        Separation and distribution expenses relate primarily to (i) accounting, tax, legal, and other professional fees, (ii) income tax charges associated with reorganization actions undertaken to facilitate the planned spin-off, (iii) costs incurred to obtain the consents required of the holders of the 2017 Notes to amend certain provisions of the indenture governing the notes, and (iv) the future fees associated with the Transition Services Agreement between SPX and Flowco.

        Prior to the spin-off, we will enter into a Transition Services Agreement with SPX, under which SPX or certain of its subsidiaries will provide us, and we will provide SPX or certain of its subsidiaries, with certain services to help ensure an orderly transition following the separation and distribution. These services will relate primarily to information technology, human resources, finance and financial reporting, tax compliance, facility access and other administrative support services.

        All separation and distribution costs incurred through the effective date of the spin-off will be funded by SPX and, thus, no portion of these costs has been included in our combined financial statements. Separation and distribution costs incurred after the effective date of the spin-off are expected to relate primarily to expenses under the Transition Services Agreement.

        SPX and Flowco will be responsible for the fees related to the respective services each receives under the Transition Services Agreement. See "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off—Transition Services Agreement" for additional details about the Transition Services Agreement.

Manner of Effecting the Spin-Off

        The general terms and conditions relating to the spin-off will be set forth in a Separation and Distribution Agreement between us and SPX.

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    Internal Reorganization

        Prior to the distribution, as described under "—Distribution of Shares of Our Common Stock," SPX will complete an internal reorganization. Following the reorganization, Flowco will own SPX's current Flow Technology reportable segment, SPX's Hydraulic Technologies business, various related legal entities, and certain SPX corporate assets and liabilities.

    Distribution of Shares of Our Common Stock

        Under the Separation and Distribution Agreement, the distribution will be effective as of 11:59 p.m., Eastern time, on September 26, 2015, the distribution date. As a result of the spin-off, on the distribution date, each holder of SPX common stock will receive one share of our common stock for every share of SPX common stock that the shareholder owns as of the record date. In order to receive shares of our common stock in the spin-off, a SPX shareholder must be a shareholder at the close of business, Eastern time, on September 16, 2015, the record date.

        On the distribution date, SPX will release the shares of our common stock to our distribution agent to distribute to SPX shareholders as of the record date. Our distribution agent will establish book-entry accounts for record holders of SPX common stock and credit to such accounts the shares of our common stock distributed to such holders. Our distribution agent will send these shareholders, including any registered holder of shares of SPX common stock represented by physical share certificates on the record date, a statement reflecting their ownership of our common stock. Book-entry refers to a method of recording stock ownership in our records that does not use physical stock certificates. For shareholders who own SPX common stock through a broker or other nominee, their broker or nominee will credit their shares of our common stock to their accounts. We expect that it will take the distribution agent up to two weeks to electronically issue shares of our common stock to SPX shareholders or their bank or brokerage firm by way of direct registration in book-entry form. Any delay in the electronic issuance of Flowco shares by the distribution agent will not affect trading in Flowco common stock. Following the spin-off, shareholders who hold shares in book-entry form may request that their shares of our common stock be transferred to a brokerage or other account at any time.

        SPX shareholders will not be required to make any payment or surrender or exchange their shares of SPX common stock or take any other action to receive their shares of our common stock.

Material U.S. Federal Income Tax Consequences of the Distribution

        The following discusses the material U.S. federal income tax consequences of SPX's distribution of shares of our common stock to "U.S. Holders" (defined below). This discussion is based on the Code, the U.S. Treasury Regulations promulgated thereunder, rulings and other administrative pronouncements issued by the IRS, and judicial decisions, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

        The distribution is conditioned upon, among other matters, SPX's receipt of an opinion of Tax Counsel that is consistent with SPX's intent that the spin-off be tax-free to SPX and U.S. Holders of SPX common stock for U.S. federal income tax purposes. The opinion will be based and rely on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of SPX and us. If any of these representations, statements or undertakings are, or become, inaccurate or incomplete, or if SPX or Flowco breach any of their respective covenants in the separation documents, the opinion of Tax Counsel may be invalid and the conclusions reached therein could be jeopardized. An opinion of counsel is not binding on the IRS or any court.

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        Notwithstanding the receipt by SPX of an opinion of Tax Counsel, the IRS could assert that the distribution and/or certain related transactions do not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, SPX, Flowco and U.S. Holders could be subject to significant U.S. federal income tax liabilities. Please refer to "Material U.S. Federal Income Tax Consequences if the Spin-Off is Taxable" below.

        For purposes of this discussion, a "U.S. Holder" is a beneficial owner of SPX common stock that is, for U.S. federal income tax purposes:

    an individual who is a citizen or resident of the United States;

    a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

    a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more United States persons (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.

        This discussion applies only to U.S. Holders that hold their shares of SPX common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not discuss all tax considerations that may be relevant in light of a U.S. Holder's particular circumstances, nor does it address the consequences to U.S. Holders subject to special treatment under the Code, such as:

    dealers or brokers in securities, commodities or currencies;

    tax-exempt organizations;

    banks, insurance companies or other financial institutions;

    mutual funds;

    regulated investment companies and real estate investment trusts;

    corporations that accumulate earnings to avoid U.S. federal income tax;

    U.S. Holders that hold individual retirement or other tax-deferred accounts;

    U.S. Holders that acquired shares of SPX common stock pursuant to the exercise of employee stock options or otherwise as compensation;

    U.S. Holders that actually or constructively own more than 5% of SPX common stock (by voting power or value);

    U.S. Holders that hold SPX common stock as part of a hedge, appreciated financial position, straddle, constructive sale, conversion transaction or other risk reduction transaction;

    traders in securities who elect to apply a mark-to-market method of accounting;

    U.S. Holders that have a functional currency other than the U.S. dollar;

    U.S. Holders that are subject to the alternative minimum tax; and

    partnerships or other pass-through entities or investors in such entities.

        If a partnership, including for this purpose any entity or arrangement that is treated as a partnership for U.S. federal income tax purposes, holds SPX common stock, the tax treatment of a

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partner in such partnership generally will depend upon the status of the partner and the activities of the partnership. A U.S. Holder that is a partnership and the partners in such partnership should consult their own tax advisors regarding the tax consequences of the distribution.

        This discussion also does not address any tax consequences arising under the unearned Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, nor does it address any tax considerations under state, local or non-U.S. law or under U.S. federal laws other than those pertaining to the U.S. federal income tax.

        THE FOLLOWING DISCUSSION IS A SUMMARY OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW, IS FOR GENERAL INFORMATION ONLY, AND DOES NOT CONSTITUTE TAX ADVICE. SPX SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM.

        SPX has not requested, and does not intend to request, a private letter ruling from the IRS regarding the qualification of the spin-off as a transaction that generally is tax-free to SPX and U.S. Holders of SPX common stock under Sections 355 and 368(a)(1)(D) of the Code, and there can be no assurance that the IRS will not assert that the distribution and/or certain related transactions are taxable. The distribution is conditioned upon, among other matters, SPX's receipt of an opinion of Tax Counsel that is consistent with SPX's intent that the spin-off be tax-free to SPX and U.S. Holders of SPX common stock for U.S. federal income tax purposes. The opinion will be based and rely on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of SPX and us. These facts, assumptions, representations, statements and undertakings relate to, among other things, SPX's and Flowco's business reasons for engaging in the spin-off, the nature and value of the assets to remain in SPX and to be contributed to us by SPX in connection with the spin-off, SPX's historical active conduct of our businesses and the businesses to remain with SPX, SPX's and Flowco's current plans and intentions to continue the active conduct of such businesses, in each case, and SPX's and Flowco's intentions not to materially modify its ownership or capital structure following the spin-off. If any of these representations, statements or undertakings are, or become, inaccurate or incomplete, or if SPX or Flowco breach any of their respective covenants in the separation documents, the opinion of Tax Counsel may be invalid and the conclusions reached therein could be jeopardized. An opinion of counsel is not binding on the IRS or any court.

        Notwithstanding the receipt by SPX of an opinion of Tax Counsel, the IRS could assert that the distribution and/or certain related transactions do not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, SPX, Flowco and U.S. Holders could be subject to significant U.S. federal income tax liabilities. Please refer to "Material U.S. Federal Income Tax Consequences if the Spin-Off is Taxable" below.

        In connection with the spin-off, SPX and Flowco will enter into a Tax Matters Agreement. For a discussion of the Tax Matters Agreement, please refer to "Certain Relationships and Related Party Transactions—Agreements with SPX Relating to the Spin-Off—Tax Matters Agreement." Our indemnification obligations to SPX under the Tax Matters Agreement are not limited in amount or subject to any cap. If we are required to indemnify SPX under the Tax Matters Agreement, we may be subject to substantial liabilities.

        Material U.S. Federal Income Tax Consequences if the Spin-Off Qualifies as a Transaction That Generally is Tax-Free to SPX and U.S. Holders of SPX Common Stock Under Sections 355 and 368(a)(1)(D) of the Code.

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        Assuming the spin-off qualifies as a transaction that generally is tax-free to SPX and U.S. Holders of SPX common stock, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code, the U.S. federal income tax consequences of the distribution will be as follows:

    the distribution generally will not result in any taxable income, gain or loss to SPX, other than taxable income or gain possibly arising out of internal reorganizations and restructurings undertaken in connection with the distribution and with respect to items required to be taken into account under U.S. Treasury Regulations relating to consolidated federal income tax returns;

    no gain or loss generally will be recognized by (and no amount will be included in the income of) U.S. Holders of SPX common stock upon their receipt of Flowco common stock in the distribution;

    the tax basis in shares of SPX common stock that a U.S. Holder holds immediately prior to the distribution will be allocated between such shares and the shares of Flowco common stock such U.S. Holder receives in the distribution in proportion to the relative fair market values of such shares immediately following the distribution; and

    the holding period of the Flowco common stock received by each U.S. Holder of SPX common stock in the distribution generally will include the holding period at the time of the distribution for the SPX common stock with respect to which the distribution is made.

        U.S. Treasury Regulations provide that if a U.S. Holder holds different blocks of SPX common stock (i.e., shares of SPX common stock purchased or acquired at different times or for different amounts), the aggregate basis for each block of SPX common stock will be allocated, to the greatest extent possible, between such block of SPX common stock and the Flowco common stock received in the distribution in respect of such block of SPX common stock, in proportion to their respective fair market values, and the holding period of the Flowco common stock received in the distribution in respect of such block of SPX common stock generally will include the holding period of such block of SPX common stock. If a U.S. Holder is not able to identify which particular shares of Flowco common stock are received in the distribution with respect to a particular block of SPX common stock, the U.S. Holder may designate the shares of Flowco common stock to be treated as received in the distribution in respect of a particular block of SPX common stock, provided that such designation is consistent with the terms of the distribution. U.S. Holders are urged to consult their own tax advisors regarding the application of these rules to their particular circumstances.

    Material U.S. Federal Income Tax Consequences if the Spin-Off is Taxable.

        As discussed above, SPX has not requested, and does not intend to request, a private letter ruling from the IRS regarding the qualification of the spin-off as a transaction that generally is tax-free to SPX and U.S. Holders of SPX common stock under Sections 355 and 368(a)(1)(D) of the Code, and there can be no assurance that the IRS will not assert that the distribution and/or certain related transactions are taxable. If the IRS were successful in taking this position, notwithstanding the opinion of Tax Counsel, the consequences described above would not apply and SPX, Flowco, and U.S. Holders of SPX common stock could be subject to significant U.S. federal income tax liabilities. In addition, certain events that may or may not be within the control of SPX or Flowco could cause the spin-off to fail to qualify as a transaction that generally is tax-free to SPX and U.S. Holders of SPX common stock, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code. Depending on the circumstances, Flowco may be required to indemnify SPX for taxes (and certain related losses) resulting from the distribution.

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        If the distribution fails to qualify as a transaction that generally is tax-free to SPX and U.S. Holders of SPX common stock, for U.S. federal income tax purposes, in general:

    pursuant to a joint election of SPX and Flowco under Section 336(e) of the Code, the SPX consolidated group would recognize taxable gain as if Flowco had sold all of its assets in a taxable sale in exchange for an amount equal to the fair market value of the Flowco common stock and the assumption of all of Flowco's liabilities, and Flowco would obtain a stepped-up basis in its assets;

    each U.S. Holder that receives Flowco common stock in the distribution would be subject to tax as if the U.S. Holder had received a distribution from SPX in an amount equal to the fair market value of Flowco common stock that was distributed to the U.S. Holder, which generally would be, without duplication and in the following order, (A) taxed as a dividend to the extent of the U.S. Holder's pro rata share of SPX's current and accumulated earnings and profits (including earnings and profits resulting from the spin-off), (B) treated as a non-taxable return of capital to the extent of the U.S. Holder's basis in the SPX common stock, and (C) treated as capital gain from the sale or exchange of SPX common stock.

        In addition, even if the spin-off were otherwise to qualify under Sections 355 and 368(a)(1)(D) of the Code, it may be taxable to SPX (but not to U.S. Holders) under Section 355(e) of the Code, if the distribution were determined to be part of a plan (or series of related transactions) pursuant to which one or more persons acquired, directly or indirectly, stock representing a 50% or greater interest in SPX or Flowco. For this purpose, any acquisitions of SPX common stock or of Flowco common stock within the period beginning two years before the distribution and ending two years after the distribution are presumed to be part of such a plan, although such presumption may be rebutted, including through the use of certain safe harbors contained in U.S. Treasury Regulations.

    Information Reporting and Backup Withholding

        U.S. Treasury Regulations require certain shareholders that receive stock in a distribution to attach to their U.S. federal income tax return for the year in which the distribution occurs a detailed statement setting forth certain information relating to the tax-free nature of the distribution.

        THE FOREGOING DISCUSSION IS A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW, IS FOR GENERAL INFORMATION PURPOSES ONLY, AND DOES NOT CONSTITUTE TAX ADVICE. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OF OTHER JURISDICTIONS OR THAT MAY APPLY TO PARTICULAR CATEGORIES OF SHAREHOLDERS. EACH SPX SHAREHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO SUCH SHAREHOLDER, INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.

Results of the Spin-Off

        After the spin-off, we will be an independent, publicly-traded company. Immediately following the spin-off, we expect to have approximately 3,624 registered holders of shares of our common stock and approximately 41,246,687 shares of our common stock outstanding, based on the number of shareholders of record and outstanding shares of SPX common stock on August 31, 2015. The figures assume no exercise of outstanding options and exclude any shares of SPX common stock held directly or indirectly by SPX. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise of SPX options and repurchase by SPX of SPX shares between the

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date the SPX board of directors declares the dividend for the distribution and the record date for the distribution.

        For information about options to purchase shares of our common stock that will be outstanding after the distribution, see "—Treatment of Equity Awards" and "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off—Employee Matters Agreement."

        Before the spin-off, we will enter into several agreements with SPX to effect the spin-off and provide a framework for our relationship with SPX after the spin-off. These agreements will govern the relationship between us and SPX after completion of the spin-off and provide for the allocation between us and SPX of SPX's assets, liabilities and obligations, including indemnification obligations. For a more detailed description of these agreements, see "Certain Relationships and Related Party Transactions—Agreements with SPX Related to the Spin-Off."

Trading Market for Our Common Stock

        There is no public market for our common stock, and an active trading market may not develop or may not be sustained. We anticipate that trading of our common stock will commence on a "when-issued" basis beginning on or shortly before the record date and continuing through the distribution date. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. When-issued trades generally settle within four trading days after the distribution date. If you own shares of SPX common stock at the close of business on the record date, you will be entitled to receive shares of our common stock distributed in the spin-off. You may trade this entitlement to receive shares of our common stock, without the shares of SPX common stock you own, on the when-issued market. On the first trading day following the distribution date, any when-issued trading of our common stock will end and "regular-way" trading will begin. We have applied for authorization to list Flowco common stock on the NYSE under the ticker symbol "FLOW." A condition to the distribution is the listing of our common stock on the NYSE or another national securities exchange approved by SPX. We will announce our when-issued trading symbol when and if it becomes available.

        We also anticipate that, beginning on or shortly before the record date and continuing up to and including the distribution date, there will be two markets in SPX common stock: a "regular-way" market and an "ex-distribution" market. Shares of SPX common stock that trade on the regular-way market will trade with an entitlement to shares of our common stock distributed in the distribution. Shares that trade on the ex-distribution market will trade without an entitlement to shares of our common stock distributed in the distribution. Therefore, if you sell shares of SPX common stock in the regular-way market up to and including the distribution date, you will be selling your right to receive shares of our common stock in the distribution. However, if you own shares of SPX common stock at the close of business on the record date and sell those shares on the ex-distribution market up to and including the distribution date, you will not be selling the right to receive shares of our common stock in connection with the spin-off and you will still receive such shares of our common stock.

        We cannot predict the prices at which our common stock may trade before the spin-off on a "when-issued" basis or after the spin-off. Those prices will be determined by the marketplace. Prices at which trading in our common stock occurs may fluctuate significantly. Trading prices for our common stock may be influenced by many factors, including anticipated or actual fluctuations in our operating results or those of other companies in our industry, investor perception of our company, market fluctuations and general economic conditions. In addition, the stock market in general has experienced extreme price and volume fluctuations that have affected the performance of many stocks and that have often been unrelated or disproportionate to the operating performance of these companies. These are just some of the factors that may adversely affect the market price of our common stock. See "Risk

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Factors—Risks Relating to Our Common Stock" for further discussion of risks relating to the trading prices of our common stock.

Treatment of Equity Awards

        SPX employees and directors with vested stock will be treated in the same manner as any other SPX shareholder.

        The treatment of stock options and unvested equity awards held by SPX employees and directors is described in "Executive Compensation—Compensation Discussion and Analysis—2015 Compensation Changes" beginning on page 115.

Debt Incurrence

        We expect that, in connection with the spin-off, we will incur indebtedness of approximately $1.0 billion, including $600.0 aggregate principal amount of the 2017 Notes, which we will become obligated to repay. SPX's board of directors has determined that following the spin-off we will be well capitalized with sufficient financial flexibility to pursue future growth opportunities.

Conditions to the Spin-Off

        We expect that the spin-off will be effective as of 11:59 p.m., Eastern time, on September 26, 2015, the distribution date, provided that the following conditions shall have been either satisfied or waived by SPX:

    Flowco's registration statement on Form 10, of which this information statement is a part, shall have become effective under the Exchange Act, with no stop order in effect with respect thereto, and this information statement shall have been mailed to the shareholders of SPX;

    Flowco common stock shall have been approved for listing on the NYSE, subject to official notice of distribution;

    SPX shall have received from Tax Counsel an opinion that is consistent with SPX's intent that the spin-off be tax-free to SPX and SPX's shareholders for U.S. federal income tax purposes;

    All permits, registrations and consents required under state and foreign securities or blue sky laws in connection with the distribution shall have been obtained and be in full force and effect;

    No order or other legal restraint preventing the distribution or any of the related transactions shall be in effect, and no other event shall have occurred or failed to occur that prevents the distribution or any of the related transactions;

    All governmental approvals necessary to complete the distribution shall have been obtained and be in effect;

    The financing arrangements contemplated to be entered into by SPX and Flowco in connection with the separation shall have been executed and delivered and the proceeds of those financing shall have been (or substantially concurrently will be) received by Flowco and SPX, as applicable;

    The board of directors of SPX shall have received an opinion in form and substance satisfactory to the board of directors of SPX with respect to the solvency, capital adequacy and sufficiency of surplus of each of SPX and Flowco after giving effect to the separation and distribution (see "The Spin-Off—Capital Adequacy Opinion"); and

    No events or developments shall have occurred or exist that, in the judgment of the board of directors of SPX, in its sole and absolute discretion, make it inadvisable to effect the distribution

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      or the related transaction, or would result in the distribution or the related transactions not being in the best interest of SPX or its shareholders.

        The fulfillment of the foregoing conditions will not create any obligation on SPX's part to effect the spin-off. Except as described in the foregoing conditions, we are not aware of any material federal or state regulatory requirements that must be complied with or any material approvals that must be obtained. SPX has the right not to complete the spin-off if, at any time prior to the distribution, the board of directors of SPX determines, in its sole discretion, that the spin-off is not in the best interests of SPX or its shareholders or that it is not advisable for us to separate from SPX.

The Spin-Off—Capital Adequacy Opinion

        In connection with the separation, a provider of national standing has been requested to render to the board of directors of SPX a capital adequacy opinion regarding SPX and Flowco. We expect the full text of the opinion will set forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion.

        We expect the opinion to address whether, assuming the spin-off has been consummated as proposed, immediately after and giving effect to the spin-off and on a pro forma basis:

(a)
each of the fair value and the present fair saleable value of the assets of each of SPX and Flowco would exceed the stated liabilities and identified contingent liabilities of the respective company;

(b)
SPX and Flowco should be able to pay each company's respective debts as they become absolute and mature or due;

(c)
SPX and Flowco should not have unreasonably small capital for the business in which each company is engaged, or proposed to be engaged by management of SPX immediately following consummation of the spin-off; and

(d)
the fair value of the assets of each of SPX and Flowco would exceed the sum of each of their stated liabilities and identified contingent liabilities on a consolidated basis, and total par value of their issued capital stock, of the applicable company.

Reason for Furnishing this Information Statement

        We are furnishing this information statement to you, as a SPX shareholder entitled to receive shares of our common stock in the spin-off, for the sole purpose of providing you with information about us. This information statement is not, and you should not consider it, an inducement or encouragement to buy, hold or sell any of our securities. We believe that the information in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither SPX nor we undertake any obligation to update the information except in the normal course of our respective public disclosure obligations.

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DIVIDEND POLICY

        Our Board will establish our dividend policy based on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice and other business considerations that our Board considers relevant. We anticipate that the terms of the debt agreements that we expect to enter into in connection with the spin-off will contain restrictions on our ability to pay dividends. The terms of agreements governing debt that we may incur in the future may also limit or prohibit dividend payments. Accordingly, we cannot assure you that we will either pay dividends in the future or continue to pay any dividend that we may commence in the future.

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CAPITALIZATION

(All currency amounts are in millions, except per share amounts)

        The following table sets forth our cash and equivalents and our capitalization as of June 27, 2015 on a historical and pro forma basis to give effect to the spin-off and transactions related to the spin-off (the "Transactions"). The information below is not necessarily indicative of what Flowco's capitalization would have been had the Transactions been completed as of June 27, 2015. This table should be read together with "Selected Historical Combined Financial Data," "Unaudited Pro Forma Condensed Combined Financial Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical annual and interim combined financial statements and related notes thereto included elsewhere in this information statement.

 
  As of June 27, 2015  
 
  Historical   Pro Forma
(unaudited)
 

Cash and equivalents

  $ 175.1   $ 175.1  

Indebtedness:

             

Short-term debt:

             

Other indebtedness(1)

    6.0     21.5  

Current maturities of capital lease obligations

    1.1     1.1  

Long-term debt:

             

2017 Notes(2)

        600.0  

Term loan under bank credit agreement(3)

        400.0  

Capital lease obligations

    9.7     9.7  

Total indebtedness

    16.8     1,032.3  

Equity:

             

Preferred stock, no par value, 3,000,000 shares authorized, and no shares issued and outstanding on a pro forma basis

         

Common stock, par value $0.01 per share, 300,000,000 shares authorized, and 41,077,984 issued and outstanding on a pro forma basis(4)

        0.4  

Paid-in capital(4)

        1,586.9  

Parent company investment(4)

    2,783.7      

Accumulated other comprehensive loss

    (311.2 )   (311.2 )

Total parent company equity/Flowco shareholders' equity

    2,472.5     1,276.1  

Noncontrolling interests

    11.6     11.6  

Total equity

    2,484.1     1,287.7  

Total capitalization

  $ 2,500.9   $ 2,320.0  

(1)
Other indebtedness on a pro forma basis includes: (i) $6.0 in outstanding borrowings under revolving lines of credit in Argentina and Brazil as reported in the historical indebtedness and (ii) $15.5 of obligations under a purchase card program sponsored by SPX that Flowco will assume upon completion of the spin-off, with the amount assumed relating to purchases made on behalf of Flowco businesses. As these arrangements extend the payment of the related obligations beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

(2)
Reflects the $600.0 aggregate principal amount of the 2017 Notes that will become an obligation of Flowco in connection with the spin-off.

(3)
Reflects $400.0 of term loan borrowings under the bank credit agreement that Flowco will enter into in connection with the spin-off.

(4)
As of the distribution date, SPX's net investment in Flowco will be eliminated to reflect the distribution of our common stock to SPX's shareholders. SPX's shareholders will receive one share of Flowco common stock for every share of SPX common stock owned as of the record date of the distribution.

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SELECTED HISTORICAL COMBINED FINANCIAL DATA

        The following table presents our selected historical combined financial data as of and for the six months ended June 27, 2015 and June 28, 2014, as well as for each of the years in the five-year period ended December 31, 2014. We derived the selected historical combined financial data as of June 27, 2015 and for the six months ended June 27, 2015 and June 28, 2014 from our unaudited condensed combined financial statements included elsewhere in this information statement. We derived the selected historical combined financial data as of December 31, 2014 and 2013, and for each of the years in the three-year period ended December 31, 2014, from our audited combined financial statements included elsewhere in this information statement. We derived the selected historical combined financial data as of June 28, 2014, December 31, 2012, and as of and for the years ended December 31, 2011 and 2010, from our unaudited condensed combined financial statements that are not included in this information statement. In management's opinion, the unaudited condensed combined financial statements have been prepared on the same basis as the audited combined financial statements and included all adjustments, consisting only of ordinary recurring adjustments, necessary for a fair presentation of the information for the periods presented.

        Our historical combined financial statements and our condensed combined financial statements include certain expenses of SPX that have been charged to us for certain corporate centralized functions and programs, including information technology, payroll services, shared services for accounting, supply chain and manufacturing operations, and business and health insurance coverage. In addition, for purposes of preparing the combined financial statements and the condensed combined financial statements, we have allocated a portion of SPX's total corporate costs to such financial statements, with the allocations related primarily to (i) the support provided by SPX's executive management, finance and accounting, legal, risk management, and human resource functions and (ii) costs associated with SPX's Charlotte, NC corporate headquarters and its Asia Pacific corporate center in Shanghai, China. These costs may not be representative of the future costs we will incur as an independent, publicly-traded company. In addition, our historical financial information does not reflect changes that we expect to experience in the future as a result of our spin-off from SPX, including changes in financing, operations, cost structure and personnel needs of our business. Our combined financial statements and our condensed combined financial statements also do not reflect the allocation of certain assets and liabilities between SPX and us as reflected under "Unaudited Pro Forma Condensed Combined Financial Statements" included elsewhere in this information statement. Consequently, the financial information included here may not necessarily reflect our financial position, results of operations and cash flows in the future or what our financial condition, results of operations and cash flows would have been had we been an independent, publicly-traded company during the periods presented.

        The selected historical combined financial data presented below should be read in conjunction with our audited and unaudited combined financial statements and accompanying notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the "Unaudited Pro

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Forma Condensed Combined Financial Statements" and accompanying notes included elsewhere in this information statement.

 
  As of and for the
six months ended
   
   
   
   
   
 
 
  As of and for the year ended December 31,  
 
  June 27,
2015
  June 28,
2014
 
 
  2014   2013   2012   2011   2010  

Summary of Operations

                                           

Revenues(1)

  $ 1,186.3   $ 1,365.6   $ 2,769.6   $ 2,804.8   $ 2,846.3   $ 2,197.2   $ 1,788.4  

Operating income(2)(3)

    98.4     109.4     254.6     231.2     188.9     185.2     154.2  

Other income (expense), net(4)

    4.3         2.2     (5.2 )   (3.4 )   (36.8 )   (3.3 )

Interest expense, net(5)

    (10.3 )   (11.0 )   (23.4 )   (34.7 )   (56.0 )   (51.3 )   (32.3 )

Income before income taxes

    92.4     98.4     233.4     191.3     129.5     97.1     118.6  

Income tax provision(6)

    (22.6 )   (41.0 )   (97.5 )   (58.8 )   (0.6 )   (37.6 )   (30.2 )

Net income

    69.8     57.4     135.9     132.5     128.9     59.5     88.4  

Less: Net income (loss) attributable to noncontrolling interests

    (0.7 )   0.2     1.4     1.5     2.0     1.2     1.4  

Net income attributable to Flowco

  $ 70.5   $ 57.2   $ 134.5   $ 131.0   $ 126.9   $ 58.3   $ 87.0  

Other financial data:

                                           

Total assets(7)

  $ 3,952.9   $ 4,444.3   $ 4,028.1   $ 4,490.7   $ 3,918.4   $ 3,614.2   $ 2,384.2  

Total debt(8)

    408.1     1,043.7     1,021.1     1,006.4     805.8     819.1     724.8  

Other long-term obligations

    328.4     384.6     342.8     382.7     402.3     345.5     210.9  

Parent company equity

    2,472.5     2,185.5     1,925.4     2,238.9     1,832.9     1,621.6     896.3  

Noncontrolling interests

    11.6     12.1     13.4     11.6     9.0     7.4     7.6  

Capital expenditures

    22.6     13.8     40.7     23.4     26.3     22.6     29.2  

Depreciation and amortization

    29.5     35.0     65.8     69.9     67.3     45.0     39.8  

(1)
On December 22, 2011, we completed the acquisition of Clyde Union (Holdings) S.a.r.l. ("Clyde Union"). 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 the six months ended June 27, 2015 and June 28, 2014, and for the years ended December 31, 2014, 2013, 2012, 2011 and 2010, we recognized expense related to changes in the fair value of plan assets, actuarial gains/losses, and settlement gains/losses of $0.0, $1.7, $25.8, $2.0, $25.4, $0.5 and $2.0, respectively, associated with our and SPX's pension and postretirement benefit plans.

(3)
During 2014, we recorded impairment charges of $7.3 and $4.4 related to the trademarks of certain businesses within our Power and Energy and Industrial reportable segments, respectively.

During 2013, we recorded impairment charges of $3.4 and $1.3 related to the trademarks of certain businesses within our Power and Energy and Food and Beverage reportable segments, respectively.

During 2012, we recorded an impairment charge of $2.0 related to the trademarks of a business within our Power and Energy reportable segment.

See Note 8 to our annual combined financial statements for further discussion of impairment charges associated with intangible assets.

(4)
In 2011, we recorded a charge of $34.6 related to a foreign currency forward contract that was entered into to hedge the purchase price of the Clyde Union acquisition.

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(5)
During the six months ended June 27, 2015 and June 28, 2014, and for the years ended December 31, 2014, 2013, 2012, 2011 and 2010, we recognized interest expense, net, of $9.6, $12.4, $25.8, $36.3, $55.6, $52.4 and $32.3 on related party notes receivable and payable in which SPX, or its affiliates that are not part of the spin-off transaction, are the counterparties.

(6)
During 2014, the income tax provision was impacted by a charge of $18.7 related to increases in valuation allowances recorded against certain foreign deferred income tax assets.

During 2012, the income tax provision was impacted by income tax benefits of $18.3 associated with various audit closures and settlements, statute expirations, and other changes in the accrual for uncertain tax positions, with the most notable being the closure of the German tax examination for the years 2005 through 2009.

(7)
Included in total assets as of June 27, 2015, June 28, 2014 and December 31, 2014, 2013, 2012, 2011 and 2010 are related party notes receivable of $670.0, $761.4, $707.1, $763.4, $5.6, $12.1 and $12.2, respectively.

(8)
Included in total debt as of June 27, 2015, June 28, 2014 and December 31, 2014, 2013, 2012, 2011 and 2010 are related party notes payable of $391.3, $1,022.3, $1,003.1, $988.4, $775.8, $758.0 and $713.1, respectively.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

        The unaudited pro forma condensed combined financial statements consist of the unaudited pro forma condensed combined statements of operations for the six months ended June 27, 2015 and year ended December 31, 2014, and an unaudited pro forma condensed combined balance sheet as of June 27, 2015. The unaudited pro forma condensed combined financial statements reported below should be read in conjunction with the information under "Selected Historical Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical annual and interim combined financial statements and related notes thereto included elsewhere in this information statement. The unaudited pro forma condensed combined statements of operations have been adjusted to give effect to the Pro Forma Transactions (as defined below) as if the Pro Forma Transactions had occurred or became effective as of January 1, 2014. The unaudited pro forma condensed combined balance sheet has been adjusted to give effect to the Pro Forma Transactions as though the Pro Forma Transactions had occurred as of June 27, 2015.

        The unaudited pro forma condensed combined financial statements included in this information statement have been derived from the historical annual and interim combined financial statements, including the unaudited combined statement of operations for the six months ended June 27, 2015 and the audited combined statement of operations for the year ended December 31, 2014, and the unaudited combined balance sheet as of June 27, 2015, which are included elsewhere in this information statement. The unaudited pro forma condensed combined financial statements do not purport to represent what our financial position and results of operations would have been had the distribution and related transactions summarized under "Certain Relationships and Related Party Transactions" occurred on the dates indicated or to project our financial performance for any future period. In addition, the unaudited pro forma condensed combined financial statements are provided for illustrative and informational purposes only and are not necessarily indicative of our future results of operations or financial condition as a separate, stand-alone public company. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable, but actual results may differ from the pro forma adjustments. These adjustments are subject to change based on the finalization of the Separation and Distribution Agreement with SPX and the other agreements described under "Certain Relationships and Related Party Transactions."

        SPX did not account for us as, and we were not operated as, a separate, stand-alone public company for the periods presented. Our unaudited pro forma condensed combined financial statements have been prepared to reflect adjustments to our historical annual and interim combined financial statements that are (1) directly attributable to the Pro Forma Transactions; (2) factually supportable; and (3) with respect to the unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on our results of operations. The unaudited pro forma condensed combined financial statements have been adjusted to give effect to the following (the "Pro Forma Transactions"):

    the transfer of certain of our assets and liabilities by SPX,

    the distribution of Flowco stock, at a one-to-one ratio, by means of a tax-free distribution, to SPX shareholders and other adjustments resulting from the distribution,

    our anticipated capital structure, including debt anticipated to be incurred,

    the resulting elimination of SPX's net investment in us, and

    the impact of, and transactions contemplated by the Separation and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement, and Trademark License Agreement, between us and SPX summarized under "Certain Relationships and Related Party Transactions."

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Transition Services Agreement

        We expect to enter into a Transition Services Agreement with SPX prior to the distribution pursuant to which we and SPX, and our and their respective affiliates, will provide to each other for an agreed-upon charge, on an interim, transitional basis, certain services for a limited time. See "Certain Relationships and Related Party Transactions."

Corporate Allocations and Stand-Alone Public Company Costs

        SPX currently provides certain corporate services to us, and costs associated with these functions have been allocated to us. These expense allocations include the cost of corporate functions and/or resources provided by SPX including, but not limited to, executive management, finance and accounting, legal and human resources support, and the cost of our Charlotte, NC corporate headquarters and our Asia Pacific center in Shanghai, China, and include the related benefit costs associated with such functions, such as pension and postretirement benefits and stock-based compensation. These costs were allocated to us based on direct usage when identifiable or, when not directly identifiable, on the basis of our proportional revenues to SPX's consolidated revenues from continuing operations. The total amount of these allocations from SPX was $36.4 for the six months ended June 27, 2015 and $95.9 for the year ended December 31, 2014. These cost allocations are primarily included in selling, general and administrative expenses in the combined statements of operations as described in Note 1 to our historical annual and interim combined financial statements. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to or the benefit received by us during the periods presented. Following the spin-off, we expect SPX to continue to provide certain of these services related to these functions on a transitional basis for a fee pursuant to the Transition Services Agreement described above. See "Certain Relationships and Related Party Transactions."

        Upon the distribution, we will assume responsibility for all of our costs of operating as a stand-alone public company, including the costs of services currently provided by SPX. As a stand-alone public company, we do not expect our recurring costs to be materially different than the expenses historically allocated to us from SPX. In addition, as we transition away from the services currently provided by SPX, we believe that we may incur non-recurring transitional costs to establish our own stand-alone functions that are excluded from the unaudited pro forma condensed combined statements of operations. However, we do not expect these costs to be material.

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FLOWCO

Unaudited Pro Forma Condensed Combined Statement of Operations

Six Months Ended June 27, 2015

(All amounts are in millions, except per share amounts)

 
  Historical   Pro Forma
Adjustments
  Pro Forma  

Revenues

  $ 1,186.3   $   $ 1,186.3  

Costs and expenses:

                   

Cost of products sold

    786.8         786.8  

Selling, general and administrative

    282.1         282.1  

Intangible amortization

    11.9         11.9  

Special charges, net

    7.1         7.1  

Operating income

    98.4         98.4  

Other income, net

    4.3         4.3  

Related party interest expense, net

    (9.6 )   9.6 (a)    

Other interest expense, net

    (0.7 )   (24.7 )(b)   (25.4 )

Income before income taxes

    92.4     (15.1 )   77.3  

Income tax provision

    (22.6 )   5.7 (c)   (16.9 )

Net income

    69.8     (9.4 )   60.4  

Less: Net loss attributable to noncontrolling interests

    (0.7 )       (0.7 )

Net income attributable to Flowco

  $ 70.5   $ (9.4 ) $ 61.1  

Pro forma net income per share attributable to Flowco:

                   

Basic

              $ 1.51 (d)

Diluted

              $ 1.51 (e)

Pro forma weighted average number of common shares outstanding:

                   

Basic

                40.553 (d)

Diluted

                40.553 (e)

See accompanying notes to unaudited pro forma condensed combined financial statements.

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FLOWCO

Unaudited Pro Forma Condensed Combined Statement of Operations

Year Ended December 31, 2014

(All amounts are in millions, except per share amounts)

 
  Historical   Pro Forma
Adjustments
  Pro Forma  

Revenues

  $ 2,769.6   $   $ 2,769.6  

Costs and expenses:

                   

Cost of products sold

    1,833.1         1,833.1  

Selling, general and administrative

    629.9         629.9  

Intangible amortization

    26.1         26.1  

Impairment of intangible assets

    11.7         11.7  

Special charges, net

    14.2         14.2  

Operating income

    254.6         254.6  

Other income, net

    2.2         2.2  

Related party interest expense, net

    (25.8 )   25.8 (a)    

Other interest income (expense), net

    2.4     (50.8 )(b)   (48.4 )

Income before income taxes

    233.4     (25.0 )   208.4  

Income tax provision

    (97.5 )   9.5 (c)   (88.0 )

Net income

    135.9     (15.5 )   120.4  

Less: Net income attributable to noncontrolling interests

    1.4         1.4  

Net income attributable to Flowco

  $ 134.5   $ (15.5 ) $ 119.0  

Pro forma net income per share attributable to Flowco:

                   

Basic

              $ 2.81 (d)

Diluted

              $ 2.81 (e)

Pro forma weighted average number of common shares outstanding:

                   

Basic

                42.400 (d)

Diluted

                42.400 (e)

See accompanying notes to unaudited pro forma condensed combined financial statements.

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FLOWCO

Unaudited Pro Forma Condensed Combined Balance Sheet

At June 27, 2015

(All currency amounts are in millions, except per share amounts)

 
  Historical   Pro Forma
Adjustments
  Pro Forma  

ASSETS:

                   

Current assets:

                   

Cash and equivalents

  $ 175.1   $   $ 175.1  

Accounts receivable, net

    615.7         615.7  

Related party accounts receivable

    21.7         21.7  

Inventories, net

    344.7         344.7  

Other current assets

    50.3         50.3  

Deferred income taxes

    54.8     1.7 (k)   56.5  

Total current assets

    1,262.3     1.7     1,264.0  

Property, plant and equipment:

                   

Land

    29.9     9.1 (f)   39.0  

Buildings and leasehold improvements

    154.3     71.0 (f)   225.3  

Machinery and equipment

    368.2     113.6 (f)   481.8  

    552.4     193.7     746.1  

Accumulated depreciation

    (275.1 )   (31.8 )(f)   (306.9 )

Property, plant and equipment, net

    277.3     161.9     439.2  

Goodwill

    1,047.2         1,047.2  

Intangibles, net

    630.9         630.9  

Other assets

    65.2     36.3 (g)   101.5  

Related party notes receivable

    670.0     (670.0) (a)    

TOTAL ASSETS

  $ 3,952.9   $ (470.1 ) $ 3,482.8  

LIABILITIES AND EQUITY:

                   

Current liabilities:

                   

Accounts payable

  $ 266.0   $   $ 266.0  

Related party accounts payable

    14.5         14.5  

Accrued expenses

    411.6     17.8 (h)   429.4  

Income taxes payable

    40.2         40.2  

Short-term debt

    6.0     15.5 (i)   21.5  

Current maturities of long-term debt

    1.1         1.1  

Current maturities of related party notes payable

    3.8     (3.8) (a)    

Total current liabilities

    743.2     29.5     772.7  

Long-term debt

    9.7     1,000.0 (j)   1,009.7  

Related party notes payable

    387.5     (387.5) (a)    

Deferred and other income taxes

    225.4     (9.8 )(l)   215.6  

Other long-term liabilities

    103.0     94.1 (m)   197.1  

Total long-term liabilities

    725.6     696.8     1,422.4  

EQUITY:

                   

Preferred stock, no par value, 3,000,000 shares authorized, and no shares issued and outstanding on a pro forma basis

             

Common stock, par value $0.01 per share, 300,000,000 shares authorized, and 41,077,984 issued and outstanding on a pro forma basis

        0.4 (n)   0.4  

Paid-in capital

        1,586.9 (n)   1,586.9  

Parent company investment

    2,783.7     (2,783.7 )(o)    

Accumulated other comprehensive loss

    (311.2 )       (311.2 )

Total parent company equity/Flowco shareholders' equity

    2,472.5     (1,196.4 )   1,276.1  

Noncontrolling interests

    11.6         11.6  

Total equity

    2,484.1     (1,196.4 )   1,287.7  

TOTAL LIABILITIES AND EQUITY

  $ 3,952.9   $ (470.1 ) $ $3,482.8  

   

See accompanying notes to unaudited pro forma condensed combined financial statements.

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FLOWCO

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

        The unaudited pro forma condensed combined financial statements as of June 27, 2015 and for the six months ended June 27, 2015 and year ended December 31, 2014 include the following adjustments:

    (a)
    Represents adjustments to eliminate the "Related party notes receivable" (amounts due from SPX) and the "Related party notes payable" (amounts due to SPX and its affiliates that are not part of the planned spin-off transaction), along with the associated interest income and expense, as these notes will be settled in their entirety through capital transfers prior to the completion of the spin-off.

    (b)
    Represents adjustments to reflect interest expense on (i) the 2017 Notes, which will become an obligation of Flowco in connection with the spin-off, and (ii) the term loan of the bank credit agreement that Flowco will enter into in connection with the spin-off. Summarized below are the components of the pro forma adjustments associated with interest expense:

 
  Six months
ended June 27,
2015
  Year ended
December 31,
2014
 

2017 Notes:

             

Interest at Stated Rate

  $ 20.1   $ 41.3  

Amortization of Deferred Financing Costs

    0.8     1.7  

    20.9     43.0  

Term Loan Under Bank Credit Agreement:

             

Interest at Stated Rate

    3.3     6.8  

Amortization of Deferred Financing Costs

    0.5     1.0  

    3.8     7.8  

Pro Forma Adjustment to Interest Expense

  $ 24.7   $ 50.8  
    (c)
    Represents an adjustment for the income tax effects of the pro forma adjustments to the condensed combined statements of operations identified in Notes (a) and (b) above. The income tax adjustment is calculated at the U.S. marginal rate of 38.0%, as the pro forma adjustments identified in Notes (a) and (b) above are primarily U.S.-related.

    (d)
    Pro forma basic net income per share attributable to Flowco and the pro forma basic weighted-average number of common shares outstanding are based on the number of SPX weighted-average basic common shares outstanding for the six months ended June 27, 2015 and the year ended December 31, 2014, adjusted for the expected distribution ratio of one share of Flowco common stock for every share of SPX common stock.

    (e)
    Pro forma diluted net income per share attributable to Flowco and the pro forma diluted weighted-average number of common shares outstanding are not adjusted to reflect the potential dilution from the issuance of equity awards to Flowco employees, as we cannot estimate those amounts at this time.

    (f)
    Represents an adjustment to reflect the transfer of certain SPX corporate-related fixed assets to Flowco. The assets and associated accumulated depreciation relate to the SPX corporate headquarters facility, information technology hardware and software assets, and certain other assets. Depreciation and other expenses associated with these fixed assets for the six months ended June 27, 2015 and the year ended December 31, 2014 are expected to be comparable to the amounts of the related expenses that were recorded to our historical combined financial statements for these periods in connection with the allocation of a portion of SPX's total

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      corporate expenses to such historical financial statements; thus, no pro forma adjustments for depreciation and other expenses associated with these fixed assets have been included in the Unaudited Pro Forma Condensed Combined Statements of Operations herein.

    (g)
    Represents adjustments to reflect the transfer of deferred financing costs ($3.8) by SPX associated with the 2017 Notes, the deferred financing costs ($5.2) expected to be incurred to establish the bank credit agreement Flowco will enter into in connection with the spin-off, and the transfer of certain investments ($27.3) by SPX associated with the SPX Supplemental Retirement Savings Plan ("SRSP"). Pursuant to the Employee Matters Agreement, Flowco will establish its own supplemental retirement savings plan; thus, the obligations under the SRSP to (i) current employees of Flowco and (ii) current SPX corporate employees who will become employees of Flowco in connection with the spin-off transaction, along with the related investments (see above), will be transferred to Flowco in connection with the spin-off transaction.

    (h)
    Represents an adjustment to reflect accrued interest ($13.3) on the 2017 Notes and the assumption of the incentive compensation and vacation liabilities ($4.5) associated with (i) current employees of Flowco and (ii) current SPX corporate employees who will become employees of Flowco in connection with the spin-off transaction.

    (i)
    Represents an adjustment to reflect Flowco's assumption of obligations under a purchase card program sponsored by SPX, with the amount assumed relating to purchases made on behalf of Flowco businesses. As these arrangements extend the payment of the related obligations beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

    (j)
    Represents an adjustment to reflect (i) that the 2017 Notes ($600.0) will become an obligation of Flowco in connection with the spin-off and (ii) term loan borrowings ($400.0) under the bank credit agreement that Flowco will enter into in connection with the spin-off.

    (k)
    Represents an adjustment to reflect deferred income tax assets associated with the liabilities for incentive compensation and vacation identified in Note (h) above.

    (l)
    Represents an adjustment to reflect the deferred income tax assets ($37.3) associated primarily with the pension, postretirement and SRSP obligations identified in Note (m) below, partially offset by deferred income tax liabilities ($27.5) associated with the SPX corporate-related fixed assets that are being transferred to Flowco (see Note (f) above for additional details on the corporate-related fixed assets being transferred by SPX).

    (m)
    Represents an adjustment to reflect the assumption by Flowco of (i) the pension and postretirement obligations ($66.8) related to certain individuals who are expected to serve as executive officers of Flowco and (ii) the SRSP obligation ($27.3) identified in Note (g) above.

    (n)
    Represents an adjustment to reflect the pro forma recapitalization of our equity. As of the distribution date, SPX's net investment in Flowco will be eliminated to reflect the distribution of our common stock to SPX's shareholders. SPX's shareholders will receive one share of Flowco common stock for every share of SPX common stock owned as of the record date of the distribution.

    (o)
    Represents (i) the net offset ($1,196.4) to all of the pro forma adjustments to the assets and liabilities in our Unaudited Pro Forma Condensed Combined Balance Sheet and (ii) the reclassification of the remaining balance within "Parent company investment" ($1,587.3) in order to reflect the pro forma recapitalization of our equity (see Note (n) above for additional details).

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

(All currency amounts are in millions)

        The following should be read in conjunction with the other sections of this information statement, including our audited combined financial statements and the related notes, our unaudited condensed combined financial statements and the related notes, "Business," and our "Unaudited Pro Forma Condensed Combined Financial Statements" and the related notes. The following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors including, but not limited to, those discussed under headings "Risk Factors" and "Special Note About Forward-Looking Statements."

        Our audited combined and unaudited condensed combined financial statements, which we discuss below, reflect our historical financial condition, results of operations and cash flows. The financial information discussed below and included in this information statement, however, may not necessarily reflect what our financial condition, results of operations or cash flows would have been had we been operated as a separate, independent entity during the periods presented, or what our financial condition, results of operations and cash flows may be in the future.


Overview

    Spin-off Transaction

        On October 29, 2014, SPX announced that its Board of Directors had unanimously approved a plan to spin off its Flow business, comprised of its Flow Technology reportable segment, its Hydraulic Technologies business, various related legal entities, and certain of its corporate assets and liabilities, and separate into two distinct, publicly-traded companies. Under the plan, SPX would execute a spin-off of the business by way of a pro-rata distribution of common stock to SPX's shareholders of record as of the spin-off transaction record date.

    Our Business

        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. Our innovative solutions play a critical role in helping meet the rising global demand in the end markets we serve. Our total revenue in 2014 was $2.8 billion, with approximately 30% from sales into emerging markets.

        We serve the food and beverage, power and energy and industrial markets. Our product portfolio of pumps, valves, mixers, filters, air dryers, hydraulic tools, homogenizers, separators and heat exchangers, along with the related aftermarket parts and services, supports global industries, including food and beverage, oil and gas, power generation (including nuclear and conventional), chemical processing, compressed air and mining. From an end market perspective, in 2014, 35.0% of our revenues were from sales into the food and beverage end markets, 34.7% were from sales into the power and energy end markets, and 30.3% were from sales into the industrial end markets. 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, relevance to customers, and global capabilities in these markets. We believe there are attractive organic and acquisition opportunities to continue to expand our business.

        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

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businesses to ultimately drive revenue, 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 business is organized into three reportable segments—Food and Beverage, Power and Energy and Industrial. The following summary describes the products and services offered by each of our reportable segments:

    Food and Beverage:  The Food and Beverage reportable segment operates in a regulated, global industry with customers who demand highly engineered, turn-key solutions. Key demand drivers include dairy consumption, emerging market capacity expansion, sustainability and productivity initiatives, customer product innovation and food safety. Key products for the segment include mixing, drying, evaporation and separation systems and components, heat exchangers, and reciprocating and centrifugal pump technologies. Our core brands include Anhydro, APV, Bran+Luebbe, e&e, Gerstenberg Schroeder, LIGHTNIN, Seital and Waukesha Cherry-Burrell. The segment's primary competitors are Alfa Laval AB, Fristam Pumps, GEA Group AG, Krones AG, Südmo, Tetra Pak, and various regional companies.

    Power and Energy:  The Power and Energy reportable segment primarily serves customers in the oil and gas industry and, to a lesser extent, the nuclear and other conventional power industries. A large portion of the segment's revenues are concentrated on oil extraction, production and transportation at existing wells, and pipeline applications. The underlying drivers of this segment include increasing demand for power and energy driven by population growth and an expanding middle class. Key products for the segment include pumps, valves and the related accessories, while the core brands include APV, Bran+Luebbe, ClydeUnion Pumps, Copes-Vulcan, Dollinger Filtration, LIGHTNIN, M&J Valve, Plenty, and Vokes. The segment's primary competitors are Cameron International Corporation, Ebara Fluid Handling, Flowserve Corporation, ITT Goulds Pumps, KSB AG, and Sulzer Ltd.

    Industrial:  The Industrial reportable segment primarily serves customers in the chemical, air treatment, mining, pharmaceutical, marine, shipbuilding, infrastructure construction, automotive and water treatment industries. Key demand drivers of this segment are tied to macroeconomic conditions and growth in the respective end markets we serve. Key products for the segment are air dryers, filtration equipment, mixers, pumps, hydraulic technologies and heat exchangers. Core brands include Airpel, APV, Delair, Deltech, Hankison, Jemaco, Johnson Pump, LIGHTNIN, Power Team, and Stone. The segment's primary competitors are Alfa Laval AB, Chemineer Inc., EKATO, Actuant, Enerpac, IDEX Viking Pump, KSB AG, Parker Domnick Hunter and various regional companies.

    Summary of Operating Results

        The following summary is intended to provide a few highlights of the discussion and analysis that follows:

    Revenues (all comparisons are to the related period in the prior year)

    For the six months ended June 27, 2015, decreased 13.1% to $1,186.3, primarily as a result of the strengthening of the U.S. dollar during the period and lower sales of power and energy pumps, largely reflecting the impact of lower oil prices.

    In 2014, decreased 1.3% to $2,769.6, primarily as a result of lower sales of power and energy pumps, partially offset by increased sales of food and beverage systems.

    In 2013, decreased 1.5% to $2,804.8, primarily as a result of lower sales of power and energy pumps and industrial heat exchangers, partially offset by an increase in sales of

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        valves, closures and other components into the oil and gas end market, as well as increased sales of systems and components into the food and beverage end market.

    Income before Income Taxes (all comparisons are to the related period in the prior year)

    For the six months ended June 27, 2015, decreased $6.0, or 6.1%, to $92.4 primarily as a result of a decline in segment profitability, partially offset by declines in corporate expense, pension and postretirement expense, and special charges and an increase in other income, net.

    In 2014, increased $42.1, or 22.0%, to $233.4 primarily as a result of the improvement in income for our reportable segments, partially offset by an increase in pension and postretirement expense.

    In 2013, increased $61.8, or 47.7%, to $191.3 primarily as a result of the improvement in income for our reportable segments, and a reduction in pension and postretirement expense.

    Cash Flows from Operations

    For the six months ended June 27, 2015, decreased to $41.0 (from $118.6 for the six months ended June 28, 2014) primarily as a result of a decline in segment profitability and the timing of cash receipts on certain large projects.

    In 2014, increased to $302.6 (from $263.3 in 2013) primarily as a result of the improved profitability noted above.

    In 2013, increased to $263.3 (from $150.6 in 2012) primarily as a result of reductions in working capital at our Clyde Union business and, to a lesser extent, the improved profitability noted above.


Results of Operations

        Cyclicality of End Markets, Seasonality and Competition—The financial results 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. Also, capital spending on original equipment by our customers in the oil and gas industries is heavily influenced by current and expected oil and gas prices. As a result of a significant decline in oil prices, beginning in the latter half of 2014 and continuing into 2015, we expect 2015 revenue and operating profit margin for our Power and Energy reportable segment to decline on a year-over-year basis by at least 20% and 300 basis points, respectively. The demand for 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 "BusinessReportable 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

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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.

Six Months Ended June 27, 2015 and June 28, 2014

        The following table provides selected financial information for the six months ended June 27, 2015 and June 28, 2014, including the reconciliation of organic revenue decline to net revenue decline:

 
  Six months ended  
 
  June 27, 2015   June 28, 2014   % Change  

Revenues

  $ 1,186.3   $ 1,365.6     (13.1 )

Gross profit

    399.5     447.6     (10.7 )

% of revenues

    33.7 %   32.8 %      

Selling, general and administrative expense

    282.1     313.8     (10.1 )

% of revenues

    23.8 %   23.0 %      

Intangible amortization

    11.9     13.7     (13.1 )

Special charges, net

    7.1     10.7     (33.6 )

Other income, net

    4.3         *  

Interest expense, net

    (10.3 )   (11.0 )   (6.4 )

Income before income taxes

    92.4     98.4     (6.1 )

Income tax provision

    (22.6 )   (41.0 )   (44.9 )

Net income

    69.8     57.4     21.6  

Components of revenue decline:

                   

Organic decline

                (5.0 )

Foreign currency

                (8.1 )

Net revenue decline

                (13.1 )

*
Not meaningful for comparison purposes

        Revenues—For the six months ended June 27, 2015, the decrease in revenues, compared to the respective period in 2014, was due primarily to a strengthening of the U.S. dollar during 2015 and, to a lesser extent, a decrease in organic revenue. The decrease in organic revenue was due primarily to lower sales of power and energy pumps, largely reflecting the impact of lower oil prices. This decrease was offset partially by a year-over-year increase in sales of food and beverage systems. See "—Results of Reportable Segments" for additional details.

        Gross Profit—The decrease in gross profit during the six months ended June 27, 2015, compared to the respective period in 2014, was attributable primarily to the revenue decline noted above. However, gross profit as a percentage of revenue increased during the six months ended June 27, 2015 due to (i) improved operational performance within the Food and Beverage reportable segment and (ii) cost reductions associated with restructuring initiatives implemented during 2014 primarily within the Power and Energy reportable segment.

        Selling, General and Administrative ("SG&A") Expense—SG&A expense includes allocations of general corporate expenses from SPX, including pension and postretirement expense and stock-based

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compensation. See Note 1 to our condensed combined financial statements for further details on our methodology for allocating corporate-related costs. For the six months ended June 27, 2015, the decrease in SG&A expense, compared to the respective period in 2014, was due primarily to the impact of the strengthening U.S. dollar during the period and, to a lesser extent, a decrease in incentive compensation expense. The decrease in incentive compensation expense was due to lower profitability in the first half of 2015, compared to the respective period in 2014.

        Intangible Amortization—For the six months ended June 27, 2015, the decrease in intangible amortization, compared to the respective period in 2014, was due primarily to the impact of foreign currency translation.

        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. See Note 4 to our condensed combined financial statements for the details of actions taken during the six months ended June 27, 2015 and June 28, 2014.

        Other Income, Net—Other income, net, for the six months ended June 27, 2015 was composed primarily of investment-related earnings of $2.9, gains on asset sales of $1.2, gains on foreign exchange ("FX") forward contracts of $1.1 and foreign currency transaction gains of $0.3, partially offset by losses on FX embedded derivatives of $1.2. The $2.9 of investment-related earnings represented unrealized gains on our investment in equity securities. See Note 15 to our condensed combined financial statements for additional details.

        Other income, net, for the six months ended June 28, 2014 was composed primarily of gains on FX forward contracts of $3.0 and investment-related earnings of $2.1, offset by foreign currency transaction losses of $3.9 and losses on FX embedded derivatives of $0.9.

        Interest Expense, Net—Interest expense, net, is comprised of interest expense on (i) capital lease obligations, (ii) miscellaneous lines of credit, and (iii) related party notes payable, partially offset by interest income on (i) related party notes receivable and (ii) cash and equivalents. See Notes 10 and 16 to our condensed combined financial statements for additional details on our third-party debt and related party notes, respectively.

        The decrease in interest expense, net, during the six months ended June 27, 2015, compared to the respective period in 2014, was due primarily to a decrease of $8.0 in interest expense associated with related party notes payable, partially offset by a decrease of $5.2 in interest income associated with related party notes receivable and a decrease of $2.1 in interest income associated with cash and equivalents.

        Income Taxes—During the six months ended June 27, 2015, we recorded an income tax provision of $22.6 on $92.4 of income before income taxes, resulting in an effective tax rate of 24.4%. The effective tax rate for the six months ended June 27, 2015 was impacted by a tax benefit of $2.0 related to foreign exchange losses recognized for income tax purposes with respect to a foreign branch.

        During the six months ended June 28, 2014, we recorded an income tax provision of $41.0 on $98.4 of income before income taxes, resulting in an effective tax rate of 41.7%. The effective tax rate for the six months ended June 28, 2014 was impacted by a tax charge of $17.0 resulting from increases in valuation allowances recorded against certain foreign deferred income tax assets.

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Years Ended December 31, 2014, 2013 and 2012

        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

  $ 2,769.6   $ 2,804.8   $ 2,846.3     (1.3 )   (1.5 )

Gross profit

    936.5     898.0     875.7     4.3     2.5  

% of revenues

    33.8 %   32.0 %   30.8 %            

Selling, general and administrative expense

    629.9     618.9     643.0     1.8     (3.7 )

% of revenues

    22.7 %   22.1 %   22.6 %            

Intangible amortization

    26.1     27.2     28.4     (4.0 )   (4.2 )

Impairment of intangible assets

    11.7     4.7     2.0     148.9     135.0  

Special charges, net

    14.2     16.0     13.4     (11.3 )   19.4  

Other income (expense), net

    2.2     (5.2 )   (3.4 )   *     52.9  

Interest expense, net

    (23.4 )   (34.7 )   (56.0 )   (32.6 )   (38.0 )

Income before income taxes

    233.4     191.3     129.5     22.0     47.7  

Income tax provision

    (97.5 )   (58.8 )   (0.6 )   65.8     *  

Net income

    135.9     132.5     128.9     2.6     2.8  

Components of combined revenue decline:

                               

Organic decline

                      (1.1 )   (1.4 )

Foreign currency

                      (0.2 )   (0.2 )

Acquisition

                          0.1  

Net revenue decline

                      (1.3 )   (1.5 )

        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 against certain foreign currencies. 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. See "—Results of Reportable Segments" for additional details.

        For 2013, the decrease in revenues, compared to 2012, was due primarily to a decline in organic revenue and, to a lesser extent, the strengthening of the U.S. dollar during the period against certain foreign currencies. The decline in organic revenue was due primarily to lower sales of power and energy pumps and industrial heat exchangers, partially offset by an increase in sales of valves, closures and other components into the oil and gas end market, as well as increased sales of systems and components into the food and beverage end market. See "—Results of Reportable Segments" for additional details.

        Gross Profit—The increase in gross profit and gross profit as a percentage of revenue during 2014, compared to 2013, was primarily attributable to our Power and Energy reportable segment and was the result of improved operational execution and favorable sales mix, as well as cost reductions associated with restructuring initiatives implemented during the latter half of 2013 and the first half of 2014.

        The increase in gross profit and gross profit as a percentage of revenue during 2013, compared to 2012, was primarily the result of improved operational execution and favorable sales mix, primarily within our Power and Energy and Industrial reportable segments. In addition, gross profit for 2012 included incremental costs of $8.1 associated with the impact of the excess fair value (over historical cost) of inventory acquired in the December 2011 acquisition of Clyde Union that was subsequently sold in the first half of 2012.

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        SG&A Expense—SG&A expense includes allocations of general corporate expenses from SPX, including pension and postretirement expense and stock-based compensation. See Note 1 to our annual combined financial statements for further details on our methodology for allocating corporate-related costs. For 2014, the increase in SG&A expense, compared to 2013, was due primarily to an increase in pension and postretirement expense of $24.2, partially offset by cost reductions from restructuring actions completed in 2013 and 2014. The increase in pension and postretirement expense resulted primarily from our allocated share of the increase in actuarial losses recorded by SPX on its pension and postretirement plans during 2014. These actuarial losses were due primarily to reductions in discount rates and changes in mortality assumptions used to measure SPX's pension and postretirement obligations, as well as settlement losses associated with certain of SPX's plans.

        For 2013, the decrease in SG&A expense, compared to 2012, was due primarily to a decrease in pension and postretirement expense of $26.5. During 2013, actuarial losses on SPX's pension and postretirement plans declined, resulting in a decrease of our allocated share of such actuarial losses.

        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 Intangible Assets—During 2014, we recorded impairment charges of $7.3 and $4.4 related to the trademarks of certain businesses within our Power and Energy and Industrial reportable segments, respectively.

        During 2013, we recorded impairment charges of $3.4 and $1.3 related to the trademarks of certain businesses within our Power and Energy and Food and Beverage reportable segments, respectively.

        During 2012, we recorded an impairment charge of $2.0 related to the trademarks of a business within our Power and Energy reportable segment.

        See Note 8 to our annual combined 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 asset impairment charges. See Note 6 to our annual combined 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

  $ 11.6   $ 13.5   $ 15.2  

Facility consolidation costs

    0.6     1.0     1.8  

Other cash costs (recoveries), net

    0.5     (0.2 )   (4.5 )

Non-cash asset write-downs

    1.5     1.7     0.9  

Total

  $ 14.2   $ 16.0   $ 13.4  

        Other Income (Expense), Net—Other income, net, for 2014 was composed primarily of investment-related earnings of $6.0 and gains on FX embedded derivatives of $2.6, partially offset by (i) foreign currency transaction losses of $2.8 and (ii) losses on FX forward contracts of $2.4. The $6.0 of investment-related earnings represented unrealized gains on our investment in equity securities. See Note 16 to our annual combined financial statements for additional details.

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        Other expense, net, for 2013 was composed primarily of foreign currency transaction losses of $6.6 and losses on FX embedded derivatives of $0.4, partially offset by gains on FX forward contracts of $1.2.

        Other expense, net, for 2012 was composed primarily of foreign currency transaction losses of $8.5, partially offset by gains on FX embedded derivatives of $1.1, gains on FX forward contracts of $0.9, and investment-related earnings of $0.8.

        Interest Expense, Net—Interest expense, net, comprised interest expense on (i) capital lease obligations, (ii) miscellaneous lines of credit, and (iii) related party notes payable, partially offset by interest income on (i) related party notes receivable and (ii) cash and equivalents. See Notes 11 and 17 to our annual combined financial statements for additional details on our third-party debt and related party notes, respectively.

        The decrease in interest expense, net, during 2014, compared to 2013, was due to an increase of $22.3 in interest income associated with related party notes receivable, partially offset by an increase of $11.8 in interest expense associated with related party notes payable.

        The decrease in interest expense, net, during 2013, compared to 2012, was due to an increase of $24.5 in interest income associated with related party notes receivable, partially offset by an increase of $5.2 in interest expense associated with related party notes payable.

        The above increases in interest income associated with related party notes receivable primarily were due to advances we made to SPX of $743.3 during the second and fourth quarters of 2013, as during the first quarter of 2013 and throughout 2012 related party notes receivable were relatively insignificant. The above increases in interest expense associated with related party notes payable were primarily due to net borrowings from SPX during 2013 of $142.3. During 2014, there were no borrowings from SPX under related party notes payable and net repayments of related party notes payable were only $6.7.

        Income Taxes—During 2014, we recorded an income tax provision of $97.5 on $233.4 of income before income taxes, resulting in an effective tax rate of 41.8%. The effective tax rate for 2014 was impacted by (i) an income tax charge of $18.7 related to increases in valuation allowances recorded against certain foreign deferred income tax assets and (ii) an income tax charge of $18.6 related to the repatriation of certain earnings of our non-U.S. subsidiaries, partially offset by $3.8 of income tax benefits related to various audit settlements and statute expirations.

        During 2013, we recorded an income tax provision of $58.8 on $191.3 of income before income taxes, resulting in an effective tax rate of 30.7%. The effective tax rate for 2013 was impacted by an income tax charge of $3.9 related to net increases in valuation allowances recorded against certain foreign deferred income tax assets, partially offset by $2.0 of income tax benefits related to various audit settlements and statute expirations and $0.7 of income tax benefits associated with the Research and Experimentation Credit generated in 2012.

        During 2012, we recorded an income tax provision of $0.6 on $129.5 of income before income taxes, resulting in an effective tax rate of 0.5%. The effective tax rate for 2012 was impacted by income tax benefits of $18.3 associated with various audit closures and settlements, statute expirations, and other changes in the accrual for uncertain tax positions, with the most notable being the closure of the German tax examination for the years 2005 through 2009.

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Results of Reportable Segments

        The following information should be read in conjunction with our interim condensed combined and annual combined financial statements and related notes.

        Non-GAAP Measures—Throughout the following discussion of reportable segments, we use "organic revenue" growth (decline) to facilitate explanation of the operating performance of our reportable 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 Operations—Non-GAAP Measures."

Six Months Ended June 27, 2015 and June 28, 2014

Food and Beverage

 
  Six months ended    
 
 
  June 27,
2015
  June 28,
2014
  % Change  

Revenues

  $ 454.1   $ 475.7     (4.5 )

Income

    53.0     39.8     33.2  

% of revenues

    11.7 %   8.4 %      

Components of revenue decline:

                   

Organic growth

                6.0  

Foreign currency

                (10.5 )

Net revenue decline

                (4.5 )

        Revenues—For the six months ended June 27, 2015, the decrease in revenues, compared to the respective period in 2014, was due to the strengthening of the U.S. dollar during the period against various foreign currencies, partially offset by an increase in organic revenue. The increase in organic revenue was due primarily to higher sales of systems in Europe and Asia Pacific.

        Income—For the six months ended June 27, 2015, income and margin increased, compared to the respective period in 2014, primarily as a result of improved operational execution on large systems projects and the organic revenue growth noted above.

        Backlog—The segment had backlog of $430.3 and $528.6 as of June 27, 2015 and June 28, 2014, respectively. Of the $98.3 year-over-year decline in backlog, $68.3 was attributable to the impact of a stronger U.S. dollar as of June 27, 2015, as compared to June 28, 2014, and $30.0 was attributable to an organic decline.

Power and Energy

 
  Six months ended    
 
 
  June 27,
2015
  June 28,
2014
  % Change  

Revenues

  $ 348.3   $ 473.1     (26.4 )

Income

    41.5     68.6     (39.5 )

% of revenues

    11.9 %   14.5 %      

Components of revenue decline:

                   

Organic decline

                (19.8 )

Foreign currency

                (6.6 )

Net revenue decline

                (26.4 )

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        Revenues—For the six months ended June 27, 2015, the decrease in revenues, compared to the respective period in 2014, was due to the decrease in organic revenue and, to a lesser extent, a strengthening of the U.S. dollar during the period against various foreign currencies. The decline in organic revenue was due primarily to lower sales of power and energy pumps, largely reflecting the impact of lower oil prices.

        Income—For the six months ended June 27, 2015, income and margin decreased, compared to the respective period in 2014, primarily due to the decline in revenue mentioned above. These declines in income and margin were offset partially by the effects of cost reductions associated with restructuring initiatives implemented during 2014 within the segment's Clyde Union business.

        Backlog—The segment had backlog of $488.9 and $604.5 as of June 27, 2015 and June 28, 2014, respectively. Of the $115.6 year-over-year decline in backlog, $44.0 was attributable to the impact of a stronger U.S. dollar as of June 27, 2015, as compared to June 28, 2014, and $71.6 was attributable to an organic decline, due primarily to the impact of lower oil prices mentioned above.

Industrial

 
  Six months ended    
 
 
  June 27,
2015
  June 28,
2014
  % Change  

Revenues

  $ 383.9   $ 416.8     (7.9 )

Income

    53.1     61.9     (14.2 )

% of revenues

    13.8 %   14.9 %      

Components of revenue decline:

                   

Organic decline

                (0.6 )

Foreign currency

                (7.3 )

Net revenue decline

                (7.9 )

        Revenues—For the six months ended June 27, 2015, the decrease in revenues, compared to the respective period in 2014, was due to the strengthening of the U.S. dollar against various foreign currencies and, to a lesser extent, a decline in organic revenue. The organic revenue decline was primarily due to lower sales of mixers and hydraulic tools and equipment, partially offset by higher sales of pumps and heat exchangers.

        Income—For the six months ended June 27, 2015, income and margin decreased, compared to the respective period in 2014, primarily due to the revenue decline noted above and a less profitable sales mix during the first half of 2015.

        Backlog—The segment had backlog of $214.1 and $245.9 as of June 27, 2015 and June 28, 2014, respectively. Of the $31.8 year-over-year decline in backlog, $22.5 was attributable to the impact of a stronger U.S. dollar as of June 27, 2015, as compared to June 28, 2014, and $9.3 was attributable to an organic decline.

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Years Ended December 31, 2014, 2013 and 2012

Food and Beverage

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

Revenues

  $ 968.9   $ 970.0   $ 946.5     (0.1 )   2.5  

Income

    99.3     90.4     91.7     9.8     (1.4 )

% of revenues

    10.2 %   9.3 %   9.7 %            

Components of revenue growth (decline):

                               

Organic growth

                      1.0     1.7  

Foreign currency

                      (1.1 )   0.4  

Acquisition

                          0.4  

Net revenue growth (decline)

                      (0.1 )   2.5  

        Revenues—For 2014, the decrease in revenues, compared to 2013, was due to a strengthening of the U.S. dollar during the period against various foreign currencies, generally offset by an increase in organic revenue. The increase in organic revenue was due primarily to higher sales of systems and components in Europe.

        For 2013, the increase in revenues, compared to 2012, was due primarily to an increase in organic revenue and, to a lesser extent, both a weakening U.S. dollar during the period against the Euro and the impact of the acquisition of Seital S.r.l. in March 2012. The increase in organic revenue was due primarily to higher sales of systems in Europe and South America.

        Income—For 2014, income and margin increased, compared to 2013, primarily as a result of cost reductions associated with restructuring initiatives at various locations in Europe and, to a lesser extent, improved operational execution and a more favorable sales mix within the segment's European operations.

        For 2013, income and margin decreased, compared to 2012, due to execution challenges on certain large system projects during 2013 and an increase in operating expenses during the year.

        Backlog—The segment had backlog of $485.1 and $549.1 as of December 31, 2014 and 2013, respectively. Approximately 88% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015.

Power and Energy

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

Revenues

  $ 961.6   $ 997.5   $ 1,011.4     (3.6 )   (1.4 )

Income

    168.7     127.4     96.7     32.4     31.7  

% of revenues

    17.5 %   12.8 %   9.6 %            

Components of revenue decline:

                               

Organic decline

                      (5.0 )   (1.0 )

Foreign currency

                      1.4     (0.4 )

Net revenue decline

                      (3.6 )   (1.4 )

        Revenues—For 2014, the decrease in revenues, compared to 2013, was due to a decline in organic revenue, partially offset by the weakening of the U.S. dollar during the period against the British Pound ("GBP"). The decline in organic revenue was due primarily to lower sales of pumps, as the

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segment entered 2014 with a lower backlog (as compared to 2013) which we believe resulted from our more selective approach to large orders.

        For 2013, the decrease in revenues, compared to 2012, was due to an organic revenue decline and the strengthening of the U.S. dollar during the period against various foreign currencies. The decline in organic revenue was due primarily to lower sales of pumps, partially offset by an increase in sales of valves, closures and other components.

        Income—For 2014, income and margin increased, compared to 2013, primarily due to improved operational execution, favorable sales mix during the period which we attribute to our more selective approach to large orders, and cost reductions associated with restructuring initiatives implemented during the latter half of 2013 and the first half of 2014 at our Clyde Union business.

        For 2013, income and margin increased, compared to 2012, due to improved operational execution at a number of the businesses within the segment and cost reductions associated with restructuring initiatives implemented at Clyde Union. In addition, in 2012, income and margin were diluted by incremental costs of $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 $475.5 and $629.5 as of December 31, 2014 and 2013, respectively. Approximately 85% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015.

Industrial

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

Revenues

  $ 839.1   $ 837.3   $ 888.4     0.2     (5.8 )

Income

    123.0     119.3     129.2     3.1     (7.7 )

% of revenues

    14.7 %   14.2 %   14.5 %            

Components of revenue growth (decline):

                               

Organic growth (decline)

                      1.4     (5.2 )

Foreign currency

                      (1.2 )   (0.6 )

Net revenue growth (decline)

                      0.2     (5.8 )

        Revenues—For 2014, the increase in revenues, compared to 2013, was due to an increase in organic revenue, partially offset by the strengthening of the U.S. dollar during the period against various foreign currencies. The increase in organic revenues was due primarily to higher sales of heat exchangers, dehydration equipment and pumps, partially offset by lower sales of mixers.

        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 against various foreign currencies. The decline in organic revenue was due to lower sales within the segment's Asia Pacific operations, as well as lower sales of heat exchangers and dehydration equipment. These decreases were offset partially by an increase in sales of mixers during 2013.

        Income—For 2014, income and margin increased, compared to 2013, primarily due to a more favorable sales mix during 2014.

        For 2013, income and margin decreased, compared to 2012, due to the decline in organic revenue mentioned above and an increase in operating expenses during 2013. These unfavorable impacts on income and margin were offset partially by the effects of a more favorable sales mix in 2013.

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        Backlog—The segment had backlog of $210.1 and $235.5 as of December 31, 2014 and 2013, respectively. Approximately 88% of the segment's backlog as of December 31, 2014 is expected to be recognized as revenue during 2015.


Corporate and Other Expense

Six Months Ended June 27, 2015 and June 28, 2014

 
  Six months ended    
 
 
  June 27,
2015
  June 28,
2014
  % Change  

Total combined revenues

  $ 1,186.3   $ 1,365.6     (13.1 )

Corporate expense

    24.6     29.9     (17.7 )

% of revenues

    2.1 %   2.2 %      

Stock-based compensation expense

    15.5     14.6     6.2  

Pension and postretirement expense

    2.0     5.7     (64.9 )

        Corporate Expense—Corporate expense includes allocations of general corporate expenses from SPX that generally relate to the cost of corporate functions and/or resources provided by SPX. See Note 1 to our condensed combined financial statements for further details on our methodology for allocating corporate-related costs.

        Corporate expense decreased during the six months ended June 27, 2015, compared to the respective period in 2014, primarily due to a decline in incentive compensation expense associated with lower profitability in the first half of 2015, compared to the first half of 2014.

        Stock-based Compensation Expense—SPX sponsors a stock compensation plan that covers eligible employees, including certain of our employees. Stock-based compensation expense, as presented herein, represents the costs associated with the eligible employees of the Company, as well as an allocation of a portion of the costs associated with the eligible corporate employees of SPX. See Note 1 to our condensed combined financial statements for further details on our methodology for allocating corporate-related costs.

        See Note 13 to our condensed combined financial statements for further details on SPX's stock-based compensation plans.

        Pension and Postretirement Expense—SPX sponsors a number of pension and postretirement plans. In addition, we also sponsor pension and postretirement plans. For all of these plans, changes in the fair value of plan assets and actuarial gains and losses are recognized to earnings in the fourth quarter of each year as a component of net periodic benefit expense, unless earlier remeasurement is required. The remaining components of pension and postretirement expense, primarily service and interest costs and expected return on plan assets, are recorded on a quarterly basis.

        Pension and postretirement expense, as presented herein, represents net periodic benefit expense associated with the plans we sponsor as well as an allocation of a portion of the net periodic benefit expense associated with the plans sponsored by SPX. See Note 1 to our condensed combined financial statements for further details on our methodology for allocating corporate-related costs.

        During the six months ended June 27, 2015, pension and postretirement expense decreased, compared to the respective period in 2014, primarily due to a reduction in the allocated net periodic benefit expense associated with the plans sponsored by SPX. During the first quarter of 2014, an actuarial loss was recorded by SPX in connection with a lump-sum payment action related to one of its U.S. pension plans. Our allocated share of the actuarial loss, as reflected in our condensed combined financial statements for the six months ended June 28, 2014, was $1.7. There were no actuarial gains/losses included in our pension and postretirement expense for the six months ended June 27, 2015.

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        See Note 8 to our condensed combined financial statements for further details on SPX's and our pension and postretirement plans.

Years Ended December 31, 2014, 2013 and 2012

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

Total combined revenue

  $ 2,769.6   $ 2,804.8   $ 2,846.3     (1.3 )   (1.5 )

Corporate expense

    58.3     59.8     58.0     (2.5 )   3.1  

% of revenues

    2.1 %   2.1 %   2.0 %            

Pension and postretirement expense

    32.2     8.0     34.5     302.5     (76.8 )

Stock-based compensation expense

    20.0     17.4     20.8     14.9     (16.3 )

        Corporate Expense—Corporate expense includes allocations of general corporate expenses from SPX that generally relate to the cost of corporate functions and/or resources provided by SPX. See Note 1 to our annual combined financial statements for further details on our methodology for allocating corporate-related costs.

        Corporate expense decreased during 2014, compared to 2013, due primarily to lower marketing expenses.

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

        Pension and Postretirement Expense—SPX sponsors a number of pension and postretirement plans. In addition, we also sponsor pension and postretirement plans. For all of these plans, changes in the fair value of plan assets and actuarial gains and losses are recognized to earnings in the fourth quarter of each year as a component of net periodic benefit expense, unless earlier remeasurement is required. The remaining components of pension and postretirement expense, primarily service and interest costs and expected return on plan assets, are recorded on a quarterly basis.

        Pension and postretirement expense, as presented herein, represents net periodic benefit expense associated with the plans we sponsor as well as an allocation of a portion of the net periodic benefit expense associated with the plans sponsored by SPX. See Note 1 to our annual combined financial statements for further details on our methodology for allocating corporate-related costs.

        During 2014, pension and postretirement expense increased, compared to 2013, primarily as a result of an increase in actuarial losses associated with both the plans sponsored by SPX and those that we sponsor.

        During 2013, pension and postretirement expense decreased, compared to 2012, primarily as a result of a decrease in actuarial losses associated with both the plans sponsored by SPX and those that we sponsor.

        See Note 9 to our annual combined financial statements for further details on SPX's and our pension and postretirement plans.

        Stock-based Compensation Expense—SPX sponsors a stock compensation plan that covers eligible employees, including certain of our employees. Stock-based compensation expense, as presented herein, represents the costs associated with our eligible employees, as well as an allocation of a portion of the costs associated with the eligible corporate employees of SPX. See Note 1 to our annual combined financial statements for further details on our methodology for allocating corporate-related costs.

        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

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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 SPX's executive officer group, as well as an increase in forfeitures during 2013.

        See Note 14 to our annual combined financial statements for further details on SPX's stock-based compensation plans.


Liquidity and Financial Condition

        Listed below are the cash flows from (used in) operating, investing and financing activities, as well as the net change in cash and equivalents, for the six months ended June 27, 2015 and June 28, 2014 and the years ended December 31, 2014, 2013 and 2012.

 
  Six months ended    
   
   
 
 
  Year ended December 31,  
 
  June 27,
2015
  June 28,
2014
 
 
  2014   2013   2012  

Cash flows from operating activities

  $ 41.0   $ 118.6   $ 302.6   $ 263.3   $ 150.6  

Cash flows used in investing activities

    (21.1 )   (7.4 )   (34.0 )   (752.0 )   (45.3 )

Cash flows from (used in) financing activities

    (54.6 )   (116.6 )   (297.8 )   388.3     1.8  

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

    (6.8 )   (1.4 )   (12.0 )   (4.8 )   5.2  

Net change in cash and equivalents          

  $ (41.5 ) $ (6.8 ) $ (41.2 ) $ (105.2 ) $ 112.3  

Six Months Ended June 27, 2015 and June 28, 2014

        Operating Activities—During the six months ended June 27, 2015, the decrease in cash flows from operating activities, compared to the same period in 2014, was primarily attributable to (i) a decline in segment profitability and (ii) the timing of cash receipts on certain large projects.

        Investing Activities—During the six months ended June 27, 2015, cash flows used in investing activities were comprised primarily of capital expenditures of $22.6 associated generally with upgrades of manufacturing facilities and information technology, partially offset by proceeds from asset sales and other of $1.6. Cash flows used in investing activities during the comparable period in 2014 were comprised primarily of capital expenditures of $13.8 associated generally with upgrades of manufacturing facilities and replacement of equipment, partially offset by proceeds from asset sales and other of $7.1.

        Financing Activities—During the six months ended June 27, 2015, cash flows used in financing activities related primarily to net transfers to SPX of $48.7 and repayments of related party notes payable of $5.4, while cash flows used in financing activities during the comparable period in 2014 related primarily to net transfers to SPX of $119.0, partially offset by net borrowings under financing arrangements of $2.8.

        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 of $6.8 and $1.4 in the six months ended June 27, 2015 and June 28, 2014, respectively, reflected primarily a reduction in U.S. dollar equivalent balances of Euro-denominated cash and equivalents (in 2015) and of Chinese Yuan-denominated cash and equivalents (in 2014), as a result of the strengthening of the U.S. dollar against these currencies during the respective periods.

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Years Ended December 31, 2014 and 2013

        Operating Activities—During 2014, the increase in cash flows from operating activities, compared to 2013, was due primarily to improved profitability.

        Investing Activities—During 2014, cash flows used in investing activities were comprised primarily of capital expenditures of $40.7, partially offset by proceeds from asset sales and other of $7.3. Cash flows used in investing activities during 2013 were comprised primarily of loans to SPX of $743.3 and capital expenditures of $23.4, partially offset by proceeds from asset sales and other of $12.0.

        Financing Activities—During 2014, cash flows used in financing activities related primarily to net transfers to SPX of $291.6, while cash flows from financing activities in 2013 related primarily to net transfers from SPX of $261.3 and net borrowings from SPX (and certain of its affiliates that are not part of the spin-off transaction) of $142.3.

        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 of $12.0 and $4.8 in 2014 and 2013, respectively, reflected primarily a reduction in U.S. dollar equivalent balances of Euro- and GBP-denominated cash and equivalents, as a result of the strengthening of the U.S. dollar against these currencies during the respective periods.

Years Ended December 31, 2013 and 2012

        Operating Activities—During 2013, the increase in cash flows from operating activities, compared to 2012, was due primarily to a reduction in working capital at our Clyde Union business and, to a lesser extent, improved profitability. In 2012, our Clyde Union business experienced project delays and other operational execution issues, which contributed to a significant increase in working capital for the business (increase of approximately $140.0). During 2013, many of these issues were remediated, resulting in a significant decline in Clyde Union's working capital.

        Investing Activities—During 2013, cash flows used in investing activities were comprised primarily of loans to SPX of $743.3 and capital expenditures of $23.4, partially offset by proceeds from asset sales and other of $12.0. Cash flows used in investing activities during 2012 were comprised primarily of the acquisition of Seital S.r.l. of $28.0 and capital expenditures of $26.3, partially offset by repayments received on related party notes of $6.8 and proceeds from asset sales and other of $5.6.

        Financing Activities—During 2013, cash flows from financing activities related primarily to net transfers from SPX of $261.3 and net borrowings from SPX (and certain of its affiliates that are not part of the spin-off transaction) of $142.3, while cash flows from financing activities in 2012 related primarily to net transfers from SPX of $33.9, partially offset by net repayments of third-party debt of $34.3.

        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 of $4.8 in 2013 reflected primarily a reduction in U.S. dollar equivalent balances of Euro- and GBP-denominated cash and equivalents, as a result of the strengthening of the U.S. dollar against these currencies during the year. The increase in cash and equivalents due to foreign currency exchange rates of $5.2 in 2012 reflects primarily an increase in U.S. dollar equivalent balances of Euro- and GBP-denominated cash and equivalents, as a result of a weakening of the U.S. dollar against these currencies during the year.

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Senior Credit Facilities

        On September 25, 2015, Flowco and certain of our subsidiaries (collectively "Flowco") expect to establish senior credit facilities with a syndicate of lenders that will provide for committed senior secured financing in the aggregate amount of $1.35 billion, consisting of the following, each with a final maturity of September 25, 2020:

    A term loan facility in an aggregate principal amount of $400.0;

    A domestic revolving credit facility, available for loans and letters of credit, in an aggregate principal amount up to $250.0;

    A global revolving credit facility, available for loans in Euros, Great Britain Pound and other currencies, in an aggregate principal amount up to the equivalent of $200.0;

    A participation multi-currency foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $250.0; and

    A bilateral multi-currency foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $250.0.

        We also may seek additional commitments, without 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 an aggregate principal amount not to exceed (x) $500.0 plus (y) an unlimited amount so long as, immediately after giving effect thereto, our Consolidated Senior Secured 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 secured by liens to consolidated adjusted EBITDA, as defined in the credit agreement, for the four fiscal quarters ended most recently before such date) does not exceed 2.75 to 1.00 plus (z) an amount equal to all voluntary prepayments of the term loan facility and voluntary prepayments accompanied by permanent commitment reductions of the revolving credit facilities and foreign credit instrument facilities.

        We will be the borrower under all of the senior credit facilities, and certain of Flowco's foreign subsidiaries are (and Flowco may designate other foreign subsidiaries to be) borrowers under the global revolving credit facility and the foreign credit instrument facilities.

        All borrowings and other extensions of credit under our senior credit facilities will be 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 Flowco on behalf of itself or any of its subsidiaries or certain joint ventures. The foreign credit instrument facility will be used to issue foreign credit instruments, including bank undertakings to support our foreign operations.

        The interest rates applicable to loans under our senior credit facilities will be, at our option, equal to either (x) an alternate base rate (the highest of (a) the federal funds effective rate plus 0.5%, (b) the prime rate of Bank of America, N.A., and (c) the one-month LIBOR rate plus 1.0%) or (y) a reserve-adjusted LIBOR rate 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 most recently before such date). We may elect interest periods of one, two, three or six months (and, if consented to by all relevant lenders, nine or twelve months) for Eurodollar borrowings. The per annum

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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
  Foreign
Credit
Instrument
Fee
  LIBOR
Loans
  ABR
Loans
 

Greater than or equal to 3.00 to 1.00

    0.350 %   0.350 %   2.000 %   0.350 %   1.250 %   2.000 %   1.000 %

Between 2.00 to 1.00 and 3.00 to 1.00

    0.300 %   0.300 %   1.750 %   0.300 %   1.000 %   1.750 %   0.750 %

Between 1.50 to 1.00 and 2.00 to 1.00

    0.275 %   0.275 %   1.500 %   0.275 %   0.875 %   1.500 %   0.500 %

Between 1.00 to 1.00 and 1.50 to 1.00

    0.250 %   0.250 %   1.375 %   0.250 %   0.800 %   1.375 %   0.375 %

Less than 1.00 to 1.00

    0.225 %   0.225 %   1.250 %   0.225 %   0.750 %   1.250 %   0.250 %

        The fees for bilateral foreign credit commitments will be as specified above for foreign credit commitments unless otherwise agreed with the bilateral foreign issuing lender. We will 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 will 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) by Flowco or its subsidiaries. Mandatory prepayments will be applied to repay, first, amounts outstanding under any term loans and, then, amounts (or to 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 will be required generally to the extent the net proceeds are reinvested (or committed to be reinvested) in permitted acquisitions, permitted investments or assets to be used in our business within 360 days (and if committed to be reinvested, actually reinvested within 180 days after the end of such 360-day period) 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 will be guaranteed by:

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

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

        Indebtedness under our senior credit facilities will be secured by a first priority pledge and security interest in 100% of the capital stock of our domestic subsidiaries (with certain exceptions) held by Flowco or its domestic subsidiary guarantors and 65% of the capital stock of our material first-tier foreign subsidiaries (with certain exceptions). If Flowco's corporate credit rating is less than "Ba2" (or not rated) by Moody's and less than "BB" (or not rated) by S&P, then Flowco and its domestic subsidiary guarantors are required to grant security interests, mortgages and other liens on substantially all our assets. If Flowco's corporate credit rating is "Baa3" or better by Moody's or "BBB-" or better

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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 will require that Flowco maintains:

    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 will 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. Our senior credit facilities will contain customary representations, warranties, affirmative covenants and events of default.


Senior Notes

        We expect that the $600.0 aggregate principal amount of the 2017 Notes will become an obligation of Flowco in connection with the spin-off. These notes 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. Payment of the principal, premium, if any, and interest on these notes will be guaranteed on a senior unsecured basis by our domestic subsidiaries.

        In connection with consummation of the spin-off, we intend to commence an offer to purchase all of the 2017 Notes then outstanding, at a purchase price equal to 101% of the aggregate principal amount of the notes repurchased, plus accrued and unpaid interest, in accordance with the terms of the indenture for the 2017 Notes. Nothing contained in this information statement should be construed as an offer to purchase any of the 2017 Notes.


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 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 and FX embedded derivatives 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

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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 June 27, 2015, there had been no significant impact to the fair value of our derivative liabilities due to our own credit risk as the related instruments were collateralized under SPX's senior credit facilities. Similarly, there had been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties' credit risks.

        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.

Currency Forward Contracts and Currency Forward Embedded Derivatives

        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 their impact. Our principal currency exposures relate to the Euro, Chinese Yuan and GBP.

        From time to time, we enter into foreign currency forward contracts ("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 currency forward embedded derivatives ("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 $60.1, $84.4 and $90.7 outstanding as of June 27, 2015, December 31, 2014 and December 31, 2013, respectively, with all such contracts as of June 27, 2015 scheduled to mature within one year. We also had FX embedded derivatives with an aggregate notional amount of $42.0, $53.4 and $78.6 at June 27, 2015, December 31, 2014 and December 31, 2013, respectively, with scheduled maturities as of June 27, 2015 of $39.5, $2.1 and $0.4 within one, two and subsequent years thereafter, respectively. The unrealized loss, net of taxes, recorded in AOCI related to FX forward contracts was $0.1 as of June 27, 2015, while such amount was less than $0.1 as of December 31, 2014 and there were no such amounts as of December 31, 2013. The net gains/(losses) recorded in "Other income (expense), net" related to FX forward contracts and FX embedded derivatives totaled ($0.1) and $2.1 for the six months ended June 27, 2015 and June 28, 2014, respectively. The net gains recorded in "Other income (expense), net" related to FX forward contracts and FX embedded derivatives totaled $0.2, $0.8 and $2.0 in 2014, 2013 and 2012, respectively.

        The net fair values of our FX forward contracts and FX embedded derivatives were $1.1 (liability), $0.6 (liability) and $3.0 (liability) at June 27, 2015, December 31, 2014 and December 31, 2013, respectively.

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Other Fair Value Financial Assets and Liabilities

        The carrying amounts of cash and equivalents and receivables (excluding related party notes receivable) reported in our combined balance sheets approximate fair value due to the short-term nature of those instruments. At June 27, 2015, December 31, 2014 and December 31, 2013, the aggregate estimated fair values of our related party notes receivable were approximately $727.2, $758.0 and $682.0, respectively, compared to the respective carrying values of $670.0, $707.1 and $763.4.

        The fair value of our debt instruments (excluding capital leases and related party notes payable) are considered to approximate carrying value due primarily to the short-term nature of these instruments. At June 27, 2015, December 31, 2014 and December 31, 2013, the aggregate estimated fair values of our related party notes payable were approximately $437.0, $1,127.0 and $1,076.0, respectively, compared to the respective carrying values of $391.3, $1,003.1 and $988.4.

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 FX forward contracts. These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions throughout the world. We periodically evaluate the credit standing of these financial institutions.

        We maintain cash levels in bank accounts that, at times, may exceed federally-insured limits. We have not experienced, 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 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

        We use operating leases to finance certain equipment, vehicles and properties. At December 31, 2014, we had $84.0 of future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year.

        Capital expenditures for 2014 totaled $40.7, compared to $23.4 and $26.3 in 2013 and 2012, respectively. Capital expenditures in 2014 related primarily to upgrades to manufacturing facilities, including replacement of equipment, and information technology. We expect 2015 capital expenditures to approximate $70.0, 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 $3.8 to our defined benefit pension and postretirement benefit plans. We expect to make $2.9 of minimum required funding contributions and direct benefit payments in 2015. Our pension plans have not experienced any liquidity difficulties or counterparty defaults due to the volatility in the credit markets. Our foreign pension funds experienced a positive return on assets of approximately 5.0% in 2014. See Note 9 to our annual combined financial statements for further disclosure of expected future contributions and benefit payments.

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        On a net basis, we paid $11.4, $19.0, and $15.7 in income taxes in 2014, 2013 and 2012, respectively. The amount of income taxes 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 13 to our annual combined financial statements and in the contractual obligations table below, we did not have any material guarantees, off-balance sheet arrangements or purchase commitments.

        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. See "Risk Factors," "Results of Reportable Segments" included in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business" for an understanding of the risks, uncertainties and trends facing our businesses.


Contractual Obligations

        The following is a summary of our primary contractual obligations as of December 31, 2014. Except as otherwise noted below, there have been no material changes in the amounts of our contractual obligations from those summarized below:

 
  Total   Due
within
1 year
  Due in
1 - 3 years
  Due in
3 - 5 years
  Due after
5 years
 

Short-term debt obligations

  $ 6.0   $ 6.0   $   $   $  

Long-term debt obligations

    12.0     1.7     1.4     5.4     3.5  

Related party notes payable(1)

    1,003.1     36.8     558.0         408.3  

Pension and postretirement benefit plan contributions and direct benefit payments(2)

    67.0     2.9     6.4     7.5     50.2  

Purchase and other contractual obligations(3)

    209.4     191.4     18.0          

Future minimum operating lease payments(4)

    84.0     25.0     27.7     12.5     18.8  

Interest payments—capital lease obligations

    3.4     1.4     1.2     0.2     0.6  

Interest payments—related party notes payable(1)

    609.0         152.1         456.9  

Total contractual cash obligations(5)

  $ 1,993.9   $ 265.2   $ 764.8   $ 25.6   $ 938.3  

(1)
During the six months ended June 27, 2015, certain related party notes payable were extinguished by way of a capital contribution. As a result of this capital contribution, these related party notes payable no longer remain our contractual obligations as of June 27, 2015. Of these amounts, $26.9 was previously due upon the lender's demand (reflected in "Due within 1 year" above) and $558.0 was previously due in 2017 (reflected in "Due in 1 - 3 years" above). Interest payments of $152.1 which were previously due in 2017 (reflected in "Due in 1 - 3 years" above) also no longer remain our contractual obligations as of June 27, 2015.

(2)
Estimated minimum required pension contributions 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), rates of compensation increases, and health care cost trend rates. See Note 9 to our annual combined financial statements for additional information on expected future contributions and benefit payments.

(3)
Represents contractual commitments to purchase goods and services at specified dates.

(4)
Represents rental payments under operating leases with remaining non-cancelable terms in excess of one year.

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(5)
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. Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by $2.5 to $7.5. In addition, the above table does not include potential payments under our derivative financial instruments.

        We believe that our cash flows, together with cash on hand, provide us with the ability to fund our operations and make planned capital expenditures payments for at least the next twelve months. However, such cash flows are dependent upon our future operating performance which, in turn, is subject to prevailing economic conditions and to financial, business and other factors, including the conditions of our markets, some of which are beyond our control. If, in the future, we cannot generate sufficient cash from operations to meet any future debt service obligations, we would need to refinance such debt obligations, obtain additional financing or sell assets. We cannot assure you that our business will generate cash from operations, or that we will be able to obtain financing from other sources, sufficient to satisfy any such debt service or other requirements.


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 annual combined financial statements, which include a detailed discussion of these and other accounting policies. We have effected no material change in either our critical accounting policies or use of estimates since the issuance of our 2014 combined financial statements included elsewhere in this information statement.

Long-Term Contract Accounting

        Certain of our businesses 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. Under the percentage-of-completion method, we recognized revenues of $237.8 and $274.0 during the six months ended June 27, 2015 and June 28, 2014, respectively, and $573.1, $612.8 and $693.1 during the years ended December 31, 2014, 2013 and 2012, 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.

        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

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other contracts that we can effectively leverage our experience. As our long-term contracts generally range from six 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 an impact on our cost and profitability estimates.

    Use of Sub-Contractors—Our arrangements with sub-contractors are generally based on fixed prices; however, our estimates of the cost and profitability can be impacted by sub-contractor delays, customer claims arising from sub-contractor performance issues, or a sub-contractor'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 12 to our annual combined 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 sub-contractors 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

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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.

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.

        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 and 2013, we recorded impairment charges of $11.7 and $4.7, respectively, related to trademarks of certain of our businesses. Other changes in the gross values of trademarks and other identifiable intangible assets related primarily to foreign currency translation.

Employee Benefit Plans

        For both the plans we sponsor and the plans sponsored by SPX, changes in the fair value of plan assets and actuarial gains and losses are recognized to earnings in the fourth quarter of each year, unless earlier remeasurement is required. The remaining components of pension and postretirement expense, primarily service and interest costs and expected return on plan assets, are recorded on a quarterly basis.

        Neither our nor the pension plans sponsored by SPX have experienced any significant impact on liquidity or counterparty exposure due to the volatility in the credit markets.

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        The costs and obligations associated with these plans are determined based on actuarial valuations. The critical assumptions used in determining these obligations and related expenses are discount rates and healthcare cost projections. These critical assumptions are calculated based on relevant data and appropriate market indicators, and are evaluated at least annually 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 actual experience and expectations for the future. While we believe that the assumptions used are appropriate, actual results may differ.

        The discount rate enables the expected future cash flows to be stated 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 on the above plans would have increased our 2014 pension expense by approximately $21.5, and a 50 basis point increase in the discount rate would have decreased 2014 pension expense by approximately $20.6.

        The trend in healthcare costs is difficult to estimate, and it can significantly impact postretirement liabilities and costs. 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 reduced our 2014 postretirement income by approximately $0.6, and a 100 basis point decrease in the healthcare cost trend rate would have increased our 2014 postretirement income by approximately $0.6.

        See Note 9 to our annual combined financial statements for further information on our accounting for pension and postretirement benefit plans.

Income Taxes

        For purposes of our combined financial statements, our income tax provision has been determined as if we filed income tax returns on a stand-alone basis. Our tax results as presented in the combined financial statements may not be reflective of the results that we will generate in the future. In jurisdictions where we have been included in the tax returns filed by SPX, any income taxes payable resulting from the related income tax provision have been reflected in our combined balance sheets within "Parent company investment."

        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 whether deferred tax assets will be realized and the adequacy of deferred tax liabilities, including the results of 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 may 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.

        We review our income tax positions on a continuous basis and record a provision for potential uncertain tax positions when we determine that an uncertain position meets the criteria of the Income

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Taxes Topic of the Codification. As events change or resolutions occur, adjustments are made to amounts previously provided, 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 10 to our annual combined financial statements for additional details regarding our uncertain tax positions.

Contingent Liabilities

        We are subject to litigation matters that arise in the normal course of business. We believe these matters are either without merit or of a kind that should not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows.

        We are subject to domestic and international environmental protection laws and regulations with respect to our business operations and are operating in compliance with, or taking action aimed at ensuring compliance with, these laws and regulations. None of our compliance obligations with environmental protection laws and regulations, individually or in the aggregate, is expected to have a material adverse effect on our financial position, results of operations or cash flows.


New Accounting Pronouncements

        See Note 3 to our annual combined financial statements and Note 2 to our condensed combined financial statements for a discussion of recent accounting pronouncements.

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BUSINESS

Company Overview

        We are a leading global supplier of highly engineered flow components, process equipment and turn-key systems, along with the related aftermarket parts and services, into food and beverage, power and energy, and industrial markets. We engineer, design and manufacture a broad array of flow control systems integral to our customers' ability to process, blend, transport, meter, filter and dehydrate various types of fluids, gases, and powders across a diverse range of applications. Our innovative solutions play a critical role in helping meet rising global demand in the markets we serve. Our total revenue in 2014 was approximately $2.8 billion, with 71% from sales to destinations outside the United States, including 30% from sales into emerging markets.

History and Development

        We initially established a presence in flow-related businesses when we acquired Lightnin Mixers as part of the 1998 General Signal merger. In 2001, we added three more flow-related businesses, Waukesha Cherry-Burrell pumps and valves, Bran+Luebbe metering and dosing pumps, and Dollinger filtration products, through the acquisition of United Dominion Industries. The combination of these well-branded, highly engineered product lines created a solid foundation on which to build our flow business. Subsequent smaller acquisitions of Copes Vulcan, M&J Valve, Hankison and Johnson Pump broadened our product offerings and improved our organic growth profile. We consolidated these businesses under one management team, reduced our cost base and drove improved operational efficiencies through our lean philosophies. We also began selling complementary products as package solutions to expand our relevance to customers in three areas:

    Process equipment focused on food and beverage and sanitary applications;

    Flow control products focused on power and energy market applications; and

    Air treatment products and pumps focused on industrial applications.

        By the end of 2007, annual revenue for our flow business had grown to more than $1.0 billion. At that point, we began to focus on expanding our international presence in select, attractive end markets.

        In December 2007, we acquired APV, a leading global supplier of process automation technologies for the dairy, foods, beverages, pharmaceutical and healthcare industries. This acquisition significantly expanded our geographic presence and established a global platform in the food and beverage industry. Following a multi-year integration of APV into our flow business, several smaller acquisitions (Gerstenberg Schroeder, Anhydro, Seital, Murdoch and e&e) broadened our processing capabilities into discrete product categories such as butters, fats and oils, powdered products, coffee and extracts. Today, customers often look to us to design and construct a fully-integrated dairy factory.

        In December 2011, we acquired ClydeUnion Pumps ("Clyde Union") which further expanded our geographic presence and established a global platform in the power and energy industry, including a global footprint of aftermarket service centers. Clyde Union has over 140 years of experience in pumping technologies and has a rich heritage of product brands. Clyde Union was formed through the combination of Weir Pumps, a long-standing engineering company with roots dating back to 1871, and Union Pumps, owned previously by Textron. The joining of these companies brought together some of the most respected products, talent and brands in the pumping industry.

        Clyde Union's technologies are complementary to our legacy power and energy products. Today, our power and energy product offering includes a variety of critical pressure pumps, metering systems, dosing pumps, specialty valves and valve closures, chemical injection skids, filtration and air dehydration equipment.

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        At the end of 2013, we moved to a new operating alignment focused on managing our business strategy around three global end markets. This new operational alignment was the next significant step in the development of our flow business and has improved our operating efficiency and enhanced our customer focus by more closely aligning our organizational resources with our customers and end markets. It has also strengthened our foundation for future growth.

        In 2014, our segment income margins improved 210 points to 14.1 percent and in February 2015, we increased our long-term margin target to 14%-16%. We believe we are in a strong position to leverage operational excellence, cost reduction initiatives and commercial synergies across our operations, and to drive further growth and increased shareholder value.

Products

        Our product portfolio of pumps, valves, mixers, filters, air dryers, hydraulic tools, homogenizers, separators and heat exchangers, along with the related aftermarket parts and services, supports global industries, including food and beverage, oil and gas, power generation (including nuclear and conventional), chemical processing, compressed air and mining. The core strengths of our product portfolio and engineering capabilities include integrated dairy systems, high pressure pumps and control valves used in oil production and transportation, regulated safety technologies for nuclear power generation, and industrial components used in chemical processing.

        Our products feature uncompromising design and quality, while offering long service life, production efficiency and cost effective performance. In addition, our products help customers increase productivity, control costs, reduce energy and waste, and meet stringent compliance regulations. Through our vast engineering knowledge, product development and industry experience, we have the capability to work closely with customers to provide solutions configured to meet their specific application and business needs.

Brands and Marketing

        We market our products and services under one global brand, "SPX." This approach provides consistent recognition of our business across our global customer base. Following the spin-off, we will continue to have rights to the "SPX" brand. Ultimately, we plan to transition our global brand to "SPXFLOW." Our product brands, many of which we believe are technology leaders in their respective industries and regions, include: Airpel, Anhydro, APV, Bran+Luebbe, Bolting Systems, ClydeUnion Pumps, Copes-Vulcan, Delair, Deltech, Dollinger Filtration, e&e, GD Engineering, Gerstenberg Schroeder, Globe, Hankison, Hytec, Jemaco, Johnson Pump, LIGHTNIN, M&J Valve, Murdoch, OFM, Plenty, Pneumatic Products, Power Team, Rail Systems, Seital, Stone, Tigerholm, Vokes, and Waukesha Cherry-Burrell.

Customers and Markets Served

        We serve a global customer base ranging from large multi-nationals to regional and local companies. We sell our products and services to thousands of companies including some of the world's leading food and beverage consumer brands, engineering, procurement and construction firms ("EPCs"), original equipment manufacturers ("OEMs"), distributors and end users. No single customer represented 5% or more of our total revenues in 2014, 2013 or 2012.

        Our products and services are used across a variety of industries in many geographic regions of the world. In 2014, we estimate that the aggregate size of the global markets in which we participate was greater than $100 billion. We believe these markets offer attractive long-term growth characteristics and will benefit from global macro and demographic trends, including population growth, an expanding middle class, heightened regulatory and safety requirements, productivity improvements, and environmental conservation efforts. We also believe our end market and geographic diversity provides

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us with stability through economic cycles. In 2014, 2013, and 2012, the breakdown of our revenue by industry consisted of:

% Revenue by Industry
  2014   2013   2012  

Oil and Gas

    28.0 %   24.4 %   23.2 %

General Industrial(1)

    20.1 %   23.0 %   23.0 %

Foods, Beverages and Personal Care (non-dairy)

    18.5 %   17.9 %   17.5 %

Dairy and Dairy Derivatives

    14.1 %   15.3 %   16.0 %

Power Generation

    6.7 %   7.8 %   8.9 %

Compressed Air

    6.8 %   6.2 %   6.0 %

Chemical

    5.8 %   5.4 %   5.4 %

(1)
General Industrial includes marine and shipbuilding, mining, transportation infrastructure, HVAC, water and wastewater, and pulp and paper markets.

Global Capabilities

        Our global headquarters are located in Charlotte, North Carolina. We have operations in over 35 countries, including over 50 manufacturing and/or engineering facilities and over 25 service centers. We had sales in over 150 countries in 2014. The breakdown of sales by geographic destination in 2014, 2013 and 2012 consisted of:

Sales by Geographic Destination
  2014   2013   2012  

North America

    35.2 %   33.6 %   34.0 %

Europe

    30.0 %   29.0 %   26.7 %

Asia Pacific

    23.6 %   25.4 %   26.8 %

Middle East and Africa

    7.7 %   8.3 %   8.6 %

Latin America

    3.5 %   3.7 %   3.9 %

Properties

        The following is a summary of our principal properties including manufacturing and engineering facilities and service centers as of December 31, 2014:

 
   
  Number of
Facilities
  Owned   Leased  
 
   
   
  (~ square footage
in millions)

 

Food and Beverage

  4 U.S. states and 10 foreign countries     20     0.7     0.7  

Power and Energy

  5 U.S. states and 9 foreign countries     26     2.0     0.6  

Industrial

  6 U.S. states and 13 foreign countries     30     1.1     0.7  

Total

        76     3.8     2.0  

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        The following table lists the locations of our primary manufacturing and engineering facilities as of December 31, 2014:

Americas   EMEA   Asia Pacific
Burlington, Canada   Annecy, France   Ahmedabad, India
Delavan, WI   Assen, Netherlands   Auckland, New Zealand
Goldsboro, NC   Brixworth, U.K.   Bangalore, India
Hanover Park, IL   Budapest, Hungary   Busan, South Korea
Houston, TX   Bydgoszcz, Poland   Jaipur, India
McKean, PA   Capetown, South Africa   Melbourne, Australia
Newport, NC   De Leur, Netherlands   New Dehli, India
Ocala, FL   Ekero, Sweden   Pune, India
Rochester, NY   Erpe-Mere, Belgium   Singapore
Rockford, IL   Etten-Leur, Netherlands   Sydney, Australia
Santiago, Chile   Eygelshoven, Netherlands   Tokyo, Japan
Sao Paulo, Brazil   Glasgow, Scotland   Xidu, China
    Johannesburg, South Africa    
    Killarney, Ireland    
    Kolding, Denmark    
    Moers, Germany    
    Newbury, U.K.    
    Norderstedt, Germany    
    Orebro, Sweden    
    Penistone, Scotland    
    Santorso, Italy    
    Silkeborg, Denmark    
    Soeborg, Denmark    
    Unna, Germany    

Reportable Segments

        We report our operating results under three end market-focused segments: Food and Beverage, Power and Energy, and Industrial. The factors considered in determining our reportable segments include, among other things, the types of customers and the nature of products sold and services provided. The following table presents relative percentages of our total revenues attributable to each of our reportable segments for 2014, 2013 and 2012 (see Note 5 to our annual combined financial statements for additional details on our reportable segments):

% Revenue by Reportable Segment
  2014   2013   2012  

Food and Beverage

    35.0 %   34.6 %   33.3 %

Power and Energy

    34.7 %   35.5 %   35.5 %

Industrial

    30.3 %   29.9 %   31.2 %

Food and Beverage Overview

        We are one of the largest suppliers of process technologies for the global food and beverage industry. We engineer, design and manufacture a broad array of mechanical components and process technologies used in fully integrated, highly sophisticated production processes. Our mechanical component offering includes pumps, valves, mixers, homogenizers, separators, and heat exchangers. Our process technologies include a broad range of liquid processing, drying and evaporation technologies, and extraction and distillation solutions. Our key brands include Anhydro, APV, Bran+Luebbe, e&e, Gerstenberg Schroeder, LIGHTNIN, Seital and Waukesha Cherry-Burrell.

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        Our customers include multi-national, regional and local dairy, food and beverage producers. We also sell mechanical components to system integrators and end users through direct sales representatives and distributors. Our process technologies are used across a wide range of product applications. We have a particularly strong presence in dairy processing technologies. The following table lists the various applications in which our process technologies are used: