UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2021

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

For the transition period from            to            

Commission File Number 1-6948

SPX CORPORATION

(Exact Name of registrant as specified in its charter)

Delaware	38-1016240
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6325 Ardrey Kell Road, Suite 400, Charlotte, North Carolina 28277

(Address of principal executive offices) (Zip Code)

(980) 474-3700

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address, and former fiscal year, if changed since last report)

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

Title of each class	Trading Symbols(s)	Name of each exchange on which registered
Common Stock, par value $0.01	SPXC	New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

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

Common shares outstanding July 30, 2021, 45,317,320

SPX CORPORATION AND SUBSIDIARIES

FORM 10-Q INDEX

PART 1 – FINANCIAL INFORMATION
Item 1 – Financial Statements
Condensed Consolidated Statements of Operations and Comprehensive Income	3
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Equity	5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	41
Item 4 – Controls and Procedures	41
PART 2 – OTHER INFORMATION
Item 1 – Legal Proceedings	42
Item 1A – Risk Factors	42
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 6 – Exhibits	42
SIGNATURES	43

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited; in millions, except per share amounts)

	Three months ended				Six months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Revenues	$	296.7	$	258.0	$	584.6	$	514.8
Costs and expenses:
Cost of products sold	194.7		169.7		378.6		336.8
Selling, general and administrative	79.2		67.4		158.5		138.5
Intangible amortization	6.5		2.4		10.5		5.0
Special charges, net	0.7		1.0		1.4		1.3
Other operating (income) expense	2.7		—		2.7		(0.4)
Operating income	12.9		17.5		32.9		33.6
Other income, net	7.1		5.4		14.3		5.8
Interest expense	(3.4)		(4.8)		(7.6)		(9.5)
Interest income	0.1		0.1		0.2		0.1
Income from continuing operations before income taxes	16.7		18.2		39.8		30.0
Income tax provision	(2.0)		(3.0)		(6.1)		(5.3)
Income from continuing operations	14.7		15.2		33.7		24.7
Income from discontinued operations, net of tax	42.7		13.2		51.3		26.4
Gain (loss) on disposition of discontinued operations, net of tax	4.1		(1.3)		3.3		(1.3)
Income from discontinued operations, net of tax	46.8		11.9		54.6		25.1
Net income	$	61.5	$	27.1	$	88.3	$	49.8
Basic income per share of common stock:
Income from continuing operations	$	0.32	$	0.34	$	0.75	$	0.56
Income from discontinued operations	1.04		0.27		1.20		0.56
Net income per share	$	1.36	$	0.61	$	1.95	$	1.12
Weighted-average number of common shares outstanding — basic	45.271		44.590		45.201		44.452
Diluted income per share of common stock:
Income from continuing operations	$	0.32	$	0.33	$	0.73	$	0.54
Income from discontinued operations	1.00		0.26		1.17		0.55
Net income per share	$	1.32	$	0.59	$	1.90	$	1.09
Weighted-average number of common shares outstanding — diluted	46.545		45.648		46.408		45.620
Comprehensive income	$	60.9	$	31.0	$	90.4	$	40.8

The accompanying notes are an integral part of these statements.

3

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share data)

	July 3, 2021		December 31, 2020
ASSETS
Current assets:
Cash and equivalents	$	69.1	$	68.3
Accounts receivable, net	212.5		221.0
Contract assets	25.0		32.5
Inventories, net	157.7		143.1
Other current assets (includes income taxes receivable of $30.1 and $27.3 at July 3, 2021 and December 31, 2020, respectively)	104.2		96.1
Assets of discontinued operations	332.9		121.6
Total current assets	901.4		682.6
Property, plant and equipment:
Land	14.0		12.9
Buildings and leasehold improvements	67.3		64.9
Machinery and equipment	227.7		215.6
	309.0		293.4
Accumulated depreciation	(196.0)		(183.4)
Property, plant and equipment, net	113.0		110.0
Goodwill	409.2		368.6
Intangibles, net	325.8		305.0
Other assets	609.4		609.8
Deferred income taxes	51.7		23.9
Assets of discontinued operations	—		219.1
TOTAL ASSETS	$	2,410.5	$	2,319.0
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	86.8	$	104.6
Contract liabilities	49.5		46.3
Accrued expenses	230.5		209.4
Income taxes payable	2.3		0.4
Short-term debt	168.3		101.2
Current maturities of long-term debt	10.4		7.2
Liabilities of discontinued operations	159.8		115.8
Total current liabilities	707.6		584.9
Long-term debt	238.0		304.0
Deferred and other income taxes	19.1		23.5
Other long-term liabilities	717.6		746.7
Liabilities of discontinued operations	—		30.7
Total long-term liabilities	974.7		1,104.9
Commitments and contingent liabilities (Note 15)
Equity:
Common stock (52,855,255 and 45,304,445 issued and outstanding at July 3, 2021, respectively, and 52,704,973 and 45,032,325 issued and outstanding at December 31, 2020, respectively)	0.5		0.5
Paid-in capital	1,321.2		1,319.9
Retained deficit	(399.8)		(488.1)
Accumulated other comprehensive income	250.6		248.5
Common stock in treasury (7,550,810 and 7,672,648 shares at July 3, 2021 and December 31, 2020, respectively)	(444.3)		(451.6)
Total equity	728.2		629.2
TOTAL LIABILITIES AND EQUITY	$	2,410.5	$	2,319.0

The accompanying notes are an integral part of these statements.

4

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in millions)

	Three months ended July 3, 2021
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at April 3, 2021	$	0.5	$	1,315.8	$	(461.3)	$	251.2	$	(445.4)	$	660.8
Net income	—		—		61.5		—		—		61.5
Other comprehensive loss, net	—		—		—		(0.6)		—		(0.6)
Incentive plan activity	—		3.0		—		—		—		3.0
Long-term incentive compensation expense	—		3.6		—		—		—		3.6
Restricted stock unit vesting	—		(1.2)		—		—		1.1		(0.1)
Balance at July 3, 2021	$	0.5	$	1,321.2	$	(399.8)	$	250.6	$	(444.3)	$	728.2

	Six months ended July 3, 2021
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at December 31, 2020	$	0.5	$	1,319.9	$	(488.1)	$	248.5	$	(451.6)	$	629.2
Net income	—		—		88.3		—		—		88.3
Other comprehensive income, net	—		—		—		2.1		—		2.1
Incentive plan activity	—		6.8		—		—		—		6.8
Long-term incentive compensation expense	—		6.6		—		—		—		6.6
Restricted stock unit vesting	—		(12.1)		—		—		7.3		(4.8)
Balance at July 3, 2021	$	0.5	$	1,321.2	$	(399.8)	$	250.6	$	(444.3)	$	728.2

	Three months ended June 27, 2020
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at March 28, 2020	$	0.5	$	1,298.5	$	(562.6)	$	231.4	$	(452.7)	$	515.1
Net income	—		—		27.1		—		—		27.1
Other comprehensive income, net	—		—		—		3.9		—		3.9
Incentive plan activity	—		2.9		—		—		—		2.9
Long-term incentive compensation expense	—		3.1		—		—		—		3.1
Restricted stock unit vesting	—		(1.1)		—		—		1.1		—
Balance at June 27, 2020	$	0.5	$	1,303.4	$	(535.5)	$	235.3	$	(451.6)	$	552.1

	Six months ended June 27, 2020
	Common Stock		Paid-In Capital		Retained Deficit		Accum. Other Comprehensive Income		Common Stock In Treasury		SPX Corporation Shareholders’ Equity
Balance at December 31, 2019	$	0.5	$	1,302.4	$	(584.8)	$	244.3	$	(460.0)	$	502.4
Impact of adoption of ASU 2016-13 - See Note 2	—		—		(0.5)		—		—		(0.5)
Net income	—		—		49.8		—		—		49.8
Other comprehensive loss, net	—		—		—		(9.0)		—		(9.0)
Incentive plan activity	—		7.6		—		—		—		7.6
Long-term incentive compensation expense	—		6.1		—		—		—		6.1
Restricted stock unit vesting	—		(12.7)		—		—		8.4		(4.3)
Balance at June 27, 2020	$	0.5	$	1,303.4	$	(535.5)	$	235.3	$	(451.6)	$	552.1

The accompanying notes are an integral part of these statements.

5

SPX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

	Six months ended
	July 3, 2021		June 27, 2020
Cash flows from (used in) operating activities:
Net income	$	88.3	$	49.8
Less: Income from discontinued operations, net of tax	54.6		25.1
Income from continuing operations	33.7		24.7
Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities:
Special charges, net	1.4		1.3
Gain on change in fair value of equity security	(7.4)		(5.3)
Deferred and other income taxes	2.3		11.0
Depreciation and amortization	20.1		13.8
Pension and other employee benefits	3.0		3.6
Long-term incentive compensation	6.1		6.4
Other, net	3.2		1.8
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable and other assets	15.6		52.2
Inventories	(6.0)		(27.2)
Accounts payable, accrued expenses and other	(31.1)		(90.4)
Cash spending on restructuring actions	(2.0)		(1.8)
Net cash from (used in) continuing operations	38.9		(9.9)
Net cash from discontinued operations	40.0		36.2
Net cash from operating activities	78.9		26.3
Cash flows from (used in) investing activities:
Proceeds from company-owned life insurance policies, net	3.9		1.1
Business acquisitions, net of cash acquired	(81.9)		—
Capital expenditures	(4.2)		(8.3)
Net cash used in continuing operations	(82.2)		(7.2)
Net cash used in discontinued operations	(1.2)		(1.1)
Net cash used in investing activities	(83.4)		(8.3)
Cash flows from (used in) financing activities:
Borrowings under senior credit facilities	102.0		178.7
Repayments under senior credit facilities	(94.9)		(88.7)
Borrowings under trade receivables financing arrangement	132.0		65.0
Repayments under trade receivables financing arrangement	(134.0)		(30.0)
Net repayments under other financing arrangements	—		(1.4)
Payment of contingent consideration	—		(1.5)
Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options	(4.2)		(2.3)
Net cash from continuing operations	0.9		119.8
Net cash used in discontinued operations	—		—
Net cash from financing activities	0.9		119.8
Change in cash and equivalents due to changes in foreign currency exchange rates	4.4		(2.3)
Net change in cash and equivalents	0.8		135.5
Consolidated cash and equivalents, beginning of period	68.3		54.7
Consolidated cash and equivalents, end of period	$	69.1	$	190.2

The accompanying notes are an integral part of these statements.

6

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(1)    BASIS OF PRESENTATION

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

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information normally required by accounting principles generally accepted in the United States (“GAAP”) can be condensed or omitted. The financial statements represent our accounts after the elimination of intercompany transactions and, in our opinion, include the adjustments (consisting only of normal and recurring items) necessary for their fair presentation. Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only (see Note 3 for information on discontinued operations).

We account for investments in unconsolidated companies where we exercise significant influence but do not have control using the equity method. In determining whether we are the primary beneficiary of a variable interest entity (“VIE”), we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties to determine which party has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and which party has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. All of our VIEs are considered immaterial, individually and in aggregate, to our condensed consolidated financial statements.

Agreement for Sale of Transformers Solutions Business

On June 8, 2021, we entered into a definitive agreement to sell our SPX Transformer Solutions, Inc. subsidiary (“Transformer Solutions”), a business that engineers, designs, manufactures, and services transformers for the U.S. power transmission and distribution market, to GE-Prolec Transformers, Inc. and Prolec GE Internacional, S. de R.L. de C.V. for cash proceeds of $645.0. The sale is subject to normal closing conditions and a potential adjustment to the sales price based on cash, debt, and working capital at the date of closing, with the closing expected to occur in the fourth quarter of 2021. After the sale of Transformer Solutions, we will have only a limited presence in the power generation markets and will focus our efforts and investments on the HVAC and detection and measurement markets. Historically, Transformer Solutions’ operations have had a significant impact on our consolidated financial results, with revenues totaling approximately 25% of our total consolidated revenues. As we no longer will have a consequential presence in the power generation markets, and given its significance to our historical consolidated financial results, we have concluded that the sale of Transformer Solutions represents a strategic shift. Accordingly, we have classified the business as a discontinued operation in the accompanying condensed consolidated financial statements. See Note 3 for additional details.

Change in Segment Reporting Structure

As noted above, Transformer Solutions is now being reported as a discontinued operation within the accompanying condensed consolidated financial statements. In addition, the remaining operations of the Engineered Solutions reportable segment, with annual income representing less than 5% of the total annual income of our reportable segments, are being reported within our HVAC reportable segment, as these operations are now being managed, and evaluated by our Chief Operating Decision Maker, as part of our HVAC cooling business.

Wind-Down of the SPX Heat Transfer Business

As a continuation of our strategic shift away from power-generation markets, during the fourth quarter of 2020, we completed the wind-down of the SPX Heat Transfer business (“Heat Transfer”), which included providing all products and services on the business’s remaining contracts with customers. As a result, we are reporting Heat Transfer as a discontinued operation in the accompanying condensed consolidated financial statements. See Note 3 for additional details.

Acquisition of ULC

On September 2, 2020, we completed the acquisition of ULC Robotics (“ULC”), a leading developer of robotic systems, machine learning applications, and inspection technology for the energy, utility, and industrial markets, for cash proceeds of $89.2, net of cash acquired of $4.0. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $45.0, with payments scheduled to be made upon successful achievement of certain operational and financial performance milestones. The estimated fair value of such contingent consideration is $24.3, which is reflected as a liability in our condensed consolidated balance sheets as of July 3, 2021 and December 31, 2020. The post-acquisition operating results of ULC are reflected within our Detection and Measurement reportable segment.

7

Acquisition of Sensors & Software

On November 11, 2020, we completed the acquisition of Sensors & Software Inc. (“Sensors & Software”), a leading manufacturer and distributor of ground penetrating radar products used for locating underground utilities, detecting unexploded ordinances, and geotechnical and geological investigations, for cash proceeds of $15.5, net of cash acquired of $0.3. Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to $4.0, with payment scheduled to be made in 2021 upon successful achievement of a financial performance milestone during the twelve months following the date of acquisition. The estimated fair value of such contingent consideration is $0.7, which is reflected as a liability in the accompanying condensed consolidated balance sheets as of July 3, 2021 and December 31, 2020. The post-acquisition operating results of Sensors & Software are reflected within our Detection and Measurement reportable segment.

Acquisition of Sealite

On April 19, 2021, we completed the acquisition of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, “Sealite”). Sealite is a leader in the design and manufacture of marine and aviation Aids to Navigation products. We purchased Sealite for cash proceeds of $81.6, net of cash acquired of $2.3. The post-acquisition results of Sealite are reflected within our Detection and Measurement Reportable segment.

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

Impact of the Coronavirus Disease (the “COVID-19 pandemic”)

We experienced adverse impacts of the COVID-19 pandemic during the first half of 2020 with diminishing impacts in the second half of 2020 and through the first half of 2021. There have been no indications that the COVID-19 pandemic has resulted in a material decline in the carrying value of any assets, or a material change in the estimate of any contingent amounts, recorded in our condensed consolidated balance sheet as of July 3, 2021. However, there is uncertainty as to the duration and overall impact of the COVID-19 pandemic, which could result in an adverse material change in a future period to the estimates we have made for the valuation of assets and contingent amounts.

Other

Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from these estimates. The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2020. Interim results are not necessarily indicative of full year results.

We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length. Our fourth quarter ends on December 31. The interim closing dates for the first, second and third quarters of 2021 are April 3, July 3 and October 2, compared to the respective March 28, June 27 and September 26, 2020 dates. We had five more days in the first quarter of 2021 and will have six fewer days in the fourth quarter of 2021 than in the respective 2020 periods. It is not practicable to estimate the impact of the five additional days on our consolidated operating results for the six months ended July 3, 2021, when compared to the consolidated operating results for the 2020 respective period.

(2)    NEW ACCOUNTING PRONOUNCEMENTS

The following is a summary of new accounting pronouncements that apply or may apply to our business.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13. ASU 2016-13 changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, based on historical experience, current conditions and reasonable and supportable forecasts. The requirements of ASU 2016-13 are to be applied on a modified retrospective basis, which entails recognizing the initial effect of adoption in retained earnings. We adopted ASU 2016-13 on January 1, 2020, which resulted in an increase of our retained deficit of $0.5.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-

8

date loss limitations and changes in tax laws, and clarifying the accounting for the step-up in the tax basis of goodwill. The transition requirements are primarily prospective and the effective date is for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. We adopted this guidance on January 1, 2021, with no material impact on our condensed consolidated financial statements.

The London Interbank Offered Rate (“LIBOR”) is scheduled to be discontinued on June 30, 2023, with some tenors ceasing on December 31, 2021. In an effort to address the various challenges created by such discontinuance, the FASB issued two amendments to existing guidance, ASU No. 2020-04 and No. 2021-01, Reference Rate Reform. The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, etc.) necessitated by the reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by the reference rate reform. Application of the guidance in the amendments is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. We are currently evaluating the impacts of reference rate reform and the new guidance on our condensed consolidated financial statements.

(3)    ACQUISITIONS AND DISCONTINUED OPERATIONS

As indicated in Note 1, on September 2, 2020, November 11, 2020 and April 19, 2021, we completed the acquisitions of ULC, Sensors & Software and Sealite, respectively. The pro forma effects of these acquisitions are not material to the condensed consolidated results of operations for the three and six months ended June 27, 2020.

Agreement to Sell Transformer Solutions Business

As discussed in Note 1, on June 8, 2021, we entered into a definitive agreement to sell Transformer Solutions and, in connection with such, are reporting the business as a discontinued operation in the accompanying condensed consolidated financial statements.

Major line items constituting pre-tax income and after-tax income of Transformer Solutions for the three and six months ended July 3, 2021 and June 27, 2020 are shown below:

	Three months ended				Six months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Revenues	$	108.5	$	113.9	$	219.1	$	224.5
Costs and expenses:
Cost of product sold	87.3		88.5		176.7		175.1
Selling, general and administrative	8.6		8.2		18.1		16.0
Other income, net	0.2		0.4		—		0.7
Income before income tax	12.8		17.6		24.3		34.1
Income tax (provision) benefit (1)	29.9		(4.1)		27.0		(7.8)
Income from discontinued operations, net of tax	$	42.7	$	13.5	$	51.3	$	26.3

___________________________

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

9

The assets and liabilities of Transformer Solutions have been classified as assets and liabilities of discontinued operations as of July 3, 2021 and December 31, 2020. The major line items constituting Transformer Solutions assets and liabilities as of July 3, 2021 and December 31, 2020 are shown below:

	July 3, 2021		December 31, 2020
ASSETS
Accounts receivable, net	$	49.3	$	50.9
Contract assets	45.1		48.6
Inventories, net	21.0		18.9
Other current assets	1.7		3.2
Property, plant and equipment:
Land	6.4		6.5
Buildings and leasehold improvements	62.4		63.1
Machinery and equipment	141.9		141.1
	210.7		210.7
Accumulated depreciation	(134.3)		(131.0)
Property, plant and equipment, net	76.4		79.7
Goodwill	131.3		131.3
Other assets	8.1		8.1
Total assets - discontinued operations	$	332.9	$	340.7
LIABILITIES
Accounts payable	$	37.3	$	34.1
Contract liabilities	67.3		57.2
Accrued expenses	24.2		24.5
Deferred and other income taxes	21.9		21.6
Other long-term liabilities	9.1		9.1
Total liabilities - discontinued operations	$	159.8	$	146.5

10

Wind-Down of the Heat Transfer Business

As discussed in Note 1, we completed the wind-down of Heat Transfer in the fourth quarter of 2020. As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all prior periods presented.

Major line items constituting pre-tax income (loss) and after-tax income (loss) of Heat Transfer for the three and six months ended June 27, 2020, are shown below:

	Three months ended		Six months ended
	June 27, 2020		June 27, 2020
Revenues	$	1.3	$	3.2
Cost of product sold	1.0		2.5
Selling, general and administrative	0.2		0.2
Special charges, net	0.4		0.4
Income (loss) before income tax	(0.3)		0.1
Income tax provision	—		—
Income (loss) from discontinued operations, net of tax	$	(0.3)	$	0.1

We recognized net gains of $4.1 and $3.3 during the three and six months ended July 3, 2021 and a net loss of $1.3 during the three and six months ended June 27, 2020 within “Gain (loss) on disposition of discontinued operations, net of tax” resulting primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior businesses classified as discontinued operations.

(4)    REVENUES FROM CONTRACTS

Disaggregated Revenues

We disaggregate revenue from contracts with customers by major product line and based on the timing of recognition for each of our reportable segments and our other operating segment, as we believe such disaggregation best depicts how the nature, amount, timing, and uncertainty of our revenues and cash flows are affected by economic factors, with such disaggregation presented below for the three and six months ended July 3, 2021 and June 27, 2020:

	Three months ended July 3, 2021
Reportable Segments and Other	HVAC		Detection and Measurement		Other		Total
Major product lines
Package and process cooling equipment and services	$	111.5	$	—	$	—	$	111.5
Boilers, comfort heating, and ventilation	73.9		—		—		73.9
Underground locators, inspection and rehabilitation  equipment, and robotic systems	—		65.9		—		65.9
Signal monitoring, obstruction lighting, and bus fare collection systems	—		45.3		—		45.3
South African projects	—		—		0.1		0.1
	$	185.4	$	111.2	$	0.1	$	296.7
Timing of Revenue Recognition
Revenues recognized at a point in time	$	166.3	$	101.5	$	—	$	267.8
Revenues recognized over time	19.1		9.7		0.1		28.9
	$	185.4	$	111.2	$	0.1	$	296.7

11

	Six months ended July 3, 2021
Reportable Segments and Other	HVAC		Detection and Measurement		Other		Total
Major product lines
Package and process cooling equipment and services	$	213.2	$	—	$	0.2	$	213.4
Boilers, comfort heating, and ventilation	147.8		—		—		147.8
Underground locators, inspection and rehabilitation  equipment, and robotic systems	—		133.3		—		133.3
Signal monitoring, obstruction lighting, and bus fare collection systems	—		89.5		—		89.5
South African projects	—		—		0.6		0.6
	$	361.0	$	222.8	$	0.8	$	584.6
Timing of Revenue Recognition
Revenues recognized at a point in time	$	320.7	$	198.0	$	—	$	518.7
Revenues recognized over time	40.3		24.8		0.8		65.9
	$	361.0	$	222.8	$	0.8	$	584.6

	Three months ended June 27, 2020
Reportable Segments and Other	HVAC		Detection and Measurement		Other		Total
Major product lines
Package and process cooling equipment and services	$	109.5	$	—	$	0.4	$	109.9
Boilers, comfort heating, and ventilation	55.7		—		—		55.7
Underground locators and inspection and rehabilitation  equipment	—		47.3		—		47.3
Signal monitoring, obstruction lighting, and bus fare collection systems	—		44.8		—		44.8
South African projects	—		—		0.3		0.3
	$	165.2	$	92.1	$	0.7	$	258.0