INDEBTEDNESS

9 Months Ended

Oct. 01, 2011

INDEBTEDNESS

INDEBTEDNESS

(10)        INDEBTEDNESS

The following summarizes our debt activity (both current and non-current) for the nine months ended October 1, 2011:

	December 31, 2010		Borrowings		Repayments			Other (6)		October 1, 2011
Domestic revolving loan facility	$	—	$	660.0	$	(660.0	)	$	—	$	—
6.875% senior notes (1)	600.0		—		—			—		600.0
7.625% senior notes	500.0		—		—			—		500.0
7.50% senior notes (2)	28.2		—		(28.2		)	—		—
6.25% senior notes (3)	21.3		—		(21.3		)	—		—
Trade receivables financing arrangement (4)	—		96.0		(50.0		)	—		46.0
Other indebtedness (5)	48.1		3.8		(2.3		)	6.0		55.6
Total debt	1,197.6		$	759.8	$	(761.8	)	$	6.0	1,201.6
Less: short-term debt	36.3									85.5
Less: current maturities of long-term debt	50.8									1.3
Total long-term debt	$	1,110.5								$	1,114.8

(1)In August 2010, we issued $600.0 of 6.875% senior notes that mature in 2017. The proceeds from the issuance were used to repay the remaining balance ($562.5) under the term loan of our then-existing senior credit facilities. In connection with the early repayment of the term loan, we also terminated the related interest rate protection agreements. Cost associated with the early repayment of the term loan and the termination of the interest rate protection agreements totaled $25.6, including $1.1 for the write-off of deferred financing costs, $0.2 for fees related to the early repayment of the term loan, and $24.3 to settle the interest rate protection agreements.

(2)These notes were redeemed in full in January 2011.

(3)These notes were redeemed in full in June 2011.

(4)Under this arrangement, we can borrow, on a continuous basis, up to $130.0, as available.

(5)Includes balances under a purchase card program of $38.8 and $36.1 at October 1, 2011 and December 31, 2010, respectively.

(6)“Other” includes debt assumed and foreign currency translation on any debt instruments denominated in currencies other than the U.S. dollar.

New Senior Credit Facilities

On June 30, 2011, we entered into new senior credit facilities with a syndicate of lenders that replaced our then-existing senior credit facilities. The new senior credit facilities provide for committed senior secured financing of $1,800.0, consisting of the following (each with a final maturity of June 30, 2016):

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

·A global revolving credit facility, available for loans in U.S. Dollars, Euros, British Pounds and other currencies in an aggregate principal amount up to the equivalent of $300.0;

·A participation foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount in various currencies up to the equivalent of $1,100.0; and

·A bilateral foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount in various currencies up to the equivalent of $100.0.

In addition, the lenders in the syndicate under the new senior credit facilities generally are comparable to those that existed for the previous senior credit facilities.

The new senior credit facilities allow additional commitments to add an incremental term loan facility and/or increase the commitments in respect of the domestic revolving credit facility, the global revolving credit facility, the participation foreign credit instrument facility and/or the bilateral foreign credit instrument facility by up to an aggregate principal amount of $1,000.0.

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

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

The letters of credit under the domestic revolving credit facility are stand-by letters of credit requested by any borrower on behalf of itself or any of its subsidiaries or certain joint ventures. The foreign credit instrument facility is used to issue foreign credit instruments, including bank undertakings to support our foreign operations.

At October 1, 2011, we had $83.8 and $654.5 of outstanding letters of credit issued under our revolving credit and our foreign trade facilities of our senior credit agreement, respectively. In addition, we had $2.9 of letters of credit outstanding under separate arrangements in China and South Africa.

The interest rates applicable to loans under our new senior credit facilities are, at our option, equal to either (i) an alternate base rate (the higher of (a) the federal funds effective rate plus 0.5%, (b) the prime rate of Bank of America, N.A., and (c) the one-month LIBOR rate plus 1.0%) or (ii) 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 on such date). We may elect interest periods of one, two, three or six months for Eurodollar borrowings. The fees charged and the interest rate margins applicable to Eurodollar and alternate base rate loans are (all on a per annum basis) as follows:

Consolidated Leverage Ratio	Domestic Revolving Commitment Fee		Global Revolving Commitment Fee		Letter of Credit Fee		Foreign Credit Commitment Fee and Bilateral Foreign Credit Fee		Foreign Credit Instrument Fee and Bilateral Foreign Credit Fee		LIBOR Rate Loans		ABR Loans
Greater than or equal to 3.00 to 1.0	0.40	%	0.40	%	2.00	%	0.40	%	1.25	%	2.00	%	1.00	%
Between 2.00 to 1.0 and 3.00 to 1.0	0.35	%	0.35	%	1.875	%	0.35	%	1.125	%	1.875	%	0.875	%
Between 1.50 to 1.0 and 2.00 to 1.0	0.30	%	0.30	%	1.75	%	0.30	%	1.00	%	1.75	%	0.75	%
Between 1.00 to 1.0 and 1.50 to 1.0	0.275	%	0.275	%	1.50	%	0.275	%	0.875	%	1.50	%	0.50	%
Less than 1.00 to 1.0	0.25	%	0.25	%	1.25	%	0.25	%	0.75	%	1.25	%	0.25	%

The weighted-average interest rate of our outstanding borrowings under our senior credit facilities was approximately 2.3% at October 1, 2011.

The fees for bilateral foreign credit commitments are as specified above for foreign credit commitments, unless otherwise agreed with the bilateral foreign issuing lender. We also pay fronting fees on the outstanding amounts of letters of credit and foreign credit instruments (in the participation facility) at the rates of 0.125% per annum and 0.20% per annum, respectively.

Our new senior credit facilities require mandatory prepayments in amounts equal to the net proceeds from the sale or other disposition of, including from any casualty to, or governmental taking of, property in excess of specified values (other than in the ordinary course of business and subject to other exceptions). Mandatory prepayments will be applied to repay amounts (or cash collateralize letters of credit) outstanding under the global revolving credit facility and the domestic revolving credit facility (without reducing the commitments thereunder). No prepayment is required generally to the extent the net proceeds are reinvested in permitted acquisitions, permitted investments or assets to be used in our business within 360 days of the receipt of such proceeds.

We may voluntarily prepay loans under our new 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 new senior credit facilities is guaranteed by:

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

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

Indebtedness under our new senior credit facilities is secured by a first priority pledge and security interest in 100% of the capital stock of our domestic subsidiaries (with certain exceptions) held by us or our domestic subsidiary guarantors and 65% of the capital stock of our material first tier foreign subsidiaries (with certain exceptions). If our corporate credit rating is “Ba2” or less (or not rated) by Moody’s and “BB” or less (or not rated) by S&P, then we and our domestic subsidiary guarantors are required to grant security interests, mortgages and other liens on substantially all of our and their assets. If our corporate credit rating is “Baa3” or better by Moody’s or “BBB-” or better by S&P and no defaults exist, then all collateral security will be released and the indebtedness under our senior credit facilities will be unsecured.

Our new senior credit facilities require that we maintain:

·A Consolidated Interest Coverage Ratio (as defined in the credit agreement generally as the ratio of consolidated adjusted EBITDA for the four fiscal quarters ended on such date to consolidated 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 by us).

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

We are permitted under our senior credit facilities to repurchase our capital stock and pay cash dividends in an unlimited amount if our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) less than 2.50 to 1.00. If our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) greater than or equal to 2.50 to 1.00, the aggregate amount of such repurchases and dividend declarations cannot exceed (A) $100.0 in any fiscal year plus (B) an additional amount for all such repurchases and dividend declarations made after June 30, 2011 equal to the sum of (i) $300.0 and (ii) a positive amount equal to 50% of cumulative Consolidated Net Income (as defined in the credit agreement generally as consolidated net income subject to certain adjustments solely for the purposes of determining this basket) during the period from July 1, 2011 to the end of the most recent fiscal quarter preceding the date of such repurchase or dividend declaration for which financial statements have been (or were required to be) delivered (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit).

During the third quarter of 2011, we were in compliance with all covenant provisions of our new senior credit facilities and our senior notes.

Modifications to Senior Credit Facilities

On October 5, 2011, we modified our existing senior credit facilities in order to provide additional committed senior secured financing in an aggregate amount of $800.0, consisting of the following term loans (collectively, the “Term Loans”):

· A delayed draw incremental term loan, in an aggregate principal amount of $300.0, repayable in full on the date that is 18 months after the date of its funding; and

· A delayed draw incremental term loan, in an aggregate principal amount of $500.0, repayable in quarterly installments (with annual repayments, as a percentage of the initial principal amount, of 0% for 2011 and 2012, 5% for 2013, 15% for 2014 and 20% for 2015, together with a single quarterly payment of 5% at the end of the first fiscal quarter of 2016), with the remaining balance repayable in full on June 30, 2016.

We intend to use the proceeds of the Term Loans to finance the Clyde Union acquisition and also may repay debt outstanding

at the time of funding.

We may borrow against the Term Loans in a single drawing on or before December 31, 2011.  If we do not consummate the Clyde Union acquisition substantially contemporaneously with such borrowing, we are required to maintain the proceeds of the Term Loans in a cash collateral account with the administrative agent until used for the Clyde Union acquisition.  The ability to draw on the Term Loans is subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties. We are required to repay the Term Loans in full if we do not consummate the Clyde Union acquisition.

The interest rates applicable to the Term Loans are calculated in a manner consistent with our existing senior credit facilities. The interest rate margins applicable to LIBOR and alternate base rate Term Loans are (all on a per annum basis) as follows:

Consolidated Leverage Ratio	LIBOR Rate Loans		ABR Loans
Greater than or equal to 3.00 to 1.0	2.250	%	1.250	%
Between 2.00 to 1.0 and 3.00 to 1.0	2.125	%	1.125	%
Between 1.50 to 1.0 and 2.00 to 1.0	2.000	%	1.000	%
Between 1.00 to 1.0 and 1.50 to 1.0	1.750	%	0.750	%
Less than 1.00 to 1.0	1.500	%	0.500	%

We will pay an upfront fee in an amount equal to an approximate average of 0.5% of the commitment of each lender providing a portion of the Term Loans. In addition, we are required to pay a commitment fee in an amount equal to 0.275% per annum of the daily unused amount of the commitment of the Term Loans, which will accrue from October 5, 2011 through the date on which Term Loan amounts are borrowed (or the commitment is terminated).

Except as noted below, the Term Loans require mandatory prepayments in circumstances consistent with the existing credit facilities. Mandatory prepayments will be applied, first, to repay any amounts outstanding under the Term Loans and any other incremental term loans that we may have outstanding in the future, in the manner and order selected by us, and after the Term Loans and any such incremental term loans have been repaid in full, and second, to repay amounts (or cash collateralize letters of credit) outstanding under the global revolving credit facility and the domestic revolving credit facility (without reducing the commitments thereunder). As with the existing credit facilities, no prepayment is required generally to the extent the net proceeds are reinvested in permitted acquisitions, permitted investments or assets to be used in our business within 360 days of the receipt of such proceeds.  In addition, upon the incurrence of unsecured indebtedness in the form of a private or public note or bond issuance, the net proceeds of such indebtedness will be applied to the extent necessary to repay in full any amounts outstanding under the $300.0 term loan.

Consistent with the existing senior credit facilities, we may voluntarily prepay the Term Loans, in whole or in part, without premium or penalty. Any prepayment of the Term Loans will be subject to reimbursement of the lenders’ breakage costs in the case of a prepayment of LIBOR rate borrowings other than on the last day of the relevant interest period.

The Term Loans are guaranteed, secured, and subject to representations, warranties, covenants and events of default in a manner consistent with the existing senior credit facilities.

The existing credit facilities include a foreign trade facility and bilateral foreign trade facilities, each available for performance letters of credit and guarantees, in an aggregate principal amount in various currencies up to the equivalent of $1,100.0 and $100.0, respectively. As part of our modification of the existing senior credit facilities, we obtained a $100.0 commitment for an additional bilateral foreign trade facility, thereby increasing the total bilateral trade facilities to an aggregate principal amount in various currencies up to the equivalent of $200.0.  Effective upon this increase in the bilateral foreign trade facilities, we reduced our foreign credit commitments on a pro rata basis under the foreign trade facility by an aggregate amount of $100.0, thereby reducing the foreign trade facilities to an aggregate principal amount in various currencies up to the equivalent of $1,000.0.