SPX CORP - FORM 10-K - February 24, 2017

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - SPX CORP	q42016exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - SPX CORP	q42016exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - SPX CORP	q42016exhibit311.htm
EX-23.1 - EXHIBIT 23.1 - SPX CORP	q42016exhibit231.htm
EX-21.1 - EXHIBIT 21.1 - SPX CORP	q42016exhibit211.htm
EX-10.49 - EXHIBIT 10.49 - SPX CORP	q42016exhibit1049.htm
EX-10.36 - EXHIBIT 10.36 - SPX CORP	q42016exhibit1036.htm
EX-10.4 - EXHIBIT 10.4 - SPX CORP	q42016exhibit104.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K



(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2016, or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to .

Commission file number: 1-6948

SPX Corporation

(Exact Name of Registrant as Specified in Its Charter)



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

13320-A Ballantyne Corporate Place

Charlotte, NC 28277

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (980) 474-3700

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



Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01	New York Stock Exchange

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

None

(Title of Class)

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

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

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

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

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

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



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

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

The aggregate market value of the voting stock held by non-affiliates of the registrant as of July 1, 2016 was $597,183,936. The determination of affiliate status for purposes of the foregoing calculation is not necessarily a conclusive determination for other purposes.

____________________________________________________________________________

The number of shares outstanding of the registrant’s common stock as of February 17, 2017 was 42,225,284.

____________________________________________________________________________

Documents incorporated by reference: Portions of the Registrant’s proxy statement for its Annual Meeting to be held on May 8, 2017 are incorporated by reference into Part III of this Annual Report on Form 10-K.

SPX CORPORATION AND SUBSIDIARIES

FORM 10-K TABLE OF CONTENTS



Part I
Item 1 – Business	1
Item 1A – Risk Factors	6
Item 1B – Unresolved Staff Comments	18
Item 2 – Properties	18
Item 3 – Legal Proceedings	18
Item 4 – Mine Safety Disclosures	18

Part II
Item 5 –Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6 – Selected Financial Data	21
Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A – Quantitative and Qualitative Disclosures About Market Risk	51
Item 8 – Financial Statements and Supplementary Data	52
Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015 and 2014	54
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2016, 2015 and 2014	55
Consolidated Balance Sheets as of December 31, 2016 and 2015	56
Consolidated Statements of Equity for the Years Ended December 31, 2016, 2015 and 2014	57
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014	58
Notes to Consolidated Financial Statements	60
Item 9 – Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	111
Item 9A – Controls and Procedures	111
Item 9B – Other Information	113

Part III
Item 10 – Directors, Executive Officers and Corporate Governance	114
Item 11 – Executive Compensation	116
Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	116
Item 13 – Certain Relationships and Related Transactions, and Director Independence	116
Item 14 – Principal Accountant Fees and Services	116

Part IV
Item 15 – Exhibits and Financial Statement Schedules	117
Item 16 – Form 10-K Summary	118

Signatures	119
Index to Exhibits	120

P A R T I

ITEM 1. Business

(All currency and share amounts are in millions)

Forward-Looking Information

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

All the forward-looking statements are qualified in their entirety by reference to the factors discussed under the heading “Risk Factors,” in this filing and any subsequent filing with the U.S. Securities and Exchange Commission (“SEC”), as well as in any documents incorporated by reference that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements. We caution you that these risk factors may not be exhaustive. We operate in a continually changing business environment and frequently enter into new businesses and product lines. We cannot predict these new risk factors, and we cannot assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, you should not rely on forward-looking statements as a prediction of actual results. We disclaim any responsibility to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.

Business

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

On September 26, 2015 (the “Distribution Date”), we completed the spin-off to our stockholders (the “Spin-Off”) of all the outstanding shares of SPX FLOW, Inc. (“SPX FLOW”), a wholly-owned subsidiary of SPX Corporation (“SPX”) prior to the Spin-Off, which at the time of the Spin-Off held the businesses comprising our Flow Technology reportable segment, our Hydraulic Technologies business, and certain of our corporate subsidiaries (collectively, the “FLOW Business”). On the Distribution Date, each of our stockholders of record as of the close of business on September 16, 2015 (the “Record Date”) received one share of common stock of SPX FLOW for every share of SPX common stock held as of the Record Date. SPX FLOW is now an independent public company trading under the symbol “FLOW” on the New York Stock Exchange. Following the Spin-Off, SPX’s common stock continues to be listed on the New York Stock Exchange and trades under the ticker symbol, “SPXC”.

Prior to the Spin-Off, our businesses serving the power generation markets had a major impact on the consolidated financial results of SPX. In recent years, these businesses have experienced significant declines in revenues and profitability associated with weak demand and increased competition within the global power generation markets. Based on a review of our post-spin portfolio and the belief that a recovery within the power generation markets was unlikely in the foreseeable future, we decided that our strategic focus would be on our (i) scalable growth businesses that serve the heating and ventilation (“HVAC”) and detection and measurement markets and (ii) power transformer and process cooling systems businesses. As a result, we have been reducing our exposure to the power generation

markets as indicated by the dispositions of our dry cooling and Balcke Dürr businesses during the first and fourth quarters of 2016, respectively. See Management’s Discussion and Analysis of Financial Condition and Notes 1 and 4 to our consolidated financial statements for further discussion of these dispositions.

In recognition of our shift away from the power generation markets, we changed the name of our Power reportable segment to “Engineered Solutions,” effective in the fourth quarter of 2016.

Unless otherwise indicated, amounts provided in Part I pertain to continuing operations only (see Notes 1 and 4 to our consolidated financial statements for information on discontinued operations).

We are a diversified, global supplier of infrastructure equipment serving the HVAC, detection and measurement, power transmission and generation, and industrial markets. With operations in approximately 15 countries and over 5,000 employees, we offer a wide array of highly engineered infrastructure products with strong brands.

HVAC solutions offered by our businesses include package cooling towers, residential and commercial boilers, comfort heating, and ventilation products. Our market leading brands, coupled with our commitment to continuous innovation and focus on our customers’ needs, enables our HVAC cooling and heating businesses to serve an expanding number of industrial, commercial and residential customers. Growth for our HVAC businesses will be driven by innovation, increased scalability, and our ability to meet the needs of broader markets.

Our detection and measurement product lines encompass underground pipe and cable locators and inspection equipment, fare collection systems, communication technologies, and specialty lighting. Our detection and measurement solutions enable utilities, telecommunication providers and regulators, and municipalities and transit authorities to build, monitor and maintain vital infrastructure. Our technology and decades of experience have afforded us a strong position in specific detection and measurement markets. We intend to expand our portfolio of specialized products through new, innovative hardware and software solutions in an attempt to (i) further capitalize on the detection and measurement markets we currently serve and (ii) expand the number of markets that we serve.

Within our engineered solutions platform, we are a leading manufacturer of medium and large power transformers, as well as process cooling equipment and heat exchangers. These solutions play a critical role in electricity transmission and generation. Specifically, our power transformers play an integral role in the North American power grid, while our process cooling equipment and heat exchangers assist our customers in meeting their power generation and industrial needs. The businesses within the platform are committed to driving value through continued focus on operational and engineering efficiencies.

Reportable Segments

We aggregate our operating segments into the following three reportable segments: HVAC, Detection and Measurement, and Engineered Solutions. The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment. In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification. Operating income or loss for each of our segments is determined before considering impairment and special charges, pension and postretirement expense, long-term incentive compensation and other indirect corporate expenses. This is consistent with the way our Chief Operating Decision Maker evaluates the results of each segment.

HVAC Reportable Segment

Our HVAC reportable segment had revenues of $509.5, $529.1 and $535.7 in 2016, 2015 and 2014, respectively, and backlog of $28.3 and $31.1 as of December 31, 2016 and 2015, respectively. Approximately 99% of the segment’s backlog as of December 31, 2016 is expected to be recognized as revenue during 2017. The segment engineers, designs, manufactures, installs and services cooling products for the HVAC and industrial markets, as well as heating and ventilation products for the residential and commercial markets. The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers. The segment primarily serves a North American customer base. Core brands for our cooling products include Marley and Recold, with the major competitors to these products being Baltimore Aircoil Company and Evapco. Our heating and ventilation products are sold under the Berko, Qmark, Fahrenheat, and Leading Edge brands, while our Marley-Wylain subsidiary sells Weil-McLain and Williamson-Thermoflo brands. Major competitors to these products are TPI Corporation, Quellet, King Electric, Systemair Mfg. LLC, Cadet Manufacturing Company, and Dimplex North America Ltd for heating products, Burnham Holdings, Inc, and Buderus for boiler products, and TPI Corporation, Broan-NuTone LLC and Airmaster Fan Company for ventilation products.

Detection and Measurement Reportable Segment

Our Detection and Measurement reportable segment had revenues of $226.4, $232.3 and $244.4 in 2016, 2015 and 2014, respectively, and backlog of $53.6 and $36.9 as of December 31, 2016 and 2015, respectively. Approximately 70% of the segment’s backlog as of December 31, 2016 is expected to be recognized as revenue during 2017. The segment engineers, designs, manufactures and installs underground pipe and cable locators and inspection equipment, bus fare collection systems, communication technologies, and specialty lighting. The primary distribution channels for the segment’s products are direct to customers and third-party distributors. The segment serves a global customer base, with a strong presence in North America and Europe. Core brands for our underground pipe and cable locators and inspection equipment are Radiodetection, Pearpoint, Dielectric, and Warren G-V, with the major competitors to these products being Vivax-Metrotech, Leica, Subsite, IPEK, IBAK, Cues, System Studies, and Ridgid. Our bus fare collection systems, communication technologies, and specialty lighting are sold under the Genfare, TCI and Flash Technology brand names, respectively. Major competitors to our bus fare collection systems include Scheidt & Bachmann, Trapeze Group, Init, and Vix Technology, while major competitors to our communication technologies products include Rohde & Schwarz, Thales Group, Saab Grintek, and LS Telcom. Lastly, major competitors of our specialty lighting products include H&P, TWR Lighting, Unimar, and ITL.

Engineered Solutions Reportable Segment

Our Engineered Solutions reportable segment had revenues of $736.4, $797.6 and $914.3 in 2016, 2015 and 2014, respectively, and backlog of $416.7 and $636.0 as of December 31, 2016 and 2015, respectively. Approximately 91% of the segment’s backlog as of December 31, 2016 is expected to be recognized as revenue during 2017. The segment engineers, designs, manufactures, installs and services transformers for the power transmission and distribution market, as well as process cooling equipment and rotating and stationary heat exchangers for the power generation and industrial markets. The primary distribution channels for the segment’s products are direct to customers and third-party representatives. The segment has a strong presence in North America and South Africa.

We sell transformers under the Waukesha brand name. Typical customers for this product line are publicly and privately held utilities. Our competitors in this market include ABB Ltd., GE-Prolec, Siemens, Hyundai Power Transformers, Delta Star Inc., Pennsylvania Transformer Technology, Inc., SGB-SMIT Group, Virginia Transformer Corporation, Howard Industries, Inc., and WEG S.A.

Our process cooling products and heat exchangers are sold under the brand names of SPX Cooling, Marley, Yuba, and Ecolaire, with major competitors to these products and service lines being Enexio, Hamon & Cie, Thermal Engineering International, Howden Group Ltd, Siemens AG, and Alstom SA.

Acquisitions

We did not acquire any businesses in 2016, 2015 or 2014. However, we regularly review and negotiate potential acquisitions in the ordinary course of business, some of which are or may be material.

Divestitures

We regularly review and negotiate potential divestitures in the ordinary course of business, some of which are or may be material. As a result of this continuous review, we determined that certain of our businesses would be better strategic fits with other companies or investors.

The following businesses were disposed of during 2016, 2015 and 2014:



Business	Year Disposed
Balcke Dürr*	2016
Dry Cooling	2016
SPX FLOW*	2015
Fenn LLC* (“Fenn”)	2014
SPX Precision Components* (“Precision Components”)	2014
Thermal Product Solutions* (“TPS”)	2014

___________________________________________________________________


*	Reflected as a discontinued operation for all periods presented.

In addition to the dispositions noted above, on January 7, 2014, we completed the sale of our 44.5% interest in EGS Electrical Group, LLC and Subsidiaries (“EGS”). Prior to the sale, we accounted for our investment in EGS under the equity method.

International Operations

We are a multinational corporation with operations in approximately 15 countries. Sales outside the United States were $237.1, $303.6 and $391.8 in 2016, 2015 and 2014, respectively.

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

Research and Development

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

We expensed $29.1, $28.6 and $30.2 in 2016, 2015 and 2014, respectively, of research activities relating to the development and improvement of our products.

Patents/Trademarks

We own approximately 164 domestic and 243 foreign patents (comprising approximately 213 patent “families”), including approximately 34 patents that were issued in 2016, covering a variety of our products and manufacturing methods. We also own a number of registered trademarks. Although in the aggregate our patents and trademarks are of considerable importance in the operation of our business, we do not consider any single patent or trademark to be of such importance that its absence would adversely affect our ability to conduct business as presently constituted. We are both a licensor and licensee of patents. For more information, please refer to “Risk Factors.”

Outsourcing and Raw Materials

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

We are subject to increases in the prices of many of our key raw materials, including petroleum-based products, steel and copper. In recent years, we have generally been able to offset increases in raw material costs. Occasionally, we are subject to long-term supplier contracts, which may increase our exposure to pricing fluctuations. We use forward contracts to manage our exposure on forecasted purchases of commodity raw materials (“commodity contracts”). See Note 12 to our consolidated financial statements for further information on commodity contracts.

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

Competition

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

Environmental Matters

See “MD&A — Critical Accounting Policies and Use of Estimates — Contingent Liabilities,” “Risk Factors” and Note 13 to our consolidated financial statements for information regarding environmental matters.

Employment

At December 31, 2016, we had over 5,000 employees. Six domestic collective bargaining agreements covered approximately 1,050 employees. We also had various collective labor arrangements as of that date covering certain non-U.S. employee groups. While we generally have experienced satisfactory labor relations, we are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes.

Executive Officers

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

Other Matters

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

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

Many of our businesses closely follow changes in the industries and end markets they serve. In addition, certain businesses have seasonal fluctuations. Historically, our businesses generally tend to be stronger in the second half of the year.

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

ITEM 1A. Risk Factors

(All currency and share amounts are in millions)

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

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 and weather-related fluctuations, including, but not limited to:

•HVAC; and

•Power transmission and distribution products.

In addition, contract timing on large projects, including those relating to power transmission and distribution systems, communications technology, fare collection systems, process cooling systems and towers, and power generation equipment may cause significant fluctuations in revenues and profits from period to period.

The businesses of many of our customers, particularly general industrial and power and energy 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. In addition, certain of our businesses have seasonal and weather-related fluctuations. Historically, many of our key businesses generally have tended to have stronger performance in the second half of the year. See "MD&A - Results of Reportable Segments."

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

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

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 key raw materials, including copper, steel and oil. 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, or may enter into, long-term supplier contracts that may increase our exposure to pricing fluctuations.

Our customers could be impacted by commodity availability and prices.

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

On the other hand, declining commodity prices may cause our customers to delay or cancel projects relating to the production of such commodities. For example, declines in oil prices have led to reduced demand for certain of our power generation products. In addition, in regions where the economy is largely dependent on oil and gas, declines in oil and gas prices have impacted the ability of our customers in these regions to finance capital expenditures. As a result, certain of our customers in these regions have delayed or cancelled tenders for our spectrum monitoring and related products. Reduced demand for our products and services could result in the delay or cancellation of existing

orders or lead to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs. Reduced demand may also erode average selling prices in the relevant market.

Credit and counterparty risks could harm our business.

The financial condition of our customers and distributors could affect our ability to market our products or collect receivables. In addition, financial difficulties faced by our customers may lead to cancellations or delays of orders.

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

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 lower cost structures, support from local governments, or both. In addition, new competitors may enter the markets in which we participate. Competitors may be able to offer lower prices, additional products or services or a more attractive mix of products or services, or services or other incentives that we cannot or will not match. These competitors may be in a stronger position to respond quickly to new or emerging technologies and may be able to undertake more extensive marketing campaigns and make more attractive offers to potential customers, employees and strategic partners. In addition, competitive environments in slow-growth markets, to which some of our businesses have exposure, have been inherently more influenced by pricing and domestic and global economic conditions. To remain competitive, we need to 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.

The fact that we 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.

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

A portion of our revenues and earnings is generated through long-term fixed-price contracts, particularly for the process cooling systems and heat exchangers sold by our Engineered Solutions segment. We recognize revenues for certain of these contracts using the percentage-of-completion method of accounting whereby revenues and expenses, and thereby profit, in a given period are determined based on our estimates as to the project status and the costs remaining to complete a particular project.

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

To the extent that we underestimate the remaining cost to complete a project, we may overstate the revenues and profit in a particular period. Further, certain of these contracts provide for penalties or liquidated damages for failure to timely perform our obligations under the contract, or require that we, at our expense, correct and remedy to

the satisfaction of the other party certain defects. Because some of our long-term contracts are at a fixed price, we face the risk that cost overruns or inflation may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on our projects.

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

Worldwide economic conditions could negatively impact our businesses.

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


•	Revenues;


•	Margins;


•	Profits;


•	Cash flows;


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


•	Customers’ ability to access credit;


•	Customers’ ability to pay amounts due to us; and


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

Downturns in global economies could negatively impact our performance or any expectations in reporting performance. For example, economic downturns relating to lower oil and gas prices have impacted the ability of customers in countries with oil and gas dependent economies to finance certain capital projects. This, in turn, has reduced demand for certain of our spectrum monitoring and related products in these regions.

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 cloud-based and other information technology (“IT”) networks and systems, some of which are managed by third parties, to process, transmit and store electronic information. We depend on such IT infrastructure for electronic communications among our locations around the world and between our personnel and suppliers and customers. In addition, we rely on these IT systems to record, process, summarize, transmit, and store electronic information, and to manage or support a variety of business processes and activities, including, among other things, our accounting and financial reporting processes; our manufacturing and supply chain processes; our sales and marketing efforts; and the data related to our research and development efforts. The failure of our IT systems or those of our business partners or third-party service providers to perform properly, or difficulties encountered in the development of new systems or the upgrade of existing systems, could disrupt our business and harm our reputation, which may result in decreased sales, increased overhead costs, excess or obsolete inventory, and product shortages, causing our business, reputation, financial condition, and operating results to suffer. Upon expiration or termination of any of our agreements with third-party vendors, we may not be able to replace the services provided to us in a timely manner or on terms and conditions, including service levels and cost, that are favorable to us, and a transition from one vendor to another vendor could subject us to operational delays and inefficiencies until the transition is complete.

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. Likewise, data privacy breaches by employees and others with both permitted and unauthorized access to our systems may pose a risk that sensitive data may be exposed to unauthorized persons or to the public, or may be permanently lost. Accidental or willful security breaches or other unauthorized access by third parties of our facilities, our information systems or the systems of our cloud-based or other service providers, or the existence of computer viruses or malware in our or their data or software, could expose us to a risk of information loss and misappropriation of proprietary and confidential information, including information relating to our customers and the personal information of our employees. If we or our third-party service providers fail to keep customers’ proprietary information and documentation confidential, we may lose existing customers and potential new customers and may expose them to significant loss of revenue based on the premature release of confidential information.

Information technology security threats are increasing in frequency and sophistication. Cyber-attacks may be random, coordinated, or targeted, including sophisticated computer crime threats. These threats pose a risk to the security of our systems and networks, and those of our business partners and third-party service providers, and to the confidentiality, availability, and integrity of our data. Our business, reputation, operating results, and financial condition could be materially adversely affected if, as a result of a significant cyber event or otherwise, our operations are disrupted or shutdown; our confidential, proprietary information is stolen or disclosed; the performance or security of our cloud-based product offerings is impacted; our intranet and internet sites are compromised; data is manipulated or destroyed; we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information; we must dedicate significant resources to system repairs or increase cyber security protection; or we otherwise incur significant litigation or other costs.

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

Our operating results are presented in 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, including countries utilizing the Euro, which may have a material adverse effect on sales or require us to lower our prices, and also decrease our reported revenues or margins related to sales conducted in foreign currencies to the extent we are unable or determine not to increase local currency prices. Likewise, decreased strength of the U.S. dollar could have a material adverse effect on the cost of materials and products purchased overseas.

Similarly, increased or decreased strength of the currencies of non-U.S. countries in which we manufacture will have a comparable effect against the currencies of other jurisdictions in which we sell. For example, our Radiodetection business manufactures a number of detection instruments in the United Kingdom and sells to customers in other countries, therefore increased strength of the British pound sterling will increase the effective price of these products sold in British pound sterling into other countries; and decreased strength of British pound sterling could have a material adverse effect on the cost of materials and products purchased outside of the United Kingdom.

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

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

We face environmental exposures including, for example, those relating to discharges from and materials handled as part of our operations, the remediation of soil and groundwater contaminated by petroleum products or hazardous substances or wastes, and the health and safety of our employees. We may be liable for the costs of investigation, removal or remediation of hazardous substances or petroleum products on, under, or in our current or formerly owned or leased properties, or from third-party disposal facilities that we may have used, without regard to whether we knew of, or caused, the presence of the contaminants. The presence of, or failure to properly remediate, these substances may have adverse effects, including, for example, substantial investigative or remedial obligations and limitations on the ability to sell or rent affected property or to borrow funds using affected property as collateral. New or existing environmental matters or changes in environmental laws or policies could lead to material costs for environmental compliance or cleanup. In addition, environmentally related product regulations are growing globally in number and complexity and could contribute to increased costs with respect to disclosure requirements, product sales and

distribution related costs, and post-sale recycling and disposal costs. There can be no assurance that these liabilities and costs will not have a material adverse effect on our financial position, results of operations or cash flows.

Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property, and competitive claims), environmental matters, product liability matters (predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). Periodically, claims, complaints and proceedings arising other than in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (e.g. patent infringement and disputes with subsidiary shareholder(s)). From time to time, we face actions by governmental authorities, both in and outside the United States. Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate. Our insurance may be insufficient or unavailable (e.g., because of insurer insolvency) to protect us against potential loss exposures.

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

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

See “MD&A - Critical Accounting Policies and Use of Estimates - Contingent Liabilities” and Note 13 to our consolidated financial statements for further discussion.

Governmental laws and regulations could negatively affect our business.

Changes in laws and regulations to which we are or may become subject could have a significant negative impact on our business. In addition, we could face material costs and risks if it is determined that we have failed to comply with relevant law and regulation. We are subject to U.S. Customs and Export Regulations, including U.S. International Traffic and Arms Regulations and similar laws, which collectively control import, export and sale of technologies by companies and various other aspects of the operation of our business; the Foreign Corrupt Practices Act and similar anti-bribery laws, which prohibit companies from making improper payments to government officials for the purposes of obtaining or retaining business; and the California Transparency in Supply Chain Act and similar laws and regulations, which relate to human trafficking and anti-slavery and impose new compliance requirements on our businesses and their suppliers. While our policies and procedures mandate compliance with such laws and regulations, there can be no assurance that our employees and agents will always act in strict compliance. Failure to comply with such laws and regulations may result in civil and criminal enforcement, including monetary fines and possible injunctions against shipment of product or other of our activities, which could have a material adverse impact on our results of operations and financial condition.

Additionally, laws and regulations have increasingly focused on supply chain transparency. As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has promulgated disclosure requirements regarding the use of certain minerals (tantalum, tin, tungsten and gold), which are mined from the Democratic Republic of Congo and adjoining countries, known as conflict minerals. Certain of our products contain gold, tungsten and tin. As a result, we must annually publicly disclose whether we manufacture any products that contain conflict minerals. Additionally, customers typically rely on us to provide critical data regarding the parts they purchase, including conflict mineral information. Our material sourcing is broad-based and multi-tiered, and it is difficult to verify the origins for conflict minerals used in the products we sell. We have many suppliers and each may provide conflict mineral information in a different manner, if at all. Accordingly, because the supply chain is complex, we may face reputational challenges from being unable to sufficiently verify the origins of conflict minerals used in our products.

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

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. Additionally, comprehensive U.S. tax reform has been publically stated to be a priority for the U.S. Congress. Changes in U.S. tax laws, if adopted, or changes in tax law interpretation could, depending on the nature of the changes, adversely affect our effective tax rates and our results. Any such changes in tax laws or regulations could impose new restrictions, costs or prohibitions on existing practices as well as reduce our net income and adversely affect our cash flows.

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

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

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

At December 31, 2016, we had $356.2 in total indebtedness. On that same date, we had $313.9 of available borrowing capacity under our revolving credit facilities, after giving effect to $36.1 reserved for outstanding letters of credit, and $39.9 of available borrowing capacity under our trade receivables financing arrangement. In addition, at December 31, 2016, we had $98.6 of available issuance capacity under our foreign credit instrument facilities after giving effect to $201.4 reserved for outstanding letters of credit. At December 31, 2016, our cash and equivalents balance was $99.6. See MD&A and Note 11 to our consolidated financial statements for further discussion. We may incur additional indebtedness in the future, including indebtedness incurred to finance, or assumed in connection with, acquisitions. We may renegotiate or refinance our senior credit facilities or other debt facilities, or enter into additional agreements that have different or more stringent terms. The level of our indebtedness could:


•	Impact our ability to obtain new, or refinance existing, indebtedness, on favorable terms or at all;


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


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


•	Limit our ability to pay dividends on our common stock in the future;


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


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

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

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

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

Our senior credit facilities and agreements governing our other indebtedness contain, or future or revised instruments may contain, various restrictions and covenants that limit our ability to make distributions or other payments to our investors and creditors unless certain financial tests or other criteria are satisfied. We also must comply with certain specified financial ratios and tests. Our subsidiaries may also be subject to restrictions on their ability to make distributions to us. In addition, our senior credit facilities and agreements governing our other indebtedness contain or may contain additional affirmative and negative covenants. Material existing restrictions are described more fully in the MD&A and Note 11 to our consolidated financial statements. Each of these restrictions could affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities, such as acquisitions.

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

Our failure to successfully complete acquisitions could negatively affect us.

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

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

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

Our failure to successfully 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 stockholders; 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 liabilities retained in connection with dispositions could negatively affect us.

Our dispositions involve a number of risks and present financial, managerial and operational challenges, including diversion of management attention from running our core businesses, increased expense associated with the dispositions, potential disputes with the customers or suppliers of the disposed businesses, potential disputes with the acquirers of the disposed businesses and a potential dilutive effect on our earnings per share. In addition, we have agreed to retain certain liabilities in connection with the disposition of certain businesses, including the Balcke Dürr business. These liabilities may be significant and could negatively impact our business.

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. In addition, we may not realize some or all of the anticipated benefits of our dispositions. See “Business,” “MD&A - Results of Discontinued Operations,” and Note 4 to our consolidated financial statements for the status of our divestitures.

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

In 2016, approximately 84% of our revenues were generated inside the United States. Our reliance on U.S. revenues and U.S. manufacturing bases exposes us to a number of risks, including:

•

Government embargoes or foreign trade restrictions such as anti-dumping duties, as well as the imposition of trade sanctions by the United States 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 or exported from the United States or reduce our sales and harm our business;


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


•	Transportation and shipping expenses add cost to our products;


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


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


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

Any of the above factors or other factors affecting the movement of people and products into and from various countries to North America could have a significant negative effect on our operations. In addition, our concentration on U.S. business may make it difficult to enter new markets, making it more difficult for our businesses to grow.

Our non-U.S. revenues and operations expose us to numerous risks that may negatively impact our business.

To the extent we generate revenues outside of the United States, 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;


•	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;


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


•	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 revenues and operations;


•	The United Kingdom’s decision to exit from the European Union (commonly referred to as “Brexit”) has contributed to, and may continue to contribute to, European economic, market and regulatory uncertainty and could adversely affect European or worldwide economic, market, regulatory, or political conditions;


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


•	Transportation and shipping expenses add cost to our products;


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


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


•	Distance and 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 the United Kingdom, China, and South Africa or affecting the movement of people and products into and from these countries to our major markets, could have a significant negative effect on our operations.

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

Sales of a substantial number of shares of common stock into the public market, or the perception that these sales could occur, could have a material adverse effect on our stock price. As of December 31, 2016, we had the ability to issue up to an additional 2.097 shares as restricted stock shares, restricted stock units, performance stock units, or stock options under our 2002 Stock Compensation Plan, as amended in 2006, 2011, 2012, 2015 and 2017, and our 2006 Non-Employee Directors’ Stock Incentive Plan. We also may issue a significant number of additional shares, in connection with acquisitions, through a registration statement, or otherwise. Additional shares issued would have a dilutive effect on our earnings per share.

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

At December 31, 2016, we had goodwill and other intangible assets, net, of $458.3. We conduct annual impairment testing to determine if we will be able to recover all or a portion of the carrying value of goodwill and indefinite-lived intangibles. In addition, we review goodwill and indefinite-lived intangible assets for impairment more frequently if impairment indicators arise. If the fair value is insufficient to recover the carrying value of our goodwill and indefinite-lived intangibles, we may be required to record a material non-cash charge to earnings.

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

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 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.

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.

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

We have defined benefit pension and postretirement plans, including both qualified and non-qualified plans, which cover a portion of our salaried and hourly employees and retirees, including a portion of our employees and retirees in foreign countries. As of December 31, 2016, our net liability to these plans was $195.8. The determination of funding requirements and pension expense or income associated with these plans involves significant judgment, particularly with respect to discount rates, long-term trends of future costs and other actuarial assumptions. If our assumptions change significantly due to changes in economic, legislative and/or demographic experience or circumstances, our pension and other benefit plans’ expense, funded status and our required cash contributions to such plans could be negatively impacted. In addition, returns on plan assets could have a material impact on our pension plans’ expense, funded status and our required contributions to the plans. Changes in regulations or law could also significantly impact our obligations. For example, see “MD&A - Critical Accounting Policies and Use of Estimates” for the impact that changes in certain assumptions used in the calculation of our costs and obligations associated with these plans could have on our results of operations and financial position.

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

At December 31, 2016, we had over 5,000 employees. Six domestic collective bargaining agreements covered approximately 1,050 employees. We also had various collective labor arrangements as of that date covering certain non-U.S. employee groups. We are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes. Further, we may be subject to work stoppages, which are beyond our control, at our suppliers or customers.

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 stockholders consider favorable.

Provisions of our Certificate of Incorporation and By-laws may inhibit changes in control of our company not approved by our Board. These provisions include, for example: a staggered board of directors; a prohibition on stockholder action by written consent; a requirement that special stockholder meetings be called only by our Chairman, President or Board; advance notice requirements for stockholder proposals and nominations; limitations on

stockholders’ ability to amend, alter or repeal the By-laws; enhanced voting requirements for certain business combinations involving substantial stockholders; the authority of our Board to issue, without stockholder approval, preferred stock with terms determined in its discretion; and limitations on stockholders’ ability to remove directors. In addition, we are afforded the protections of Section 203 of the Delaware General Corporation Law, which could have similar effects. In general, Section 203 prohibits us from engaging in a “business combination” with an “interested stockholder” (each as defined in Section 203) for at least three years after the time the person became an interested stockholder unless certain conditions are met. These protective provisions could result in our not consummating a transaction that our stockholders consider favorable or discourage entities from attempting to acquire us, potentially at a significant premium to our then-existing stock price.

Risks Related to our Spin-Off of SPX FLOW

The Spin-Off of SPX FLOW could result in substantial tax liability to us and our stockholders.

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

Even if the Spin-Off otherwise qualifies as a tax-free transaction, the distribution could be taxable to us (but not to our stockholders) in certain circumstances if future significant acquisitions of our stock or the stock of SPX FLOW are determined to be part of a plan or series of related transactions that includes the Spin-Off. In this event, the resulting tax liability would be substantial. In connection with the Spin-Off, we entered into a Tax Matters Agreement with SPX FLOW, under which SPX FLOW agreed (i) not to enter into any transaction without our consent that could cause the Spin-Off to be taxable to us, and (ii) to indemnify us for any tax liabilities resulting from such a transaction. The indemnity from SPX FLOW may not be sufficient to protect us against the full amount of such liabilities. Any tax liabilities resulting from the Spin-Off or related transactions 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 FLOW 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 the distribution and returning SPX FLOW’s assets or SPX FLOW’s shares and subject us to liability.

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 FLOW or any of our respective subsidiaries were solvent at the time of or after giving effect to the Spin-Off.

The distribution of SPX FLOW 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 stockholders either (1) out of its surplus (net assets) 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 we believe that we and SPX FLOW were each solvent at the time of the Spin-Off (including immediately after the distribution of shares of SPX FLOW common stock), that we are able to repay our debts as they mature and have sufficient capital to carry on our businesses, and that the distribution was made entirely out of surplus in accordance with Section 170 of the DGCL, we cannot assure you that a court would reach the same conclusions in determining whether SPX FLOW 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 our stockholders.

ITEM 1B. Unresolved Staff Comments

None.

ITEM 2. Properties

The following is a summary of our principal properties related to continuing operations as of December 31, 2016:



		No. of	Approximate Square Footage
	Location	Facilities	Owned	Leased
			(in millions)
HVAC reportable segment	7 U.S. states and 2 foreign countries	9	0.6	1.2
Detection and Measurement reportable segment	4 U.S. states and 1 foreign country	5	0.2	0.2
Engineered Solutions reportable segment	12 U.S. states and 1 foreign country	14	2.2	0.4
Total		28	3.0	1.8

In addition to manufacturing plants, we own various sales, service and other locations throughout the world. We consider these properties, as well as the related machinery and equipment, to be well maintained and suitable and adequate for their intended purposes.

ITEM 3. Legal Proceedings

We are subject to legal proceedings and claims that arise in the normal course of business. 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; however, we cannot assure you that these proceedings or claims will not have a material effect on our financial position, results of operations or cash flows.

See “Risk Factors,” “MD&A — Critical Accounting Policies and Estimates — Contingent Liabilities,” and Note 13 to our consolidated financial statements for further discussion of legal proceedings.

ITEM 4. Mine Safety Disclosures

Not applicable.

P A R T I I

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

Our common stock is traded on the New York Stock Exchange under the symbol “SPXC.”

Set forth below are the high and low sales prices for our common stock as reported on the New York Stock Exchange composite transaction reporting system for each quarterly period during the years 2016 and 2015, together with dividend information. The share prices presented for all periods prior to the Spin-Off have been adjusted using the conversion ratio as of the Distribution Date. The dividend information reflects actual dividends declared for the respective periods.



	High		Low		Dividends Declared Per Share
2016:
4^th Quarter	$	25.95	$	15.49	$	—
3^rd Quarter	20.55		14.05		—
2^nd Quarter	17.33		14.00		—
1^st Quarter	15.52		7.62		—



	High		Low		Dividends Declared Per Share
2015:
4^th Quarter	$	12.98	$	8.22	$	—
3^rd Quarter	18.22		11.82		—
2^nd Quarter	21.50		17.29		0.375
1^st Quarter	22.45		19.59		0.375

In connection with the Spin-Off, we discontinued dividend payments immediately following the second quarter dividend payment for 2015 and do not expect to resume dividend payments for the foreseeable future. Any dividends that may be paid in future periods, including amount, declaration date, record and payment date, will be at the discretion of our Board of Directors and will depend on, among other things, financial performance and ongoing capital needs, our ability to declare and pay dividends, and other factors deemed relevant.

There were no repurchases of common stock during the three months ended December 31, 2016. The number of shareholders of record of our common stock as of February 17, 2017 was 3,283.

Company Performance

This graph shows a five-year comparison of cumulative total returns for SPX, the S&P 500 Index, the S&P 1500 Industrials Index, and the S&P 600 Index. The graph assumes an initial investment of $100 on December 31, 2011 and the reinvestment of dividends.



	2011		2012		2013		2014		2015		2016
SPX Corporation	$	100.00	$	118.10	$	169.72	$	148.65	$	62.27	$	158.30
S&P 500	100.00		116.00		153.57		174.60		177.01		198.18
S&P 1500 Industrials	100.00		116.46		164.43		178.37		173.53		208.94
S&P 600	100.00		114.81		160.34		167.46		161.83		201.88

ITEM 6. Selected Financial Data



	As of and for the year ended December 31,
	2016			2015			2014			2013			2012
	(in millions, except per share amounts)
Summary of Operations
Revenues ⁽¹⁾	$	1,472.3		$	1,559.0		$	1,694.4		$	1,715.1		$	1,745.8
Operating income (loss) ^{(1)(2)(3)(4)(12)}	55.0			(122.2		)	(185.3		)	32.9			(419.8		)
Other income (expense), net ⁽⁵⁾⁽⁶⁾	(0.3		)	(10.0		)	490.0			38.4			56.3
Interest expense, net	(14.0		)	(20.7		)	(20.1		)	(62.7		)	(65.7		)
Loss on early extinguishment of debt ⁽⁷⁾	(1.3		)	(1.4		)	(32.5		)	—			—
Income (loss) from continuing operations before income taxes	39.4			(154.3		)	252.1			8.6			(429.2		)
Income tax (provision) benefit ⁽⁸⁾	(9.1		)	2.7			(137.5		)	13.2			60.9
Income (loss) from continuing operations	30.3			(151.6		)	114.6			21.8			(368.3		)
Income (loss) from discontinued operations, net of tax ⁽⁹⁾	(97.9		)	34.6			269.3			190.5			550.8
Net income (loss)	(67.6		)	(117.0		)	383.9			212.3			182.5
Less: Net income (loss) attributable to noncontrolling interests	(0.4		)	(34.3		)	(9.5		)	2.4			2.8
Net income (loss) attributable to SPX Corporation common shareholders	(67.2		)	(82.7		)	393.4			209.9			179.7
Adjustment related to redeemable noncontrolling interests ⁽¹⁰⁾	(18.1		)	—			—			—			—
Net income (loss) attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interests	$	(85.3	)	$	(82.7	)	$	393.4		$	209.9		$	179.7
Basic income (loss) per share of common stock:
Income (loss) from continuing operations	$	0.30		$	(2.90	)	$	2.98		$	0.46		$	(7.38	)
Income (loss) from discontinued operations	(2.35		)	0.87			6.30			4.16			10.97
Net income (loss) per share	$	(2.05	)	$	(2.03	)	$	9.28		$	4.62		$	3.59
Diluted income (loss) per share of common stock:
Income (loss) from continuing operations	$	0.30		$	(2.90	)	$	2.94		$	0.46		$	(7.38	)
Income (loss) from discontinued operations	(2.32		)	0.87			6.20			4.10			10.97
Net income (loss) per share	$	(2.02	)	$	(2.03	)	$	9.14		$	4.56		$	3.59
Dividends declared per share ⁽¹¹⁾	$	—		$	0.75		$	1.50		$	1.00		$	1.00
Other financial data:
Total assets	$	1,912.5		$	2,179.3		$	5,894.3		$	6,851.7		$	7,128.0
Total debt	356.2			371.8			733.1			1,057.6			1,062.0
Other long-term obligations	921.1			851.6			861.8			930.8			994.1
SPX shareholders’ equity	191.6			345.4			1,808.7			2,153.3			2,219.8
Noncontrolling interests	—			(37.1		)	3.2			14.0			11.3
Capital expenditures	11.7			16.0			19.3			31.4			50.7
Depreciation and amortization	26.5			37.0			40.6			42.7			40.1

___________________________________________________________________


⁽¹⁾	During 2015 and 2014, we made revisions to expected revenues and profits on our large power projects in South Africa. These revisions resulted in a reduction of revenue and operating income of $57.2 and $95.0 in 2015 and a reduction in revenue and operating profit of $25.0 in 2014. See Notes 5 and 13 to our consolidated financial statements for additional details.


⁽²⁾	During 2016, 2015, 2014, 2013 and 2012, we recognized income (expense) related to changes in the fair value of plan assets, actuarial gains (losses), settlement gains (losses) and curtailment gains of $(12.0), $(15.9), $(95.0), $3.5 and $(140.3), respectively, associated with our pension and postretirement benefit plans.


⁽³⁾	During 2016, we recorded impairment charges of $30.1 related to the intangible assets of our SPX Heat Transfer (“Heat Transfer”) business.

During 2014, we recorded an impairment charge of $10.9 related to the trademarks of our Heat Transfer business. In addition, during the fourth quarter of 2014, we recorded an impairment charge of $18.0 related to our former dry cooling business’s investment in a joint venture with Shanghai Electric Group Co., Ltd.

During 2012, we recorded impairment charges of $281.4 associated with the goodwill $(270.4) and other long-term assets $(11.0) of our Cooling Systems business. In addition, we recorded impairment charges totaling $4.5 related to trademarks for two businesses within our Engineered Solutions and HVAC reportable segments.

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


⁽⁴⁾	During 2016, we sold our dry cooling business, resulting in a pre-tax gain of $18.4.


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


⁽⁶⁾	During 2016, 2015, 2014, 2013 and 2012, we recognized gains (losses) of $(2.4), $(8.6), $(2.6), $1.6 and $7.6, respectively, associated with foreign currency transactions, foreign currency forward contracts, and currency forward embedded derivatives.

During 2016, 2015, 2014, 2013 and 2012, we recorded charges of $4.2, $8.0, $3.1, $0.0, and $0.0 respectively, associated with asbestos product liability matters.

During 2012, we recorded a pre-tax gain of $20.5 associated with the deconsolidation of our dry cooling business in China.

⁽⁷⁾

During the third quarter of 2016, we elected to reduce our participation foreign credit instrument facility commitment and our bilateral foreign credit instrument facility commitment by $125.0 and $75.0, respectively. In connection with the reduction of our foreign credit instrument facility commitments, we recorded a charge of $1.3 to “Loss on early extinguishment of debt” during 2016 associated with the write-off of the unamortized deferred financing fees related to this previously available issuance capacity of $200.0.

During the third quarter of 2015, we refinanced our credit facility in preparation of the Spin-Off. As a result of the refinancing, we recorded a charge of $1.4 during 2015, which consisted of the write-off of a portion of the unamortized deferred financing fees related to our prior credit agreement.

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

⁽⁸⁾

During 2016, our income tax provision was impacted by $0.3 of income taxes that were provided in connection with the $18.4 gain that was recorded on the sale of the dry cooling business, $2.4 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions, and $13.7 of foreign losses generated during the year for which no tax benefit was recognized, as future realization of such tax benefit is considered unlikely.

During 2015, our income tax provision was impacted by (i) the effects of approximately $139.0 of pre-tax losses generated during the year (the majority of which relate to our large projects in South Africa) for which no tax benefit was recognized, as future realization of any such tax benefit is considered unlikely, (ii) $3.7 of foreign taxes incurred during the year related to the Spin-Off and the reorganization actions undertaken to facilitate the Spin-Off, and (iii) $3.4 of taxes related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions.

During 2014, our income tax provision was impacted by the U.S. income taxes provided in connection with the $491.2 gain on the sale of our interest in EGS, income tax charges of $33.8 related to net increases in valuation allowances recorded against certain foreign deferred income tax assets, and $11.4 of income tax charges related to the repatriation of certain earnings of our non-U.S. subsidiaries. In addition, our income tax provision was impacted unfavorably by a low effective tax rate on foreign losses. The impact of these items was partially offset by the following income tax benefits: (i) $16.2 of tax benefits related to various audit settlements, statute expirations and other adjustments to liabilities for uncertain tax positions, with the most

notable being the closure of our U.S. tax examination for the years 2008 through 2011, and (ii) $6.4 of tax benefits related to a loss on an investment in a foreign subsidiary.

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

During 2012, our income tax provision was impacted by an income tax benefit of $26.3 associated with the $281.4 impairment charge recorded for our Cooling Systems business, as the majority of the goodwill for the Cooling Systems business has no basis for income tax purposes. Additionally, the 2012 income tax provision was negatively impacted by (i) taxes provided of $9.4 on foreign dividends and undistributed earnings that were no longer considered to be indefinitely reinvested; (ii) incremental tax expense of $6.1 associated with the deconsolidation of our dry cooling business in China, as the goodwill allocated to the transaction was not deductible for income tax purposes; and (iii) valuation allowances that were recorded against deferred income tax assets during the year of $5.4.


⁽⁹⁾	During 2016, we completed the sale of Balcke Dürr, resulting in a net loss of $78.6.

During 2015, we completed the Spin-Off of SPX FLOW. The operating results of SPX FLOW are presented within discontinued operations for all periods presented.

During 2014, we sold our TPS, Precision Components, and Fenn businesses, resulting in an aggregate gain of $14.4.

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

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

⁽¹⁰⁾

In connection with our noncontrolling interest in our South African subsidiary, we have reflected an adjustment of $18.1 to “Net income (loss) attributable to SPX Corporation common shareholders” for the excess redemption amount of the put option in our calculations of basic and diluted earnings per share for the year ended December 31, 2016. See Note 13 to our consolidated financial statements for additional details regarding the put option and this adjustment.


⁽¹¹⁾	In connection with the Spin-Off, we discontinued dividend payments immediately following the dividend payment for the second quarter of 2015.


⁽¹²⁾	During 2015, 2014, 2013, and 2012 there was a significant amount of general and administrative costs associated with corporate employees and other corporate support that transferred to SPX FLOW at the time of the Spin-Off and did not meet the requirements to be presented within discontinued operations.

ITEM 7. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

(All currency and share amounts are in millions)

The following should be read in conjunction with our consolidated financial statements and the related notes thereto. Unless otherwise indicated, amounts provided in Item 7 pertain to continuing operations only.

Executive Overview

Spin-Off of SPX FLOW

On September 26, 2015, we completed the Spin-Off of SPX FLOW. The results of SPX FLOW are reflected as a discontinued operation for all periods presented. See Notes 1 and 4 to our consolidated financial statements for additional details on the Spin-Off.

Shift Away from the Power Generation Markets

In recent years, our businesses serving the power generation markets have experienced significant declines in revenue and profitability associated with weak demand and increased competition within the global power generation markets. Based on a review of our post-spin portfolio and the belief that recovery within the power generation markets was unlikely for the foreseeable future, we decided that our strategic focus would be on our (i) scalable growth businesses that serve the HVAC and detection and measurement markets and (ii) power transformer and process cooling systems businesses. As a result, we have been reducing our exposure to the power generation markets as indicated by the disposals summarized below:

Dry Cooling Business:


•	On November 20, 2015, we entered into an agreement for the sale of our dry cooling business, a business that provides dry cooling products to the global power generation markets, to Paharpur Cooling Towers Limited (“Paharpur”).


•	On March 30, 2016, we completed the sale for cash proceeds of $47.6 (net of cash transferred with the business of $3.0).


•	In connection with the sale, we recorded a pre-tax gain of $18.4.


•	The gain includes a reclassification from “Equity” of other comprehensive income of $40.4 related to foreign currency translation.

Balcke Dürr:


•	On November 22, 2016, we entered into an agreement for the sale of Balcke Dürr, a business that provides heat exchangers and other related components primarily to the European and Asian power generation markets, to a subsidiary of mutares AG (the “Buyer”).


•	On December 30, 2016, we completed the sale for cash proceeds of less than $0.1.


•	We left $21.1 of cash in Balcke Dürr at the time of sale and provided the Buyer a non-interest bearing loan of $9.1, payable in installments at the end of 2018 and 2019.


•	The related agreement provides that existing parent company guarantees of approximately €79.0 and bank and surety bonds of approximately €79.0 will remain in place through each instrument’s expiration date, with such expiration dates ranging from 2017 to 2022.


•	Balcke Dürr, the Buyer, and the Buyer’s parent company have provided certain indemnifications in the event that any of these guarantees or bonds are called. See Notes 2, 4 and 15 to our consolidated financial statements for additional details on the guarantees, bonds, and related indemnifications.


•	The results of Balcke Dürr are presented as a discontinued operation for all periods presented. See Notes 1 and 4 to our consolidated financial statements for additional details.


•	In connection with the sale, we recorded a net loss of $78.6 to “Gain (loss) on disposition of discontinued operations, net of tax” within our consolidated statement of operations for 2016.


•	The net loss includes a charge of $5.1 associated with the estimated fair value of the parent company guarantees and the bank and surety bonds, after consideration of the indemnifications provided in the event any of these guarantees or bonds are called.

Change to the Name of Our Power Reportable Segment

In recognition of these dispositions and the resulting shift away from the power generation markets, we changed the name of our Power reportable segment to “Engineered Solutions,” effective in the fourth quarter of 2016.

Summary of Operating Results

Revenues for 2016 decreased $86.7 (or 5.6%), compared to 2015, primarily as a result of the impact of the sale of the dry cooling business, a decline in organic revenue, and, to a lesser extent, a stronger U.S. dollar in 2016. These decreases were offset partially by the impact of a reduction in revenues of $57.2 during the third quarter of 2015 resulting from a revision to the expected revenues and profits on our large power projects in South Africa. The decline in organic revenues was due primarily to lower sales by our power generation businesses. See “Results of Reportable Segments” for additional details.

During 2016, we generated operating income of $55.0, compared to an operating loss of $122.2 in 2015. Operating income (loss) for 2016 and 2015 was impacted by the following:

2016:


•	The aforementioned gain of $18.4 on the sale of the dry cooling business.


•	Impairment charges of $30.1 associated with the intangible assets of our Heat Transfer business. See Note 8 to our consolidated financial statements for additional details.

2015:


•	A reduction in operating income of $95.0 associated with a third quarter 2015 revision to our estimates of expected revenues and profits on our large power projects in South Africa.


•	A significant amount of general and administrative costs associated with corporate employees and other corporate support that transferred to SPX FLOW at the time of the Spin-Off.

In addition, operating results for 2016 and 2015 were impacted by net charges of $15.4 and $18.6, respectively, associated with our pension and postretirement plans, with the largest portion of the charges resulting from actuarial losses recorded during each of the years. See Note 9 to our consolidated financial statements for additional details.

Operating cash flows from continuing operations totaled $53.4 in 2016, compared to cash flows used in continuing operations during 2015 of $76.0. The increase in operating cash flows was primarily due to the fact that cash flows used in operating activities for 2015 included disbursements for general corporate overhead costs related to a corporate structure that supported the SPX business prior to the Spin-Off. As previously noted, a significant portion of this corporate structure transferred to SPX FLOW at the time of the Spin-Off and, thus, was no longer part of our company during 2016. In addition, operating cash flows associated with our businesses increased during 2016, compared to 2015, primarily as a result of the timing of cash receipts on certain long-term projects.

Results of Continuing Operations

Cyclicality of End Markets, Seasonality and Competition—The financial results of our businesses closely follow changes in the industries in which they operate and end markets in which they serve. In addition, certain of our businesses have seasonal fluctuations. For example, our heating and ventilation business tends to be stronger in the third and fourth quarters, as customer buying habits are driven largely by seasonal weather patterns. 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 none of our competitors offer all the same product lines or serve all

the same markets as we do. 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.

Non-GAAP Measures — Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations, acquisitions/divestitures, and the impact of the revenue reduction that resulted from the third quarter 2015 and fourth quarter 2014 revisions to the expected revenues and profits on our large power projects in South Africa of $57.2 and $25.0, respectively. We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented, as, when read in conjunction with our revenues, it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors we use in internal evaluations of the overall performance of our business. This metric, however, is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”), should not be considered a substitute for net revenue growth (decline) as determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies.

The following table provides selected financial information for the years ended December 31, 2016, 2015, and 2014, including the reconciliation of organic revenue decline to net revenue decline:



	Year ended December 31,									2016 vs		2015 vs
	2016			2015			2014			2015%		2014%
Revenues	$	1,472.3		$	1,559.0		$	1,694.4		(5.6	)%	(8.0	)%
Gross profit	375.8			275.9			366.4			36.2		(24.7	)
% of revenues	25.5		%	17.7		%	21.6		%
Selling, general and administrative expense	301.0			387.8			511.2			(22.4	)	(24.1	)
% of revenues	20.4		%	24.9		%	30.2		%
Intangible amortization	2.8			5.2			5.7			(46.2	)	(8.8	)
Impairment of intangible and other long-term assets	30.1			—			28.9			*		*
Special charges, net	5.3			5.1			5.9			3.9		(13.6	)
Gain on sale of dry cooling business	18.4			—			—			*		*
Other income (expense), net	(0.3		)	(10.0		)	490.0			*		*
Interest expense, net	(14.0		)	(20.7		)	(20.1		)	(32.4	)	3.0
Loss on early extinguishment of debt	(1.3		)	(1.4		)	(32.5		)	(7.1	)	(95.7	)
Income (loss) from continuing operations before income taxes	39.4			(154.3		)	252.1			*		*
Income tax (provision) benefit	(9.1		)	2.7			(137.5		)	*		*
Income (loss) from continuing operations	30.3			(151.6		)	114.6			*		*
Components of consolidated revenue decline:
Organic										(3.3	)	(3.7	)
Foreign currency										(1.9	)	(2.4	)
Sale of dry cooling business										(4.1	)	—
South Africa revenue revision										3.7		(1.9	)
Net revenue decline										(5.6	)	(8.0	)

___________________________________________________________________


*	Not meaningful for comparison purposes.

Revenues — For 2016, the decrease in revenues, compared to 2015, was due to the impact of the sale of the dry cooling business, a decline in organic revenue, and, to a lesser extent, a stronger U.S. dollar in 2016. These decreases were offset partially by the impact of a reduction in revenues of $57.2 during the third quarter of 2015 resulting from a revision to the expected revenues and profits on our large power projects in South Africa. The decline in organic revenues was due primarily to lower sales by the power generation businesses within our Engineered Solutions reportable segment. See “Results of Reportable Segments” for additional details.

For 2015, the decrease in revenues, compared to 2014, was due to a decline in organic revenue, the strengthening of the U.S. dollar, and a net reduction in revenues associated with our large power projects in South Africa. The decline

in organic revenue was due primarily to lower sales by the power generation businesses within our Engineered Solutions reportable segment. As mentioned above, we recorded a reduction in revenues of $57.2 during the third quarter of 2015 associated with our large power projects in South Africa. During 2014, we recorded a $25.0 reduction to revenues related to these same projects. See “Results of Reportable Segments” for additional details.

Gross Profit — For 2016, the increase in gross profit and gross profit as a percentage of revenues, compared to 2015, was due primarily to a reduction in gross profit of $95.0 during the third quarter of 2015 associated with a revision to the expected revenues and profits of our large power projects in South Africa. In addition, during 2016, gross profit and gross profit as a percentage of revenues were impacted favorably by cost reductions and improved operating efficiency at the businesses within our HVAC reportable segment and our power transformer business.

The decrease in gross profit and gross profit as a percentage of revenue in 2015, compared to 2014, was primarily due to the $95.0 reduction in gross profit associated with our large power projects in South Africa.

Selling, General and Administrative (“SG&A”) Expense — For 2016, the decrease in SG&A expense, compared to 2015, was due primarily to declines in corporate expense of $61.7, pension and postretirement expense of $3.2, and long-term incentive compensation expense of $20.2. See “Results of Reportable Segments” for additional details on corporate expense, pension and postretirement expense, and long-term incentive compensation expense.

For 2015, the decrease in SG&A expense, compared to 2014, was due primarily to a decline in pension and postretirement expense of $85.6 (an overall decrease in pension and postretirement expense of $86.3, with $0.7 included in “Cost of products sold”) and, to a lesser extent, a decline in corporate expense of $30.5, a decrease in incentive compensation, and the impact of currency translation. The decrease in pension and postretirement expense in 2015 was due to a decrease in actuarial losses during the year. See “Results of Reportable Segments” for additional details on corporate expense and pension and postretirement expenses. The decrease in incentive compensation was due to lower profitability in 2015.

Intangible Amortization — For 2016, the decline in intangible amortization, compared to 2015, was primarily the result of (i) discontinuing amortization on the long-term assets of our dry cooling business in connection with classifying the business’s assets and liabilities as “held for sale,” effective December 31, 2015, and (ii) the impact of the $23.9 impairment charge recorded in the fourth quarter of 2016 associated with our Heat Transfer business’s definite-lived intangible assets. See Note 8 to our consolidated financial statements for additional details on the impairment charge recorded for the definite-lived intangible assets of our Heat Transfer business.

For 2015, the decrease in intangible amortization, compared to 2014, was due to the impact of foreign currency translation resulting from a stronger U.S. dollar during 2015.

Impairment of Intangible and Other Long-Term Assets — During 2016, we recorded impairment charges of $30.1 related to the intangible assets of our Heat Transfer business, which included $23.9 for definite-lived intangible assets and $6.2 for indefinite-lived intangible assets.

During 2014, we recorded an impairment charge of $10.9 related to the indefinite-lived intangible assets of our Heat Transfer business. In addition, we recorded an impairment charge of $18.0 related to our dry cooling business’s investment in a joint venture with Shanghai Electric Group Co., LTD.

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

Special Charges, Net — Special charges, net, related primarily to restructuring initiatives to consolidate manufacturing, distribution, sales and administrative facilities, reduce workforce, and rationalize certain product lines. See Note 6 to our consolidated financial statements for the details of actions taken in 2016, 2015 and 2014. The components of special charges, net, were as follows:



	Year ended December 31,
	2016		2015		2014
Employee termination costs	$	1.7	$	4.5	$	5.3
Facility consolidation costs	—		0.2		0.3
Other cash costs, net	—		0.1		0.3
Non-cash asset write-downs	3.6		0.3		—
Total	$	5.3	$	5.1	$	5.9

Gain on Sale of Dry Cooling Business — On March 30, 2016, we completed the sale of our dry cooling business resulting in a gain of $18.4. See Notes 1 and 4 to our consolidated financial statements for additional details.

Other Income (Expense), Net — Other expense, net, for 2016 was composed primarily of charges of $4.2 associated with asbestos product liability matters, losses on foreign currency forward contracts (“FX forward contracts”) of $5.1, and losses on currency forward embedded derivatives (“FX embedded derivatives”) of $1.2. These amounts were offset partially by foreign currency transaction gains of $3.9, income from company-owned life insurance policies of $2.8, equity earnings in joint ventures of $1.5, income associated with transition services provided in connection with the sale of the dry cooling business of $0.9, and gains on asset sales of $0.9.

Other expense, net, for 2015 was composed primarily of charges of $8.0 associated with asbestos product liability matters, foreign currency transaction losses of $7.4, losses on foreign currency forward contracts of $7.7, partially offset by gains of $6.5 on currency forward embedded derivatives, a gain of $3.8 related to death benefits on life insurance contracts, and equity earnings in joint ventures of $1.5.

Other income, net, for 2014 was composed primarily of the gain on sale of our interest in EGS of $491.2 and, to a much lesser extent, investment earnings of $2.7, gains on FX embedded derivatives of $3.1, equity earnings in joint ventures of $1.6, and foreign currency transaction gains of $0.1, partially offset by losses on FX forward contracts of $5.8.

Interest Expense, Net — Interest expense, net, includes both interest expense and interest income. The decrease in interest expense, net, during 2016, compared to 2015, was primarily the result of a decline in interest expense due to lower average debt balances during 2016.

The increase in interest expense, net, during 2015, compared to 2014, was primarily a result of a decrease in interest income during 2015 due to the lower average cash balances during the year, partially offset by the impact of refinancing our senior credit facilities during the third quarter of 2015 in preparation for the Spin-Off, which resulted in a decrease in our outstanding term loan and our average outstanding borrowings on our revolving credit facilities.

Loss on Early Extinguishment of Debt — During the third quarter of 2016, we reduced the issuance capacity under our foreign credit facilities by $200.0. In connection with such reduction, we recorded a charge of $1.3 associated with the write-off of the unamortized deferred financing fees related to the $200.0 of previously available issuance capacity.

In the third quarter of 2015, we refinanced our senior credit facilities in connection with the Spin-Off. As a result of the refinancing, we recorded a charge of $1.4 during 2015, which consisted of the write-off of unamortized deferred financing fees related to our prior senior credit facilities.

In the first quarter of 2014, we completed the redemption of all our 7.625% senior notes for a total redemption price of $530.6. As a result of the redemption, we recorded a charge of $32.5 during 2014, which consisted of the premium paid of $30.6, the write-off of unamortized deferred financing fees of $1.0, and other costs to redeem the notes of $0.9.

Income Taxes — During 2016, we recorded an income tax provision of $9.1 on $39.4 of pre-tax income from continuing operations, resulting in an effective tax rate of 23.1%. The most significant items impacting the effective tax rate for 2016 were the $0.3 of income taxes provided in connection with the $18.4 gain that was recorded on the sale of the dry cooling business, $13.7 of foreign losses generated during the period for which no tax benefit was recognized as future realization of any such tax benefit is considered unlikely, and $2.4 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions.

During 2015, we recorded an income tax benefit of $2.7 on $154.3 of a pre-tax loss from continuing operations, resulting in an effective tax rate of 1.7%. The most significant item impacting the effective tax rate for 2015 was the effects of approximately $139.0 of pre-tax losses generated during the year (the majority of which relate to our large power projects in South Africa) for which no tax benefit was recognized, as future realization of such tax benefit is considered unlikely. In addition, we incurred foreign tax charges of $3.7 related to the Spin-Off and the reorganization actions undertaken to facilitate the Spin-Off and $3.4 of net charges related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions.

During 2014, we recorded an income tax provision of $137.5 on $252.1 of pre-tax income from continuing operations, resulting in an effective tax rate of 54.5%. The effective tax rate for 2014 was impacted by the U.S. income taxes provided in connection with the $491.2 gain on the sale of our interest in EGS, tax charges of $33.8 related to net increases in valuation allowances recorded against certain foreign deferred income tax assets, $11.4 of income

tax charges related to the repatriation of certain earnings of our non-U.S. subsidiaries, and a low effective tax rate on foreign losses, partially offset by (i) $16.2 of tax benefits related to various audit settlements, statute expirations and other adjustments to liabilities for uncertain tax positions, with the most notable being the closure of our U.S. tax examination for the years 2008 through 2011, and (ii) $6.4 of tax benefits related to a loss on an investment in a foreign subsidiary.

Results of Discontinued Operations

Sale of Balcke Dürr Business

As indicated in Note 1 to our consolidated financial statements, we completed the sale of Balcke Dürr on December 30, 2016 for cash proceeds of less than $0.1. In addition, we left $21.1 of cash in Balcke Dürr at the time of the sale and provided the Buyer with a non-interest bearing loan of $9.1, payable in installments due at the end of 2018 and 2019. In connection with the sale, we recorded a net loss of $78.6 to “Gain (loss) on disposition of discontinued operations, net of tax” within our consolidated statement of operations for 2016.

The results of Balcke Dürr are presented as a discontinued operation for all periods presented. Major classes of line items constituting pre-tax income (loss) and after-tax income (loss) of Balcke Dürr for the years ended December 31, 2016, 2015 and 2014 are shown below:



	Year ended December 31,
	2016			2015			2014
Revenues	$	153.4		$	160.3		$	258.3
Costs and expenses:
Costs of products sold	144.2			143.8			198.5
Selling, general and administrative	31.4			37.9			50.6
Impairment of goodwill	—			13.7			—
Special charges (credits), net	(1.3		)	12.7			3.4
Other expense, net	(0.2		)	(0.9		)	(2.1		)
Income (loss) before taxes	(21.1		)	(48.7		)	3.7
Income tax (provision) benefit	4.5			9.1			(2.2		)
Income (loss) from discontinued operations	$	(16.6	)	$	(39.6	)	$	1.5

The assets and liabilities of Balcke Dürr have been reclassified to assets and liabilities of discontinued operations as of December 31, 2015. The major classes of Balcke Dürr’s assets and liabilities as of December 31, 2015 are shown below:



ASSETS:
Cash and equivalents	$	4.2
Accounts receivable, net	61.9
Inventories, net	9.4
Other current assets	8.7
Assets of discontinued operations - current	84.2
Property, plant and equipment, net	14.2
Other assets (includes $19.6 of “Deferred and other income taxes”)	21.6
Assets of discontinued operations - non current	35.8
Total assets - discontinued operations	$	120.0

LIABILITIES:
Accounts payable	$	19.9
Accrued expenses	53.9
Income taxes payable	0.1
Liabilities of discontinued operations - current	73.9
Liabilities of discontinued operations - non current (includes $15.5 of “Deferred and other income taxes”)	24.0
Total liabilities - discontinued operations	$	97.9

The following table presents selected financial information for Balcke Dürr that is included within discontinued operations in the consolidated statements of cash flows:



	Year ended December 31,
	2016		2015		2014
Non-cash items included in income (loss) from discontinued operations, net of tax
Depreciation and amortization	$	2.0	$	2.2	$	2.8
Impairment of goodwill	—		13.7		—
Capital expenditures	0.7		1.9		1.1

Spin-Off of SPX FLOW

As indicated in Note 1 to our consolidated financial statements, we completed the Spin-Off of SPX FLOW on September 26, 2015. The results of SPX FLOW are reflected as a discontinued operation within our consolidated financial statements for all periods presented. Major classes of line items constituting pre-tax income and after-tax income of SPX FLOW for the years ended December 31, 2015 ⁽¹⁾ and 2014 are shown below:



	Year ended December 31,
	2015 ⁽¹⁾			2014
Revenues	$	1,775.1		$	2,768.4
Costs and expenses:
Costs of products sold	1,179.3			1,831.0
Selling, general and administrative ⁽²⁾	368.2			507.8
Intangible amortization	17.7			26.1
Impairment of intangible assets	15.0			11.7
Special charges	41.2			13.8
Other income (expense), net ⁽³⁾	1.3			(1.9		)
Interest expense, net	(32.6		)	(41.1		)
Income before taxes	122.4			335.0
Income tax provision	(43.0		)	(75.5		)
Income from discontinued operations	79.4			259.5
Less: Net loss attributable to noncontrolling interest	(0.9		)	(2.2		)
Income from discontinued operations attributable to common shareholders	$	80.3		$	261.7


⁽¹⁾	Represents financial results for SPX FLOW through the date of Spin-Off (i.e., the nine months ended September 26, 2015), except for a revision to increase the income tax provision by $1.4 that was recorded during the fourth quarter of 2015.


⁽²⁾	Includes $30.8 and $3.5 for the years ended December 31, 2015 and December 31, 2014, respectively, of professional fees and other costs that were incurred in connection with the Spin-Off.


⁽³⁾	Includes, for the year ended December 31, 2014, $5.0 of costs incurred to obtain the consents required of the holders of our 6.875% senior notes to amend certain provisions of the indenture governing such senior notes, with such consent obtained in connection with the Spin-Off.

The following table presents selected financial information for SPX FLOW that is included within discontinued operations in the consolidated statements of cash flows:



	Year ended December 31,
	2015 ⁽¹⁾		2014
Non-cash items included in income from discontinued operations, net of tax
Depreciation and amortization	$	44.3	$	65.8
Impairment of intangible assets	15.0		11.7
Capital expenditures	43.1		40.7
Payment of capital lease obligation	—		60.8

⁽¹⁾Represents amounts for SPX FLOW through the date of Spin-Off (i.e., the nine months ended September 26, 2015).

Other Discontinued Operations Activity

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

Precision Components — Sold for cash consideration of $62.6 during 2014, resulting in a loss, net of taxes, of $6.9.

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

In addition to the businesses discussed above, we recognized net losses of $2.7, $5.2 and $1.1 during 2016, 2015 and 2014, respectively, resulting from adjustments to gains/losses on dispositions of businesses discontinued prior to 2014.

Changes in estimates associated with liabilities retained in connection with a business divestiture (e.g., income taxes) may occur. As a result, it is possible that the resulting gains/losses on these and other previous divestitures may be materially adjusted in subsequent periods.

The following table presents selected information regarding the results of operations of our businesses included in discontinued operations, other than Balcke Dürr and SPX FLOW, for the years ended December 31, 2016, 2015 and 2014:



	Year ended December 31,
	2016		2015		2014
Revenues	$	—	$	—	$	27.7
Pre-tax loss	—		—		(6.1		)
Loss from discontinued operations, net	—		—		(5.0		)

For the years ended December 31, 2016, 2015 and 2014, results of operations from our businesses reported as discontinued operations were as follows:



	Year ended December 31,
	2016			2015 ⁽¹⁾			2014
Balcke Dürr
Income (loss) from discontinued operations	$	(107.0	)	$	(48.7	)	$	3.7
Income tax (provision) benefit	11.8			9.1			(2.2		)
Income (loss) from discontinued operations, net	(95.2		)	(39.6		)	1.5

SPX FLOW
Income from discontinued operations	—			122.4			335.0
Income tax provision	—			(43.0		)	(75.5		)
Income from discontinued operations, net	—			79.4			259.5

All other
Income (loss) from discontinued operations	(3.7		)	(8.6		)	22.1
Income tax (provision) benefit	1.0			3.4			(13.8		)
Income (loss) from discontinued operations, net	(2.7		)	(5.2		)	8.3

Total
Income (loss) from discontinued operations	(110.7		)	65.1			360.8
Income tax (provision) benefit	12.8			(30.5		)	(91.5		)
Income (loss) from discontinued operations, net	$	(97.9	)	$	34.6		$	269.3


⁽¹⁾	For SPX FLOW, represents financial results through the date of Spin-Off (i.e., the nine months ended September 26, 2015), except for a revision to increase the income tax provision by $1.4 that was recorded during the fourth quarter of 2015.

Other Dispositions

Sale of Dry Cooling Business

As indicated in Note 1 to our consolidated financial statements, on November 20, 2015, we entered into an agreement for the sale of our dry cooling business. On March 30, 2016, we completed the sale of our dry cooling business for cash proceeds for $47.6 (net of cash transferred with the business of $3.0). In connection with the sale, we recorded a gain of $18.4.

The assets and liabilities of our dry cooling business are presented as “held for sale” within our consolidated balance sheet as of December 31, 2015. The major classes of assets and liabilities held for sale as of December 31, 2015 are shown below:



Assets:
Accounts receivable, net	$	49.2
Inventories, net	12.9
Other current assets	13.9
Property, plant and equipment, net	3.3
Goodwill	10.7
Intangibles, net	8.3
Other assets	8.8
Assets held for sale	$	107.1
Liabilities:
Accounts payable	$	13.7
Accrued expenses	25.3
Other long-term liabilities	2.3
Liabilities held for sale	$	41.3

Sale of Interest in EGS

On January 7, 2014, we completed the sale of our 44.5% interest in EGS for cash proceeds of $574.1. As a result of the sale, we recorded a gain of $491.2 to “Other income (expense), net” during 2014. Prior to sale, we accounted for our investment in EGS under the equity method.

Results of Reportable Segments

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

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 segments. Organic revenue growth (decline) is a non-GAAP financial measure, and is not a substitute for net revenue growth (decline). Refer to the explanation of this measure and purpose of use by management under “Results of Continuing Operations — Non-GAAP Measures.”

HVAC Reportable Segment



	Year Ended December 31,									2016 vs. 2015%		2015 vs. 2014%
	2016			2015			2014			2016 vs. 2015%		2015 vs. 2014%
Revenues	$	509.5		$	529.1		$	535.7		(3.7	)	(1.2	)
Income	80.2			80.2			69.4			—		15.6
% of revenues	15.7		%	15.2		%	13.0		%
Components of revenue decline:
Organic										(2.4	)	(0.7	)
Foreign currency										(1.3	)	(0.5	)
Net revenue decline										(3.7	)	(1.2	)

Revenues — For 2016, the decrease in revenues, compared to 2015, was due to a decline in organic revenue and, to a lesser extent, the impact of a stronger U.S. dollar during 2016. The organic revenue decline primarily was the result of lower sales by the segment’s heating and ventilation products businesses.

For 2015, the decrease in revenues, compared to 2014, was due to a decline in organic revenue and, to a lesser extent, a stronger U.S. dollar during 2015. The organic revenue decline was due to lower sales within the segment’s heating and ventilation products businesses, partially offset by an increase in sales of cooling products, including a project in the U.S. that contributed $7.3 of revenues during 2015.

Income — For 2016, margin increased, compared to 2015, primarily as a result of improved operating efficiency and a more profitable sales mix within the segment’s heating and ventilation products businesses.

For 2015, income and margin increased, compared to 2014, primarily as a result of (i) improved operating efficiency within the segment’s heating and ventilation products businesses and (ii) a more profitable sales mix associated within the segment’s cooling products business.

Backlog — The segment had backlog of $28.3 and $31.1 as of December 31, 2016 and 2015, respectively. Approximately 99% of the segment’s backlog as of December 31, 2016 is expected to be recognized as revenue during 2017.

Detection and Measurement Reportable Segment



	Year Ended December 31,									2016 vs. 2015%		2015 vs. 2014%
	2016			2015			2014			2016 vs. 2015%		2015 vs. 2014%
Revenues	$	226.4		$	232.3		$	244.4		(2.5	)	(5.0	)
Income	45.3			46.0			55.2			(1.5	)	(16.7	)
% of revenues	20.0		%	19.8		%	22.6		%
Components of revenue decline:
Organic										(0.3	)	(2.5	)
Foreign currency										(2.2	)	(2.5	)
Net revenue decline										(2.5	)	(5.0	)

Revenues — For 2016, the decrease in revenues, compared to 2015, was due to a stronger U.S. dollar in 2016 and, to a lesser extent, a decline in organic revenue. The decline in organic revenue was due primarily to a decrease in sales of communication technologies products, generally offset by increases in sales of bus fare collection systems and specialty lighting products.

For 2015, the decrease in revenues, compared to 2014, was due to a decline in organic revenue and a stronger U.S. dollar in 2015. The organic revenue decline was due to lower sales of bus fare collection systems and specialty lighting products, partially offset by increased sales of underground pipe and cable locators and inspection equipment.

Income — For 2016, the decrease in income, compared to 2015, was primarily due to the revenue declines noted above.

For 2015, income and margin decreased, compared to 2014, primarily as a result of (i) the revenue decline noted above and (ii) a less profitable mix associated with sales of communication technology equipment, underground pipe and cable locators, and inspection equipment.

Backlog — The segment had backlog of $53.6 and $36.9 as of December 31, 2016 and 2015, respectively. Approximately 70% of the segment’s backlog as of December 31, 2016 is expected to be recognized as revenue during 2017.

Engineered Solutions Reportable Segment



	Year Ended December 31,									2016 vs. 2015%		2015 vs. 2014%
	2016			2015			2014			2016 vs. 2015%		2015 vs. 2014%
Revenues	$	736.4		$	797.6		$	914.3		(7.7	)	(12.8	)
Income (loss)	17.3			(87.4		)	(3.6		)	*		*
% of revenues	2.3		%	(11.0		)%	(0.4		)%
Components of revenue decline:
Organic										(4.5	)	(5.8	)
Foreign currency										(2.3	)	(3.5	)
Sale of dry cooling business										(8.1	)	—
South Africa revenue revision										7.2		(3.5	)
Net revenue decline										(7.7	)	(12.8	)

___________________________________________________________________


*	Not meaningful for comparison purposes.

Revenues — For 2016, the decrease in revenues, compared to 2015, was due primarily to the impact of the sale of the dry cooling business, a decline in organic revenue, and, to a lesser extent, the impact of a stronger U.S. dollar in 2016, partially offset by the impact of a reduction in revenues of $57.2 during the third quarter of 2015 resulting from a revision to the expected revenues and profits on our large power projects in South Africa. The decline in organic revenues was due primarily to lower sales of power generation equipment.

For 2015, the decrease in revenues, compared to 2014, was due to a decline in organic revenue, the impact of a stronger U.S. dollar during 2015, and a net reduction in revenues associated with the segment’s large power projects in South Africa. The decline in organic revenue was due primarily to lower sales of power generation equipment and,

to a lesser extent, power transformers. As mentioned above, the segment recorded a reduction in revenues of $57.2 during the third quarter of 2015 associated with the segment’s large power projects in South Africa. During 2014, the segment recorded a $25.0 reduction to revenues related to these same projects.

Income — For 2016, the increase in profit and margin, compared to 2015, was due primarily to the fact that the segment’s results for 2015 included a reduction in profit of $95.0 during the third quarter of 2015 resulting from a revision to the expected revenues and profits on our large power projects in South Africa. During 2016, income and margin for the segment’s power transformer business increased as a result of improved operating efficiency. However, these increases were offset partially by lower profitability within certain of the power generation businesses, resulting primarily from the declines in revenue noted above.

For 2015, income and margin decreased, compared to 2014, primarily as a result of the reduction in profits associated with the segment’s large power projects in South Africa and the organic revenue decline, both of which are mentioned above. These declines in income and margin were partially offset by improved profitability within the segment’s power transformer business, with such profit improvement resulting primarily from improved operating efficiency.

Backlog — The segment had backlog of $416.7 and $636.0 as of December 31, 2016 and 2015, respectively. Of the $219.3 year-over-year decline in backlog, $40.0 was attributable to the impact of a stronger U.S. dollar as of December 31, 2016, as compared to December 31, 2015. In addition, the balance at December 31, 2015 included $127.3 of backlog associated with our dry cooling business. Approximately 91% of the segment’s backlog as of December 31, 2016 is expected to be recognized as revenue during 2017.

Corporate Expense and Other Expense



	Year Ended December 31,									2016 vs. 2015%		2015 vs. 2014%
	2016			2015			2014			2016 vs. 2015%		2015 vs. 2014%
Total consolidated revenues	$	1,472.3		$	1,559.0		$	1,694.4		(5.6	)	(8.0	)
Corporate expense	41.7			103.4			133.9			(59.7	)	(22.8	)
% of revenues	2.8		%	6.6		%	7.9		%
Pension and postretirement expense	15.4			18.6			104.9			(17.2	)	(82.3	)
Long-term incentive compensation expense	13.7			33.9			32.7			(59.6	)	3.7

Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, NC corporate headquarters. Prior to the Spin-Off, corporate expense also included costs of our Asia Pacific center in Shanghai, China, which was part of the Spin-Off, costs that were previously allocated to the Flow Business that do not meet the requirements to be presented within discontinued operations, and the cost of corporate employees who became employees of SPX FLOW at the time of the Spin-Off. The decrease in corporate expense in 2016, compared to 2015, and in 2015, compared to 2014, was due primarily to the elimination of costs in connection with the Spin-Off, including the cost of corporate employees who became employees of SPX FLOW. In addition, incentive compensation was lower in 2015, compared to 2014, due to lower profitability in 2015.

Pension and Postretirement Expense — Pension and postretirement expense represents our consolidated expense, which we do not allocate for segment reporting purposes. The decline in pension and postretirement expense in 2016, compared to 2015, was due to a decline in actuarial losses, as actuarial losses in 2016 totaled $12.0 compared to $15.9 in 2015. Actuarial losses for 2016 and 2015 resulted primarily from our fourth quarter re-measurement of our plan’s assets and liabilities, with the resulting charges for the fourth quarter of 2016 and 2015 totaling $10.2 and $9.6, respectively. The fourth quarter 2016 charges resulted primarily from lower discount rates applied to our plans’ projected benefit obligations, while the fourth quarter 2015 charges resulted primarily from lower than expected returns on plan assets. Actuarial losses for 2016 also included charges of $1.8 associated with the second quarter 2016 re-measurement of the assets and liabilities of the SPX U.S. Pension Plan (the “U.S. Plan”) and Supplemental Individual Account Retirement Plan (“SIARP”) in connection with lump-sum payments that were made by these plans during the quarter. Actuarial losses for 2015 also included charges of $11.4 associated with the third quarter 2015 re-measurement of the assets and liabilities of the U.S. Plan and SIARP in connection with an amendment to these plans to freeze all benefits of active non-union participants. This amendment also resulted in a curtailment gain of $5.1 during the third quarter of 2015.

Pension and postretirement expense for 2014 included net actuarial losses of $95.0. The actuarial losses for 2014 included charges of (i) $65.4 resulting from the fourth quarter re-measurement of our plans’ assets and liabilities,

(ii) $19.4 for the lump-sum payment action related to the U.S. Plan during the first quarter of 2014, and (iii) $15.0 related to the premium paid in order to transfer monthly payments to retirees under the SPX U.K. Pension Plan to an insurance company during the fourth quarter of 2014. Pension and postretirement expense for 2014 also included a $4.8 increase to the estimated settlement gain that was recorded during the fourth quarter of 2013 in connection with the transfer of the pension obligation for the retirees of the U.S. Plan to an insurance company.

See Note 9 to our consolidated financial statements for further details on our pension and postretirement plans.

Long-term Incentive Compensation Expense — The decrease in long-term incentive compensation expense in 2016, compared to 2015, was due primarily to the fact that the 2015 amount included $21.6 of costs related to corporate employees who became employees of SPX FLOW at the time of the Spin-Off or retired in connection with the Spin-Off.

The increase in long-term incentive compensation expense for 2015, compared to 2014, was due primarily to additional compensation during 2015 of $2.1 that resulted from a Spin-Off-related modification of certain outstanding restricted stock unit awards.

See Note 14 to our consolidated financial statements for further details on our long-term incentive compensation plans.

Liquidity and Financial Condition

Listed below are the cash flows from (used in) operating, investing and financing activities, and discontinued operations, as well as the net change in cash and equivalents for the years ended December 31, 2016, 2015 and 2014.



	Years Ended December 31,
	2016			2015			2014
Continuing operations:
Cash flows from (used in) operating activities	$	53.4		$	(76.0	)	$	(326.1	)
Cash flows from (used in) investing activities	36.4			(14.0		)	554.9
Cash flows used in financing activities	(20.5		)	(173.7		)	(842.5		)
Cash flows from (used in) discontinued operations	(77.8		)	(4.6		)	414.7
Change in cash and equivalents due to changes in foreign currency exchange rates	6.7			(57.9		)	(65.2		)
Net change in cash and equivalents	$	(1.8	)	$	(326.2	)	$	(264.2	)

2016 Compared to 2015

Operating Activities — The increase in cash flows from operating activities during 2016, compared to 2015, was due primarily to the fact that cash flows used in operating activities for 2015 included disbursements for general corporate overhead costs related to a corporate structure that supported the SPX business prior to the Spin-Off. As previously noted, a significant portion of this corporate structure transferred to SPX FLOW at the time of the Spin-Off and, thus, was no longer part of our company during 2016. In addition, operating cash flows associated with our businesses increased during 2016, compared to 2015, primarily as a result of the timing of cash receipts on certain long-term projects.

Investing Activities — The increase in cash flows from investing activities during 2016, compared to 2015, was due primarily to proceeds from the sale of our dry cooling business of $47.6.

Financing Activities — During 2016, net cash flows used in financing activities primarily related to net repayments of debt of $18.9. During 2015, net cash flows used in financing activities primarily related to the cash dividend to SPX FLOW in connection with the Spin-Off of $208.6 and dividends paid of $45.9, partially offset by net borrowings under our senior credit facilities of $97.0.

Discontinued Operations — Cash flows used in discontinued operations for 2016 related primarily to the operations of our Balcke Dürr business and the cash disposed of in connection with the sale of Balcke Dürr, while cash flows from discontinued operations for 2015 related primarily to the cash flows associated with the FLOW Business.

Change in Cash and Equivalents due to Changes in Foreign Currency Exchange Rates — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during 2016. The decrease in cash and equivalents due to foreign currency exchange rates for 2015 reflected primarily a reduction in U.S. dollar equivalent balances of our Euro-denominated cash and equivalents as a result of the strengthening of the U.S. dollar against the Euro during the period.

2015 Compared to 2014

Operating Activities — The decrease in cash flows used in operating activities during 2015, compared to 2014, was due primarily to the fact that the amount for 2014 included income tax payments of approximately $235.0 associated with the sales of our interest in EGS and the TPS, Precision Components and Fenn businesses. The amounts for both 2015 and 2014 include disbursements for general corporate overhead costs related to a corporate structure that supported the SPX business prior to the Spin-Off. In addition, cash flows used in operating activities for both 2015 and 2014 were impacted by significant cash investments required for our large power projects in South Africa.

Investing Activities — The decrease in cash flows from investing activities during 2015, compared to 2014, was due primarily to the fact that the 2014 amount included proceeds of $574.1 related to the sale of our interest in EGS. Cash flows used in investing activities for 2015 were comprised primarily of capital expenditures of $16.0, while cash flows from investing activities in 2014 were comprised primarily of the proceeds from the sale of our interest in EGS of $574.1, partially offset by capital expenditures of $19.3.

Financing Activities — During 2015, net cash flows used in financing activities primarily related to the cash dividend to SPX FLOW in connection with the Spin-Off of $208.6 and dividends paid of $45.9, partially offset by net borrowings under our senior credit facilities of $97.0. During 2014, net cash flows used in financing activities primarily related to the redemption of our 7.625% senior notes for $530.6, share repurchases of $488.8, and cash dividends of $59.8, partially offset by net borrowings on other debt instruments of $250.0.

Discontinued Operations — Cash flows from discontinued operations for 2015 and 2014 related primarily to the cash flows associated with the FLOW Business and Balcke Dürr. In addition, cash flows from discontinued operations for 2014 included $108.6 of cash proceeds from the sale of our TPS, Precision Components and Fenn businesses. The decrease in cash flows from discontinued operations was due primarily to the fact that the 2015 amount only included cash flows for the FLOW Business through the date of Spin-Off (i.e., September 26, 2015), and the fourth quarter of each year typically is the strongest for our businesses with regard to operating cash flows, as well as the fact that the 2014 amount included the $108.6 of proceeds associated with business dispositions noted above, partially offset by a repayment of a capital lease obligation totaling $60.8 associated with the corporate headquarters facility that was transferred to SPX FLOW in connection with the Spin-Off.

Change in Cash and Equivalents due to Changes in Foreign Currency Exchange Rates — The decrease in cash and equivalents due to foreign currency exchange rates for 2015 and 2014 reflected primarily a reduction in U.S. dollar equivalent balances of our Euro-denominated cash and equivalents as a result of the strengthening of the U.S. dollar against the Euro during those periods.

Borrowings

The following summarizes our debt activity (both current and non-current) for the year ended December 31, 2016:



	December 31, 2015		Borrowings		Repayments			Other ⁽⁴⁾		December 31, 2016
Revolving loans	$	—	$	56.2	$	(56.2	)	$	—	$	—
Term loans ⁽¹⁾	348.0		—		(8.8		)	0.4		339.6
Trade receivables financing arrangement ⁽²⁾	—		72.0		(72.0		)	—		—
Other indebtedness ⁽³⁾	23.8		33.5		(43.6		)	2.9		16.6
Total debt	371.8		$	161.7	$	(180.6	)	$	3.3	356.2
Less: short-term debt	22.1									14.8
Less: current maturities of long-term debt	9.1									17.9
Total long-term debt	$	340.6								$	323.5

_____________________________________________________________


⁽¹⁾	The term loan is repayable in quarterly installments of 5.0% annually, beginning in the third quarter of 2016. The remaining balance is repayable in full on September 24, 2020. Balances are net of unamortized debt issuance costs of $1.6 and $2.0 at December 31, 2016 and December 31, 2015, respectively.


⁽²⁾	Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available. At December 31, 2016, we had $39.9 of available borrowing capacity under this facility.

⁽³⁾

Primarily included capital lease obligations of $1.7 and $1.7, balances under purchase card programs of $3.9 and $4.8, borrowings under a line of credit in South Africa of $10.2 and $0.0, and borrowings under a line of credit in China of $0.0 and $17.3, at December 31, 2016 and 2015, respectively. The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.


⁽⁴⁾	“Other” primarily includes debt assumed, foreign currency translation on any debt instruments denominated in currencies other than the U.S. dollar, and the impact of amortization of debt issuance costs associated with the term loan.

Maturities of long-term debt payable during each of the five years subsequent to December 31, 2016 are $17.9, $18.0, $17.9, $289.0 and $0.2, respectively.

Senior Credit Facilities

In connection with the Spin-Off, we entered into a credit agreement (the “Credit Agreement”), dated September 1, 2015, with a syndicate of lenders that provides for committed senior secured financing in an aggregate amount of $1,000.0, consisting of the following (each with a final maturity of September 24, 2020):


•	A term loan facility in an aggregate principle amount of $350.0;


•	A domestic revolving credit facility, available for loans and letters of credit, in an aggregate principal amount up to $200.0;


•	A global revolving credit facility, available for loans in Euros, GBP and other currencies, in an aggregate principal amount up to the equivalent of $150.0;


•	A participation foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $175.0; and


•	A bilateral foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $125.0.

The term loan under the Credit Agreement is repayable in quarterly installments (with annual aggregate repayments, as a percentage of the initial principal amount of $350.0, of 5.0%, beginning in the third calendar quarter of 2016), with the remaining balance repayable in full on September 24, 2020.

The participation foreign credit instrument facility and the bilateral foreign credit instrument facility originally provided financing of $300.0 and $200.0, respectively. On September 29, 2016, we elected to reduce our participation foreign credit instrument facility commitment and our bilateral foreign credit instrument facility commitment by $125.0 and $75.0, respectively. In connection with the reduction of our foreign credit instrument facility commitments, we recorded a charge of $1.3 to “Loss on early extinguishment of debt” during the third quarter of 2016 associated with the write-off of the unamortized deferred financing fees related to this previously available issuance capacity of $200.0.

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 (i) $300.0 plus (ii) 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 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 for the four fiscal quarters ended most recently before such date) does not exceed 2.75:1.00 plus (iii) an amount equal to all voluntary prepayments of the term loan facility and voluntary prepayments accompanied by permanent commitment reductions of revolving credit facilities and foreign credit instrument facilities.

We are the borrower under each of the above facilities, and certain of our foreign subsidiaries are (and we 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 the Credit Agreement are subject to the

satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties.

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

The interest rates applicable to loans under the Credit Agreement are, at our option, equal to either (i) an alternate base rate (the highest of (a) the federal funds effective rate plus 0.5%, (b) the prime rate of Bank of America, N.A., and (c) the one-month LIBOR rate plus 1.0%) or (ii) a reserve-adjusted LIBOR rate for dollars (Eurodollars) 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 and 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, twelve months) for Eurodollar borrowings. The per annum fees charged and the interest rate margins applicable to Eurodollar and alternate base rate loans are as follows:



Consolidated Leverage Ratio	Domestic Revolving Commitment Fee		Global Revolving Commitment Fee		Letter of Credit Fee		Foreign Credit Commitment Fee		Foreign Credit Instrument Fee		LIBOR Rate Loans		ABR Loans
Greater than or equal to 3.00 to 1.0	0.350	%	0.350	%	2.000	%	0.350	%	1.250	%	2.000	%	1.000	%
Between 2.00 to 1.0 and 3.00 to 1.0	0.300	%	0.300	%	1.750	%	0.300	%	1.000	%	1.750	%	0.750	%
Between 1.50 to 1.0 and 2.00 to 1.0	0.275	%	0.275	%	1.500	%	0.275	%	0.875	%	1.500	%	0.500	%
Between 1.00 to 1.0 and 1.50 to 1.0	0.250	%	0.250	%	1.375	%	0.250	%	0.800	%	1.375	%	0.375	%
Less than 1.00 to 1.0	0.225	%	0.225	%	1.250	%	0.225	%	0.750	%	1.250	%	0.250	%

The weighted-average interest rate of outstanding borrowings under our senior credit facilities was approximately 2.5% at December 31, 2016.

The fees and 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 0.25% per annum, respectively.

The Credit Agreement requires mandatory prepayments in amounts equal to the net proceeds from the sale or other disposition of, including from any casualty to, or governmental taking of, property in excess of specified values (other than in the ordinary course of business and subject to other exceptions) by SPX or our subsidiaries. Mandatory prepayments will be applied to repay, first, amounts outstanding under any term loans and, then, 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 (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 the Credit Agreement, in whole or in part, without premium or penalty. Any voluntary prepayment of loans will be subject to reimbursement of the lenders’ breakage costs in the case of a prepayment of Eurodollar rate borrowings other than on the last day of the relevant interest period. Indebtedness under the Credit Agreement is guaranteed by:


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


•	SPX 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 the Credit Agreement is secured by a first priority pledge and security interest in 100% of the capital stock of our domestic subsidiaries (with certain exceptions) held by SPX or our domestic subsidiary

guarantors and 65% of the capital stock of our material first-tier foreign subsidiaries (with certain exceptions). If SPX obtains a corporate credit rating from Moody’s and S&P and such corporate credit rating is less than “Ba2” (or not rated) by Moody’s and less than “BB” (or not rated) by S&P, then SPX and our domestic subsidiary guarantors are required to grant security interests, mortgages and other liens on substantially all of their assets. If SPX’s corporate credit rating is “Baa3” or better by Moody’s or “BBB-” or better by S&P and no defaults would exist, then all collateral security will be released and the indebtedness under the Credit Agreement will be unsecured.

The Credit Agreement requires that SPX maintain:


•	A Consolidated Interest Coverage Ratio (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).

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

We are permitted under the Credit Agreement 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) $50.0 in any fiscal year plus (B) an additional amount for all such repurchases and dividend declarations made after the Effective Date equal to the sum of (i) $100.0 plus (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 the Effective Date to the end of the most recent fiscal quarter preceding the date of such repurchase or dividend declaration for which financial statements have been (or were required to be) delivered (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit) plus (iii) certain other amounts.

At December 31, 2016, we had $313.9 of available borrowing capacity under our revolving credit facilities after giving effect to $36.1 reserved for outstanding letters of credit. In addition, at December 31, 2016, we had $98.6 of available issuance capacity under our foreign credit instrument facilities after giving effect to $201.4 reserved for outstanding letters of credit.

At December 31, 2016, we were in compliance with all covenants of our Credit Agreement.

Other Borrowings and Financing Activities

Certain of our businesses purchase goods and services under purchase card programs allowing for payment beyond their normal payment terms. As of December 31, 2016 and 2015, the participating businesses had $3.9 and $4.8, respectively, outstanding under these arrangements.

We are party to a trade receivables financing agreement, whereby we can borrow, on a continuous basis, up to $50.0. Availability of funds may fluctuate over time given changes in eligible receivable balances, but will not exceed the $50.0 program limit. The facility contains representations, warranties, covenants and indemnities customary for facilities of this type. The facility does not contain any covenants that we view as materially constraining to the activities of our business.

In addition, we maintain line of credit facilities in China, India, and South Africa available to fund operations in these regions, when necessary. At December 31, 2016, the aggregate amount of borrowing capacity under these facilities was $16.1, while the aggregate borrowings outstanding were $11.0.

Financial Instruments

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

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

As of December 31, 2016, there was no significant impact to the fair value of our derivative liabilities due to our own credit risk as the related instruments are collateralized under our senior credit facilities. Similarly, there was no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risk.

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

Interest Rate Swaps

During the second quarter of 2016, we entered into interest rate swap agreements (“Swaps”) to hedge the interest rate risk on our variable rate term loan. These Swaps, which we designate and account for as cash flow hedges, have effective dates beginning in January 2017 and maturities through September 2020 and effectively convert 50% of the borrowing under the variable rate term loan to a fixed rate of 1.2895% plus the applicable margin. These are amortizing Swaps; therefore, the outstanding notional value is scheduled to decline commensurate with the scheduled maturities of the term loan. As of December 31, 2016, the aggregate notional amounts of the Swaps was $170.8 and the unrealized gain, net of tax, recorded in accumulated other comprehensive income (“AOCI”) was $0.7. In addition, we have recorded a long-term asset of $1.7 to recognize the fair value of these Swaps.

Currency Forward Contracts

We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency exchange rates. Our objective is to preserve the economic value of non-functional currency-denominated cash flows and to minimize the impact of changes as a result of currency fluctuations. Our principal currency exposures relate to the Euro, South African Rand and GBP.

From time to time, we enter into forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries (“FX forward contracts”). 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 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 $8.8 and $111.2 outstanding as of December 31, 2016 and 2015, respectively, with all of the $8.8 scheduled to mature in 2017. We also had FX embedded derivatives with an aggregate notional amount of $0.9 and $99.4 at December 31, 2016 and 2015, respectively, with all of the $0.9 scheduled to mature in 2017. The decline in the notional amount of FX forward contracts and FX embedded derivatives was due primarily to the sale of our dry cooling business. The unrealized gains (losses), net of taxes, recorded in AOCI related to FX forward contracts were $0.0 and $(0.6) as of December 31, 2016 and 2015,

respectively. The net loss recorded in “Other income (expense), net” related to FX forward contracts and embedded derivatives totaled $6.3 in 2016, $1.2 in 2015 and $2.7 in 2014.

Commodity Contracts

From time to time, we enter into commodity contracts to manage the exposure on forecasted purchases of commodity raw materials. The outstanding notional amounts of commodity contracts were 4.1 and 4.2 pounds of copper at December 31, 2016 and 2015, respectively. We designate and account for these contracts as cash flow hedges and, to the extent these commodity contracts are effective in offsetting the variability of the forecasted purchases, the change in fair value is included in AOCI. We reclassify AOCI associated with our commodity contracts to cost of products sold when the forecasted transaction impacts earnings. As of December 31, 2016 and 2015, the fair value of these contracts was $1.1 (current asset) and $1.7 (current liabilities), respectively. The unrealized gain (loss), net of taxes, recorded in AOCI was $0.8 and $(1.2) as of December 31, 2016 and 2015, respectively. We anticipate reclassifying the unrealized gain as of December 31, 2016 to income over the next 12 months.

Other Fair Value Financial Assets and Liabilities

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

The fair value of our debt instruments as of December 31, 2016 approximated the related carrying values due primarily to the variable market-based interest rates for such instruments.

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 interest rate swap, foreign currency forward, and commodity contracts. These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions throughout the world. We periodically evaluate the credit standing of these financial institutions.

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

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

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

Cash and Other Commitments

Our senior credit facilities are payable in full on September 24, 2020. Our term loan is repayable in quarterly installments of 5.0% annually, beginning in the third fiscal quarter of 2016. The remaining balance is repayable in full on September 24, 2020.

We use operating leases to finance certain equipment, vehicles and properties. At December 31, 2016, we had $37.7 of future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year.

During 2015, we declared and paid dividends of $30.9 and $45.9, respectively, while we declared and paid dividends of $63.2 and $59.8, respectively, in 2014. In connection with the Spin-Off, we discontinued dividend payments immediately following the second quarter dividend payment for 2015 and do not expect to resume dividend payments for the foreseeable future.

Capital expenditures for 2016 totaled $11.7, compared to $16.0 and $19.3 in 2015 and 2014, respectively. Capital expenditures in 2016 related primarily to upgrades to manufacturing facilities, including replacement of equipment, and upgrades in information technology. We expect 2017 capital expenditures to approximate $14.0 to $18.0, with a significant portion related to replacement of equipment.

In 2016, we made contributions and direct benefit payments of $20.8 to our defined benefit pension and postretirement benefit plans. We expect to make $20.9 of minimum required funding contributions and direct benefit payments in 2017. Our pension plans have not experienced any liquidity difficulties or counterparty defaults due to the volatility in the credit markets. Our pension funds earned asset returns of approximately 10.0% in 2016. See Note 9 to our consolidated financial statements for further disclosure of expected future contributions and benefit payments.

On a net basis, both from continuing and discontinued operations, we paid $4.8, $51.0 and $314.8 of income taxes for 2016, 2015 and 2014, respectively. In 2016, we made payments of $9.1 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $4.3. The amount of income taxes that we pay annually is dependent on various factors, including the timing of certain deductions. Deductions and the amount of income taxes can and do vary from year to year. See Note 10 to our consolidated financial statements for further disclosure of undistributed earnings of foreign subsidiaries, amounts considered permanently reinvested, and our intentions with respect to repatriation of earnings.

As of December 31, 2016, except as discussed in Notes 4 and 13 to our consolidated financial statements and in the contractual obligations table below, we did not have any material guarantees, off-balance sheet arrangements or purchase commitments other than the following: (i) $36.1 of certain standby letters of credit outstanding, all of which reduce the available borrowing capacity on our domestic revolving credit facility; (ii) $201.4 of letters of credit outstanding, all of which reduce the available borrowing capacity on our foreign trade facilities; and (iii) approximately $116.9 of surety bonds. In addition, $35.9 of our standby letters of credit relate to self-insurance or environmental matters.

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

We continually review each of our businesses in order to determine their long-term strategic fit. These reviews could result in selected acquisitions to expand an existing business or result in the disposition of an existing business. In addition, you should read “Risk Factors,” “Results for Reportable Segments” included in this MD&A, 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, 2016:



	Total		Due Within 1 Year		Due in 1-3 Years		Due in 3-5 Years		Due After 5 Years
Short-term debt obligations	$	14.8	$	14.8	$	—	$	—	$	—
Long-term debt obligations	343.0		17.9		35.9		289.2		—
Pension and postretirement benefit plan contributions and payments⁽¹⁾	276.0		20.9		39.4		33.8		181.9