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AQUISITIONS AND DISCONTINUED OPERATIONS
 9 Months Ended
Sep. 30, 2023
Acquisitions and Discontinued Operations [Abstract]  
AQUISITIONS AND DISCONTINUED OPERATIONS ACQUISITIONS AND DISCONTINUED OPERATIONS
Acquisition of ASPEQ
As indicated in Note 1, on June 2, 2023, we completed the acquisition of ASPEQ for $421.8, net of cash acquired of $0.9. We financed the acquisition with available cash and borrowings under our senior credit facilities. The assets acquired and liabilities assumed have been recorded at preliminary estimates of fair value as determined by management, based on information currently available and on current assumptions as to future operations and are subject to change upon completion of the acquisition method of accounting. Final determination of the fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date, as permitted under GAAP. The following is a summary of the recorded preliminary fair values of the assets acquired and liabilities assumed for ASPEQ as of June 2, 2023:

Assets acquired:
Current assets, including cash and equivalents of $0.9
$42.1 
Property, plant and equipment10.6 
Goodwill168.9 
Intangible assets246.1 
Other assets1.3 
Total assets acquired469.0 
Current liabilities assumed11.3 
Non-current liabilities assumed (1)
35.0 
Net assets acquired$422.7 
___________________________
(1)Includes net deferred income tax liabilities and other liabilities of $34.0 and $1.0, respectively.

The identifiable intangible assets acquired consist of customer relationships, trademarks, technology, and customer backlog of $142.3, $51.5, $47.8, and $4.5, respectively, with such amounts based on a preliminary assessment of the related fair values. We expect to amortize the customer relationships, technology, and customer backlog assets over 12.0, 16.0, and 1.0 years, respectively, with the trademarks acquired being indefinite lived.

We acquired gross receivables of $18.0, which had a fair value at the acquisition date of $17.9 based on our estimates of cash flows expected to be recovered.

The qualitative factors that comprise the recorded goodwill include expected market growth for ASPEQ’s existing operations, increased volumes achieved by selling ASPEQ’s products through existing SPX sales channels, procurement and operational savings and efficiencies, and various other factors. We expect none of the goodwill described above to be deductible for tax purposes.

We recognized revenues and net losses for ASPEQ of $26.0 and $0.8, and $34.6 and $1.3, respectively, for the three and nine months ended September 30, 2023 with the net loss impacted by charges during the three and nine months ended September 30, 2023 of (i) $6.7 and $9.4, respectively, associated with amortization of the various intangible assets mentioned above and (ii) $2.5 and $3.6, respectively, associated with the excess fair value (over historical cost) of inventory acquired which has been subsequently sold. During the nine months ended September 30, 2023, we incurred acquisition-related costs for ASPEQ of $5.1, which have been recorded to “Selling, general and administrative” within our condensed consolidated statements of operations and “Corporate expense” within consolidated operating income in Note 6.
The following unaudited pro forma information presents our results of operations for the three and nine months ended September 30, 2023 and October 1, 2022, respectively, as if the acquisition of ASPEQ had taken place on January 1, 2022. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the acquisition been completed as of the date presented, and should not be taken as representative of our future consolidated results of operations. The pro forma results include estimates and assumptions that management believes are reasonable; however, these results do not include any anticipated cost savings or expenses of the planned integration of ASPEQ. These pro forma results of operations have been prepared for comparative purposes only and include additional interest expense on the borrowings required to finance the acquisition, additional depreciation and amortization expense associated with fair value adjustments to the acquired property, plant and equipment and intangible assets, adjustments to reflect charges associated with acquisition-related costs and charges associated with the excess fair value (over historical cost) of inventory acquired and subsequently sold as if they were incurred during the first quarter of 2022, and the related income tax effects.

Three months endedNine months ended
September 30, 2023October 1, 2022September 30, 2023October 1, 2022
Revenues$448.7 $397.0 $1,319.0 $1,108.8 
Income from continuing operations39.8 9.0 118.6 23.5 
Net income (loss)(16.3)(0.4)63.9 6.4 
Income from continuing operations per share of common stock:
Basic$0.87 $0.20 $2.61 $0.52 
Diluted$0.85 $0.20 $2.55 $0.51 
Net income (loss) per share of common stock:
Basic$(0.36)$(0.01)$1.40 $0.14 
Diluted$(0.35)$(0.01)$1.37 $0.14 

Other Acquisitions

As indicated in Note 1, on March 31, 2022 and April 3, 2023, we completed the acquisitions of ITL and TAMCO, respectively. The pro forma effects of these acquisitions are not material to our condensed consolidated results of operations.

Sale of Transformer Solutions Business

On October 1, 2021, we completed the sale of SPX Transformer Solutions, Inc. which is reported as a discontinued operation for all periods presented. During the first quarter of 2022, we agreed to the final adjustment of the purchase price which resulted in a payment to the buyer of $13.9 and an increase to the gain on sale of $0.2.

Wind-Down of DBT Business

We completed the wind-down of our DBT Technologies (PTY) LTD (“DBT”) business after ceasing all operations, including those related to two large power projects in South Africa — Kusile and Medupi, in the fourth quarter of 2021. As a result of completing the wind-down plan, we are reporting DBT as a discontinued operation for all periods presented. As previously disclosed, DBT had asserted claims against the remaining prime contractor on the large projects, Mitsubishi Heavy Industries Power — ZAF (f.k.a. Mitsubishi-Hitachi Power Systems Africa (PTY) LTD) (“MHI”), of approximately South African Rand 1,000.0 (or $52.1) and MHI had asserted, or issued letters of intent to claim for, alleged damages against DBT. Although it was reasonably possible that some loss may have been incurred in connection with these claims (which totaled approximately South African Rand 2,815.2 or $146.5), we were unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims; (ii) complexity of contractual relationships between the end customer, MHI, and DBT; (iii) legal interpretation of the contract provisions and application of South African law to the contracts; and (iv) unpredictable nature of any dispute resolution processes that have occurred or may occur in connection with these claims. Although we have experienced success in enforcing and defending our rights through the dispute resolution process over the past few years (including the matters mentioned below), we have invested, and would have continued to invest, significant management and financial resources to defend and pursue these matters.

On September 5, 2023, DBT and SPX entered into an agreement with MHI to resolve all claims between the parties with respect to the two large power projects in South Africa (the “Settlement Agreement”). The Settlement Agreement provides for full and final settlement and mutual release of all claims between the parties with respect to the projects, including any claim
against SPX Technologies, Inc. as guarantor of DBT's performance on the projects. It also provides that the underlying subcontracts are terminated and all obligations of both parties under the subcontracts have been satisfied in full. In connection with the Settlement Agreement, we incurred a charge, net of tax, of $54.2 during the three months ended September 30, 2023. The charge included the write-off of $15.2 in net amounts due from MHI. Such charge is included in “Loss from discontinued operations, net of tax” for the three and nine months ended September 30, 2023.

Prior to the Settlement Agreement, on February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT against MHI related to costs incurred in connection with delays on two units of the Kusile project. In connection with the ruling, DBT received South African Rand 126.6 (or $8.6 at the time of payment). This ruling was subject to final and binding arbitration in this matter. In March 2023, an arbitration tribunal upheld the decision of the dispute adjudication panel. As a result, the South African Rand 126.6 (or $6.8) was recorded as income during the quarter ended April 1, 2023, with such amount recorded within “Loss on disposition of discontinued operations, net of tax.” Additionally, in June 2023, the arbitration tribunal ruled DBT was entitled to recover $1.3 of legal costs incurred related to the arbitration. Such amount was recorded to “Loss on disposition of discontinued operations, net of tax” during the second quarter of 2023 with the cash payment received during the nine months ended September 30, 2023.

Additionally, in May 2023, a separate arbitration tribunal ruled DBT was entitled to recover $5.5 of legal costs incurred related to a prior arbitration hearing. Such amount was recorded to “Loss on disposition of discontinued operations, net of tax” during the second quarter of 2023 with the cash payment received during the nine months ended September 30, 2023.

The assets and liabilities of DBT have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.

The major line items constituting DBT’s assets and liabilities as of September 30, 2023 and December 31, 2022:

September 30, 2023December 31, 2022
ASSETS
Cash and equivalents$1.1 $9.3 
Accounts receivable, net4.9 7.6 
Other current assets3.8 6.5 
Property, plant and equipment:
Buildings and leasehold improvements0.2 0.2 
Machinery and equipment0.6 0.7 
0.8 0.9 
Accumulated depreciation(0.7)(0.8)
Property, plant and equipment, net0.1 0.1 
Other assets— 19.1 
Total assets of DBT$9.9 $42.6 
LIABILITIES
Accounts payable (1)
$25.8 $1.4 
Contract liabilities2.0 3.6 
Accrued expenses7.4 22.0 
Other long-term liabilities4.1 4.6 
Total liabilities of DBT$39.3 $31.6 
___________________________

(1) Includes DBT's remaining obligation under the Settlement Agreement to make a payment to MHI of South African Rand 480.9 (or $25.0 at September 30, 2023), due in September 2024. In connection with this remaining obligation, we entered into a foreign currency forward contract which we are accounting for as a fair value hedge. Refer to Note 13 for additional details.
Wind-Down of the Heat Transfer Business

We completed the wind-down of our SPX Heat Transfer (“Heat Transfer”) business in the fourth quarter of 2020. As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all periods presented.
The assets and liabilities of Heat Transfer have been included within “Assets of DBT and Heat Transfer” and “Liabilities of DBT and Heat Transfer,” respectively, on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022. The major line items constituting Heat Transfer’s assets and liabilities as of September 30, 2023 and December 31, 2022 are shown below:

September 30, 2023December 31, 2022
ASSETS
Other current assets$0.3 $0.2 
Other assets0.1 0.1 
Total assets of Heat Transfer$0.4 $0.3 
LIABILITIES
Accounts payable$0.1 $0.1 
Accrued expenses0.1 0.1 
Total liabilities of Heat Transfer$0.2 $0.2 
Changes in estimates associated with liabilities retained in connection with a business divestiture (e.g., income taxes) may occur. As a result, it is possible that the resulting gains/losses on these and other previous divestitures may be materially adjusted in subsequent periods.
For the three and nine months ended September 30, 2023 and October 1, 2022, results of operations from our businesses reported as discontinued operations were as follows:
Three months endedNine months ended
September 30, 2023October 1, 2022September 30, 2023October 1, 2022
DBT (1)
Loss from discontinued operations$(69.2)$(5.7)$(68.6)$(14.2)
Income tax benefit13.2 0.8 14.1 2.3 
Loss from discontinued operations, net(56.0)(4.9)(54.5)(11.9)
All other (2)
Loss from discontinued operations(0.1)(6.0)(0.2)(6.9)
Income tax benefit— 1.5 — 1.7 
Loss from discontinued operations, net(0.1)(4.5)(0.2)(5.2)
Total
Loss from discontinued operations(69.3)(11.7)(68.8)(21.1)
Income tax benefit13.2 2.3 14.1 4.0 
Loss from discontinued operations, net$(56.1)$(9.4)$(54.7)$(17.1)
___________________________
(1)Loss for the three and nine months ended September 30, 2023 resulted primarily from the charge, and related income tax impacts, recorded in connection with the Settlement Agreement referred to above and legal costs incurred in connection with the various dispute resolution matters. This loss for the nine months ended September 30, 2023 was partially offset by the arbitration awards received, which are discussed above. Loss for the three and nine months ended October 1, 2022 resulted primarily from net legal costs, and related income tax impacts, incurred in connection with various dispute resolution matters related to the two large power projects.
(2)Loss for the three and nine months ended September 30, 2023 resulted primarily from revisions to liabilities retained in connection with prior dispositions. Loss for the three and nine months ended October 1, 2022 resulted primarily from asbestos-related charges and revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions.

Net cash used in discontinued operations for the nine months ended September 30, 2023 related primarily to (i) cash payments of $25.3 made by DBT to MHI during the three months ended September 30, 2023 in connection with the Settlement Agreement, (ii) disbursements of $14.5 for professional fees and support costs incurred principally in connection with the claims resolved by the Settlement Agreement, and (iii) local taxes of $3.8 paid in South Africa, which we subsequently recovered during the fourth quarter of 2023, partially offset by recovery of legal costs we were awarded in arbitration
proceedings between DBT and MHI of $6.8 mentioned above. Net cash used in discontinued operations for the nine months ended October 1, 2022 related primarily to (i) disbursements for professional fees incurred in connection with the South Africa claims matters, (ii) disbursements related to asbestos product liability matters, (iii) a payment of $13.9 to the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business, and (iv) disbursements for liabilities retained in connection with dispositions, including fees associated with the sale of Transformer Solutions.